Learn More about Candlestick Trading

Quote from cashmoney69:

:mad: ... UGH, DAMN file...

I track the semiconductor industry on a daily basis in its 5 parts:

broadline integrated
specialized
equipment/materials
memory chips

I also follow the:

NASDAQ
QQQQ
S&P 500
DOW
SOX.X (the semi sector)

on a daily basis as well and write down their daily flucuations.



------------

Because Intel is the only stock i follow 99% of the time, I write down its historic data everyday, and every 3 days, I average that data as you'll see below.

Intel historic data ( started 4/3/06)

date open high low close

4/25 18.94 19.20 18.75 19.06
4/26 19.15 19.58 18.60 19.49
4/27 19.35 20.20 18.60 20.08


Average OHLC data for these three days listed below:

4/25-4/27 19.47 19.57 19.29 19.37

- nathan
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I just wanted to add that, as of a few days ago, I no longer follow just one stock. Just like investing, its important to diversify.

Money center bank stocks and National broker firms are also on my list.

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about candles, Right now, as some may already know, I like to hold a stock for 3 days to a week. My problem is that I cant decide what chart to look at.

1) the 6 week chart shows more information and gives me a wider view of how the stock is moving, but the candles are small and harder to find patterns

2) The 4 week chart doesn't show as much, but the candles are easier to read. But for some reason I feel that the more I can see, the better.

3) the 5 day chart. I see how the stock is moving in one week (my maximum holding time), but I miss out on key s/r levels, reversals, and so on, on a longer time frame

4) 3 days. Major s/r levels and other important information is not shown, but at the same time, 3 days is my minimum holding period.

should I concentrate ONLY on a 3 / 5 day chart ? or should I look further out?

I spend my trading day changing between these many time frames and its getting annoying.

- nathan
 
Excellent question.
It's been my dilemma (one of them anyway) for years. I like hitting singles with my trading and want to find some consistency.

Don't need to be spoon-fed, but would be interested to see what works for others.
 
Quote from cashmoney69:

I just wanted to add that, as of a few days ago, I no longer follow just one stock. Just like investing, its important to diversify.

Money center bank stocks and National broker firms are also on my list.

------
about candles, Right now, as some may already know, I like to hold a stock for 3 days to a week. My problem is that I cant decide what chart to look at.

1) the 6 week chart shows more information and gives me a wider view of how the stock is moving, but the candles are small and harder to find patterns

2) The 4 week chart doesn't show as much, but the candles are easier to read. But for some reason I feel that the more I can see, the better.

3) the 5 day chart. I see how the stock is moving in one week (my maximum holding time), but I miss out on key s/r levels, reversals, and so on, on a longer time frame

4) 3 days. Major s/r levels and other important information is not shown, but at the same time, 3 days is my minimum holding period.

should I concentrate ONLY on a 3 / 5 day chart ? or should I look further out?

I spend my trading day changing between these many time frames and its getting annoying.

- nathan
More...

For the trend & all sorts of techncial analysis, I solely look at daily & weekly chart. I don't need any chart which is longer than that.

I have no idea how to read 2-day, 3-day etc. chart! Is it just the same as what we do for daily chart? Why do we need to combine these days into 1? What make you feel it's better?

I also look at intraday chart, so I can pick a better entry & exit point.

Finally I have one question, why are you confined yourself to 3 days min and 1 week max.? Are you flexible at that?

I feel this is against a lot of trading principles like "stop-loss" & "let profit run" "follow the trend" etc.

The time you decide to stay should be answered technically, not just a fixed time period.

A very bad idea in my opinion. :(
 
Quote from WmWaster:

For the trend & all sorts of techncial analysis, I solely look at daily & weekly chart. I don't need any chart which is longer than that.

I have no idea how to read 2-day, 3-day etc. chart! Is it just the same as what we do for daily chart? Why do we need to combine these days into 1? What make you feel it's better?

I also look at intraday chart, so I can pick a better entry & exit point.

Finally I have one question, why are you confined yourself to 3 days min and 1 week max.? Are you flexible at that?

