Candlestick patterns - NOT effective intraday?

H

hapaboy

Just wondering if any intraday traders out there are using 1, 3, 5, or 15-min candlestick patterns out there to make entries on a consistent and profitable basis. If so, what have you found to be the most reliable patterns for short-term trades? What other indicators do you find them to be most useful in conjunction with?

My sense going over various posts here on ET is that most traders believe candlestick patterns are better used for longer (i.e. swing) trades than short-term quick scalps or daytrades. Is this correct?

Personally, I trade intraday using candlestick charts to view stock price action BUT do not make my entries based on the patterns themselves. Instead I look at volume, pace, and SMAs in conjunction with simple support and resistance levels the stock has made during the day. I'm ALWAYS looking for ways to improve my trading and wonder if looking for candlestick patterns on a short-term basis is worth looking into.

Mahalo.
 
Quote from hapaboy:

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hapaboy,

Tweezers at key fibonacci ratios have proven to work very well for me - especially when they occur on a 10 or 30 minute chart.

I attached a 5 min. chart for illustration.

Good trading,
Al C.
 

Attachments

Yes, I think candle patterns work on timeframes as small as 5 minutes. Anything less than that and I would say that they are suspect.
But, the candle pattern (to me at least) is the last thing on my mind when getting the planets lined up for a trade. Its far more important to know what the broad market is doing and what sectors are showing relative strength or weakness that day than the pattern. Watch the market for a couple of years and you'll start to see many "ugly" or even non-existent patterns follow through just because there was accumulation or distribution in that particular stock due to outside factors.

The pattern should always be the last thing to check for, not the first. Too many traders are left holding the bag when patterns fail and they wonder why.............................

PS: what is "Hapa"? I have deduced that you are Hawaiian and I know that there is a musical group out there that calls itself the same thing.

Peace!
:cool:
 
Some thoughts to consider that lead me to believe that the classical interpretation of candlesticks may not hold for intraday 'sticks.

1. Candlesticks were developed by Japanese rice traders who I assume primarily traded off daily or weekly charts. The patterns they've thus developed may not apply intraday.

2. The close of an intraday candlestick has little signifcance compared to a daily close. The daily close is used for marking to market futures, while the intraday close is just a close, nothing more.

3. The open of an intraday candlestick is just the next tick afer the previous bar completes. The open of a daily candlestick is after a night of letting traders think about their positions.

4. Intraday patterns on one time frame, such as a 2 minute, can look signficantly different if you use a slightly different time frame. Also, different real-time data vendors will start and end their candlesticks on different bars, making different candlesticks for different traders. A daily candlestick, on the other hand, is pretty much the same for all traders.

-- M
 
How do you find candlestick patterns intraday? Do you only watch a handful of stocks everyday and wait for patterns to form, or do you just scan stocks all day looking for patterns? Seems like it would be hard to find good trades to take everyday.
 
Interesting responses. Thanks to all for contributing thus far. It would seem candle patterns are considered more for mid- to long-term trades than short intraday moves.

I have PM'ed NihabaAshi and asked him to join this discussion. I would greatly like to hear his view on this.

If anyone does use candles intraday, it would be great if they could post charts of examples they have traded on an intraday basis.

(F. d'Anconia, "Hapa" is indeed a local Hawaiian band and I am a fan! The term "Hapa" basically means "half," and in Hawaii refers to someone who is of mixed racial heritage. Hawaii is the most ethnically mixed state in the Union, I believe, and is the only state where minorities, especially Asian-Americans, outnumber Caucasians, referred to locally as "Haoles.")
 
Quote from hapaboy:

Interesting responses. Thanks to all for contributing thus far. It would seem candle patterns are considered more for mid- to long-term trades than short intraday moves.

I have PM'ed NihabaAshi and asked him to join this discussion. I would greatly like to hear his view on this.

If anyone does use candles intraday, it would be great if they could post charts of examples they have traded on an intraday basis.

(F. d'Anconia, "Hapa" is indeed a local Hawaiian band and I am a fan! The term "Hapa" basically means "half," and in Hawaii refers to someone who is of mixed racial heritage. Hawaii is the most ethnically mixed state in the Union, I believe, and is the only state where minorities, especially Asian-Americans, outnumber Caucasians, referred to locally as "Haoles.")
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I don't think this is true at all - I use candles intraday and have for many years. I think candles work on ANY timeframe, just as most indicators work on any timeframe.

The problem most have is calculating the move that will result from a signal in proportion to the timeframe. In other words, using candles and trading a signal on a 5-min timeframe will yield a move suitable for scalping. But, if you are looking for a longer move that is not over in 15-minutes, you better be looking for candles on a 60-min or daily chart.
 
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