I thought this was a bullish hammer, but I guess I was wrong (pic)

[IronFist]

Quote from NihabaAshi:

Hi IronFist,

It's not a bullish dark hammer pattern.

What is the difference between dark hammer patterns and white hammer patterns? One of the definitions for "hammer" I found on line said:

A small body (white or black) that closes near its high with a long lower shadow.

...which made me think that as long as the shape was right, it didn't matter if it was a black or a white body.

You may want to try to find a source for what is a valid bullish dark hammer pattern.

When you say "dark" hammer pattern you mean because it was a red candle and not green, right?

 

[IronFist]

Even here it says for a bullish hammer pattern that the color of the body is not important.

http://www.hotcandlestick.com/directory/Bullish Hammer.htm

I must be missing something obvious...

 

[brownsfan019]

Fist - that was a hammer by textbook definition.

Again, it comes down to how/when you would have traded it. As I said, the entry part of this equation is very important as there are a variety of ways the trade could have played out:

1) Buy at the market > probably stopped in the same day.

2) Put a buy stop above the hammer's close > no fill. No harm, no foul.

3) Buy somewhere in the body/shadow of the hammer > you got your ideal fill, now it's how you manage the trade. Of course, in this method you WANT price to FALL and then go UP. Seems counter-intuitive to me.

And regardless of how you trade this, there WILL BE HAMMERS THAT FAIL. Whether you use the textbook hammer definition or not, they all fail at some time or another. Nothing is bullet proof.

 

[TudorJones]

Candlesticks are more useful in trading RICE. It's intended use to begin with... i KNOW !!!

 

[IronFist]

Quote from TudorJones:

Candlesticks are more useful in trading RICE. It's intended use to begin with... i KNOW !!!

Candles measure OHLC of the day. I don't think they're specific to a given market

 

[hypostomus]

It's an old quote about not trying to guess bottoms: "Don't try to catch a falling knife."

 

[TudorJones]

Quote from IronFist:

Candles measure OHLC of the day. I don't think they're specific to a given market

You are right... they can be used in any market. But, to be used with SUCCESS is a different case. You must use them only in Statistically Significant markets.

 

[Spooz Top]

Quote from IronFist:

Even here it says for a bullish hammer pattern that the color of the body is not important.

http://www.hotcandlestick.com/directory/Bullish Hammer.htm

I must be missing something obvious...

the color of the hammer is unimportant......but what`s more important is that a hammer is a hammer until it negates it`s bullish pattern......or when it fails.

each pattern is just a probability & nothing more....it can go with you or against you so be prepared for both....no pattern/bar set up is 100% & never will be.

 

[brownsfan019]

Quote from Spooz Top:
each pattern is just a probability & nothing more....it can go with you or against you so be prepared for both....no pattern/bar set up is 100% & never will be.

Thanks, that's what I was trying to say.

 

[brownsfan019]

The other part of the equation Fist is what you do (if anything) when a pattern fails. Some would say reverse, some say nothing.

It looks like you have A LOT of studying to do if you plan to trade candlesticks. Just looking for a picture that resembles something you found on a free website won't cut it in the long run. You have to understand the dynamics of what you are trading and why.

So coupled with your basic candlestick analysis (visual) you need to define your entry criteria, initial stop criteria, initial profit target(s) criteria and your plan B (if it fails) criteria.

Just looking for the picture is going to be a tough battle to win over the long haul. This is why there are posts here that say hammer or other candle patterns fail. Just seeing the picture is only the beginning to actually attempting to trade candlesticks for profit.