do candle sticks really work?
- Thread starter bat1
- Start date
That is an excellent point. Many, if not all, of the books on candlesticks warn not to use candles as a stand-alone system, they are a tool to be used. My guess is that the people that say they do not work, were the same people that saw a hammer, buy it, and watch it be a loser. You must give consideration to the overall picture. A simple strategy is to use support and resistance, be it traditional pivots, something from market profile, or whatever. Using what you have defined as support and resistance in combination of candle pattens COULD be successful.
Not so, though they both collect the same OHLC data. Candlesticks present the data in a more readily visual form, emphasising certain market action that would be easily missed using OHLC bars. Candlesticks inherently demonstrate the size, location and price direction in the real body, plus its relation to preceding real bodies. These formations are useful but are concealed rather than demonstrated by OHLC bars. This allows formations such as bearish engulfing patterns to indicate potential reversal points that OHLC bars would not, assuming no new highs or lows had printed. The value of candlesticks over OHLC bars is demonstrated by the relative levels of terminology derived from each - what is the OHLC bar equivalent name for a doji, or a harami, a shooting star or dark cloud cover?
The original poster is correct. Candlesticks no longer "work"
I believe they are "broken"...I have no idea who broke them but clearly someone should return them and get a refund.
I will be out of town this weekend or I would do it for you..
Thanks for catching that before we wasted our time trying to use them...
Good luck
Steve
I believe they are "broken"...I have no idea who broke them but clearly someone should return them and get a refund.
I will be out of town this weekend or I would do it for you..
Thanks for catching that before we wasted our time trying to use them...
Good luck
Steve
If you understand "PRICE" as it relates to FEAR and GREED of the players.................then even a simple LINE chart would be all you need.
KISS works, always has always will simple because a price chart is a reflection of the traders emotions..............and we all know humans have NOT advanced from the "FIGHT or Flight" stage.
If man was more advanced in that regard.........then computers and software would be the answer. Not gonna happen folks.
Learn to trade or fade away. The % of winners to losers has not changed in over a 100 years............that tells the whole story.
KISS works, always has always will simple because a price chart is a reflection of the traders emotions..............and we all know humans have NOT advanced from the "FIGHT or Flight" stage.
If man was more advanced in that regard.........then computers and software would be the answer. Not gonna happen folks.
Learn to trade or fade away. The % of winners to losers has not changed in over a 100 years............that tells the whole story.
This thread will easily confuse any new trader about Japanese Candlesticks or Candlestick charts because there are two main conversations occuring in this thread...
* Do Japanese Candlestick patterns provide any useful trading info to help a trader profit ???
* Do Candlestick charts have an advantage over Bar charts, Line charts, PnF charts or any other type of charts ???
Lets talk chart types.
Most traders that use candlestick charts do not trade via Japanese Candlestick patterns.
Simply, they are using candlestick charts because the prefer this type of chart over other types of charts for whatever reason.
However, from my own personal experience and via discussions with other traders...
I can see the changes in supply/demand much faster via candlestick charts in comparison to using bar charts or any other charts.
Regardless, as bighog saids, if you understand the price action...
It really doesn't matter what type of chart you use.
Yet, candlestick charts first caught my eye because they look pretty in comparison to bar charts.
Lets talk patterns.
* Don't use Japanese Candlestick patterns to define the price action.
Thus, you should already understand the price action before the appearance of any Japanese Candlestick pattern or any other type of pattern signal.
* Don't use Japanese Candlestick patterns alone as in all by themselves.
In fact, they should only be used as confirmation only to what you already know about the price action or as a confirmation to your primary method.
* Trade Management after Entry involving Japanese Candlestick trade signals is critical along with having a big impact upon the reliability of any candlestick pattern.
* All books show only the generic (basic) Japanese Candlestick patterns.
Thus, only use Japanese Candlestick books as a dictionary or definition source.
* Every Japanese Candlestick pattern can be broken down into sub-groups.
For example, I've documented about 15 different types of Bullish White Hammer patterns...
12 of them are not reliable via how I trade them but may be reliable for someone else that has a different market approach.
* Stay away from the candlestick pattern recognition computer software or codes because they involve the generic patterns...
Stuff I wouldn't risk one penny on.
Thus, Japanese Candlesticks is suitable only for discretionary traders and you should only learn them without the assistance of some computer code.
