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

[NihabaAshi]

Quote from Capablanca:

So NihabaAshi where did you learn all this candlestick stuff? The way you talk about candlesticks, it's as if it has all been codified and categorized, a candlestick taxonomy if you will. I don't think the most commonly available references on the subject do that to the degree you have. Are the candlestick categories you use ones you have created through your own experience or is there a reference for them?

From what I know of candlesticks the common interpretations for them are as likely to be wrong as right. No one school of trading thought I've encountered gives as much insight as a combination of them.

Hi Capablanca,

I have +15 years as a trader with the early years being a part time trader.

Only the basic (generic) candlestick patterns can be coded.

However, codes aren't going to resolve the issue that the price action must be understood prior to the appearance of any pattern signal.

This is how I approach Japanese Candlesticks via understanding the price action prior to the appearance of any pattern signals.

That's something coding cannot do.

Also, all I did was break down my favorite generic patterns into sub-groups.

For example, the Bullish White Hammer pattern has over a dozen different sub-groups and most aren't reliable for trading via my particular methodology although may be reliable for someone else that has a different approach to Japanese Candlesticks.

Therefore, I only trade just a few sub-groups of the Bullish White Hammer pattern and leave the other ones alone.

To answer your question directly, the sub-groups are via years of research on my own and I do not know of any sources outside of my own knowledge that has categorized the sub-groups beyond the generic parent of each pattern.

However, I strongly believe I can't be the only trader on this planet that has broken down many well known candlestick patterns into sub-groups.

As for the generic parent Japanese Candlestick patterns, any book about Japanese Candlesticks will do for basic knowlege and definitions.

Regardless to the pattern, they can be rule based and that means if one rule is not valid for a particular pattern...

It's not valid.

Thus, I really haven't experience any wrong or right to Japanese Candlestick Analysis as if there's subjectivity involved.

It's a very rule based approach and too many traders don't realize that.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term

 

[cashmoney69]

Quote from NihabaAshi:



I prefer to use them as confirmation signals to what I already understand about the price action as a price action only trader (no indicators).

I'm hoping this thread becomes a continuation of a prior Hammer thread called Tradin Hammers.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=18381

However, if you don't believe in the merits of using Hammer patterns or think they don't work...

Instead of just showing up and saying Hammers don't work (admitting you failed at using them when others have not)...

Please post a recent chart of a failed Hammer pattern.

Hopefully I or someone else that uses Hammers can reply with helpful insights if we see something wrong with that particular Hammer pattern in your chart example.

Yet, if your chart is stock chart...I myself will not provide any analysis of such because I do not trade stocks (equities) nor do I have an understanding of its price action mainly because I'm unable to watch its price action in realtime or I don't have any live-recordings of its price action.

However, that doesn't imply someone else cannot reply to your Hammer discussion in relationship to a particular stock (equity).

Simply, one of the keys to using Hammer patterns properly is to understand the price action prior to any trade signals.

Further, if you ask anyone that's participating in this thread about Hammers in general...please post a chart example of a particular pattern in question.

In addition, you can do a keyword search here at ET on any past posts that I've discussed Hammer patterns via typing either NihabaAshi Hammers or NihabaAshi Hammer in the below ET search menu...

http://www.elitetrader.com/vb/search.php?s=

I make it easier for someone to research my past comments on anything via intentionally typing my name at the end of each message post.

Once again...I do not recommend using candlestick analysis all by itself and it should be only used as a confirmation to what you already know or believe is occurring in the the current price action.

Something else, if your going to learn about Hammers or any other type of price action pattern via hindsight charts alone...

This is very difficult and can give some traders a false sense of understanding the price action that leads into the Hammer pattern and possibly sabotaging the ability to react to Hammers in realtime.



It's an excellent way of understanding the price action and learing how you interact with the market in realtime via any particular trading instrument.

NihabaAshi [/B]

NihabaAshi

What other candles do you like other than hammers?. Sometimes I find it hard to tell the difference between a hammer and a hanging man (if the candle appears to be in the middle of a chart) even though color doesn't matter.

I have a stock chart here, that maybe someone who trades stocks can comment on. This is WMT on a daily chart, is the lower shadow on the hammer supposed to mark strong support?

Also NihabaAshi:

"I prefer to use them as confirmation signals to what I already understand about the price action as a price action only trader (no indicators). "

A single hammer candle alone gives you a buy/sell signal?... is the candle, or first few candles after the hammer important to you?.

I'd like to understand more about price action like you without the use of indicators. Other than re-reading (but i probably will anyway) nison's book, is there a more effective way of doing so?.

I know you dont like giving analysis on hammers for stocks, but on my WMT chart, I circle some WRB's.. I was wondering if I could see where you'd mark support/ resistance, and talk to you more about wrb's.

CM

 

[NihabaAshi]

Quote from cashmoney69:

NihabaAshi

What other candles do you like other than hammers?. Sometimes I find it hard to tell the difference between a hammer and a hanging man (if the candle appears to be in the middle of a chart) even though color doesn't matter.

I have a stock chart here, that maybe someone who trades stocks can comment on. This is WMT on a daily chart, is the lower shadow on the hammer supposed to mark strong support?

Also NihabaAshi:

"I prefer to use them as confirmation signals to what I already understand about the price action as a price action only trader (no indicators). "

A single hammer candle alone gives you a buy/sell signal?... is the candle, or first few candles after the hammer important to you?.

I'd like to understand more about price action like you without the use of indicators. Other than re-reading (but i probably will anyway) nison's book, is there a more effective way of doing so?.

I know you dont like giving analysis on hammers for stocks, but on my WMT chart, I circle some WRB's.. I was wondering if I could see where you'd mark support/ resistance, and talk to you more about wrb's.

CM

H cm,

Here's my currently list of favorites that's different from a year ago.

Hammers, Engulfing, Harami and Long Legged Dojis.

Also, I don't analyze single candlestick lines (not reliable).

Yes, the intervals before and after are extremely important in any type of pattern signal regardless if your using Japanes Candlesticks or anything else.

In addition, the most effective way of learing price action only trading is to study how price reacts to FED commentary, key economic reports and other regular schedule market events.

As to those WRB's on your chart...the s/r zones are their bodies (price area between Close and Open of each WRB).

Your goal is to find out what caused those WRB's to give yourself an understanding about WMT price action.

If you don't know the reason (its not related to TA) behind the formation of those WRB's...your trading at a higher risk.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term