moonmist,
I completely agree.
The more traders that understand that they
must understand the price action that they're trading
prior to the appearance of their trade signals...the more reliable their trade signals will be.
Its easy to see who these traders are that don't understand the price action being traded...they are the ones that concentrate solely on their trade signals...tweaking, changing parameters and so on.
That's the main reason why computer codes, automation of Japanese Candlestick patterns aren't reliable...there's
no market context. Its also the primary reason why traders that understand market context will outperform traders without market context while both using the exact same trade signals. Thus, traders that fail at using Japanese Candlestick Analysis, either don't understand market context or have an inadequate trading plan or both.
Simply, I recommend to any trader that if he/she does not understand market context and does not have an adequate trading plan (e.g. proper money management, proper capitalization, proper position size management, discipline, proper trading environment and so on)...save your money and go find another career.
Quote from moonmist:
IMHO:
The reliability of a candlestick pattern depends on a lot of factors:
a) Context:
A trader would need a lot of experience to read the context of the market correctly ...............
http://www.elitetrader.com/vb/showthread.php?s=&postid=2845881&highlight=context#post2845881
http://www.elitetrader.com/vb/showthread.php?s=&postid=3693806&highlight=context#post3693806
b) Personality of the trading instrument:
CL is a running market, while ES is a congested market. Breakout patterns eg. ascending/descending triangle would be more likely to succeed for CL, while reversal patterns, eg. double top/bottom, would be more reliable for ES. The first thirty minutes of the pit session is usually a good time to make money for ES and CL. As pointed out by Handle123, the last thirty-five minutes of the pit session is great for ES scalping. However, NoDoji did remark that the last thirty minutes of the pit session is not good for CL trading...