* Don't try to learn all nor a lot of Japanese Candlestick patterns.
Select one or two patterns only and spend a few years mastering it.
Good place to start are any candlestick pattern thats part of the Long Shadow Family (e.g. Bullish White Hammer pattern, Bearish Dark Inverted Hammer pattern, Bullish Long Legged Doji pattern et cetera).
* Time frame has no impact on the reliability.
This gets back to understanding the price action prior to the appearance of any pattern signal.
Therefore, the 1min chart is just as reliable as the Daily chart.
However, you can use time frame to control the number of pattern signals you get.
Thus, does have an impact on the number of pattern signals you get.
Ignore any of the above...
Eventually you'll show up somewhere online to say Japanese Candlesticks patterns are useless or don't work. :eek:
By the way, they work well for me as clues to enter a particular price action only if I understand the price action prior to the appearance of the clue.
Simply, I'm also saying that just because you get a valid Japanese Candlestick pattern...
It doesn't imply it's tradable which is something many backtesters of Japanese Candlesticks have difficulties with.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term and Martial Arts term
* Do Japanese Candlestick patterns provide any useful trading info to help a trader profit ???
* Do Candlestick charts have an advantage over Bar charts, Line charts, PnF charts or any other type of charts ???
Lets talk chart types.
Most traders that use candlestick charts do not trade via Japanese Candlestick patterns.
Simply, they are using candlestick charts because the prefer this type of chart over other types of charts for whatever reason.
However, from my own personal experience and via discussions with other traders...
I can see the changes in supply/demand much faster via candlestick charts in comparison to using bar charts or any other charts.
Regardless, as bighog saids, if you understand the price action...
It really doesn't matter what type of chart you use.
Yet, candlestick charts first caught my eye because they look pretty in comparison to bar charts.
Lets talk patterns.
* Don't use Japanese Candlestick patterns to define the price action.
Thus, you should already understand the price action before the appearance of any Japanese Candlestick pattern or any other type of pattern signal.
* Don't use Japanese Candlestick patterns alone as in all by themselves.
In fact, they should only be used as confirmation only to what you already know about the price action or as a confirmation to your primary method.
* Trade Management after Entry involving Japanese Candlestick trade signals is critical along with having a big impact upon the reliability of any candlestick pattern.
* All books show only the generic (basic) Japanese Candlestick patterns.
Thus, only use Japanese Candlestick books as a dictionary or definition source.
* Every Japanese Candlestick pattern can be broken down into sub-groups.
For example, I've documented about 15 different types of Bullish White Hammer patterns...
12 of them are not reliable via how I trade them but may be reliable for someone else that has a different market approach.
* Stay away from the candlestick pattern recognition computer software or codes because they involve the generic patterns...
Stuff I wouldn't risk one penny on.
Thus, Japanese Candlesticks is suitable only for discretionary traders and you should only learn them without the assistance of some computer code.
* Don't try to learn all nor a lot of Japanese Candlestick patterns.
Select one or two patterns only and spend a few years mastering it.
Good place to start are any candlestick pattern thats part of the Long Shadow Family (e.g. Bullish White Hammer pattern, Bearish Dark Inverted Hammer pattern, Bullish Long Legged Doji pattern et cetera).
* Time frame has no impact on the reliability.
This gets back to understanding the price action prior to the appearance of any pattern signal.
Therefore, the 1min chart is just as reliable as the Daily chart.
However, you can use time frame to control the number of pattern signals you get.
Thus, does have an impact on the number of pattern signals you get.
Ignore any of the above...
Eventually you'll show up somewhere online to say Japanese Candlesticks patterns are useless or don't work. :eek:
By the way, they work well for me as clues to enter a particular price action only if I understand the price action prior to the appearance of the clue.
Simply, I'm also saying that just because you get a valid Japanese Candlestick pattern...
It doesn't imply it's tradable which is something many backtesters of Japanese Candlesticks have difficulties with.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term and Martial Arts term
Just so that you will now know and for what it's worth, in the country where candlestick charts originated most printed charts still use candlesticks, but very few Japanese any longer use candlestick patterns in their TA.
I've heard that before as well, but yet to see anything that actually substantiates this other than 'I heard...'
Is there anything out there confirming this hearsay?
>brownsfan019
I can assure you that it's more than 'hearsay' that 'I heard'
in the '41 years' that I've been living here in Japan!!