I feel this is against a lot of trading principles like "stop-loss" & "let profit run" "follow the trend" etc.

The time you decide to stay should be answered technically, not just a fixed time period.

A very bad idea in my opinion. :(
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Swing trading defined:
http://www.investopedia.com/terms/s/swingtrading.asp

The reason 1 week is my max is my patience begins to wear thin after 1 week. The reason for 3 days is because I pay 14 dollars r/t, so I need to hold for a while to make a reasonable gain.

Yes, I would be flexable..I'd hold more than a week if the stock was moving strongly, otherwise I'm not going to waste my time over a few cents.

I am still working and honing my style to an "edge" :) . I might decide to use 5 minute and 10 minute charts only..but like I said, I'm still searching for what I like best.

hope this helps :p

- nathan
 
Quote from NihabaAshi:

Yes...my reference about the subjectivity of TA concerns any topic when there's no specific rules.



Yet, its just secondary trading tool I use for confirmation to my primary method.

Last of all, I recommend all to re-read hcour comments especially if your a beginner trader wanting to get involved in understanding supply/demand, price action only trading or both.

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

You have been discussing lots of candlesticks formations and explain its use etc...but you use it as a secondary trading tool...what, then, is your primary method? Will you trade candlesticks all by itself? If no, are you saying that by itself, it has negative expectancy?

Thanks
 
Today, I have received similar promotions relatng candlestick trading:

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Good investing,

The Candlestick Forum Staff
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This shows that they are really telling you candlesticks can let you into big profits.
 
Knowledge of candlesticks is important - especially trading Asian instruments (as they are very widely followed there). Look at the yen (one of the best instruments in the world from an intraday candlestick traders perspective if you ask me) - pick the "right time frame" and candlesticks are a wonderful entry/exit tool. Greg Morrisons book suggests that candlestick patterns coupled with western style oscillators make an ideal trading system and that is how I trade. Their are very precise rules regarding each formation - and when I am in a 50-50 situation (ie get out or hold) I usually look at higher/lower time frame candlestick/oscillator studies and/or support resistance seen in swing hi/lo fractal top/bottoms (ie 3 highs, 2 lows - middle high is strong resistance that I mark on a chart.) to make up my mind.

Candlesticks must be seen in context (a hammer is useless in a sideways market but at the end of a trend is of note). When in correct proportion and symmetry, 1-2-3 candlestick patterns (ie next bar is higher lo/high and then following bar has got a lower hi/lo) if it comes at the end of a trend - could mean a reversal. The 4th bar will show all - and the oscillator study on the lower time frame will give clues about the fourth bar (ie H+S formation on oscillator on a lower time frame when it is happenning concurrently on a 4th bar 1-2-3 reversal is a sure sign the market up is exhausted.

Many times the oscillator is saying one thing and the candlesticks do not support that and vice versa - when they are in confluence it is a powerful signal. Both oscillator and candlestick (patterns) are leading indicators.
 
Quote from NZDSPeCIALISt:

Knowledge of candlesticks is important - especially trading Asian instruments (as they are very widely followed there). Look at the yen (one of the best instruments in the world from an intraday candlestick traders perspective if you ask me) - pick the "right time frame" and candlesticks are a wonderful entry/exit tool. Greg Morrisons book suggests that candlestick patterns coupled with western style oscillators make an ideal trading system and that is how I trade. Their are very precise rules regarding each formation - and when I am in a 50-50 situation (ie get out or hold) I usually look at higher/lower time frame candlestick/oscillator studies and/or support resistance seen in swing hi/lo fractal top/bottoms (ie 3 highs, 2 lows - middle high is strong resistance that I mark on a chart.) to make up my mind.

Candlesticks must be seen in context (a hammer is useless in a sideways market but at the end of a trend is of note). When in correct proportion and symmetry, 1-2-3 candlestick patterns (ie next bar is higher lo/high and then following bar has got a lower hi/lo) if it comes at the end of a trend - could mean a reversal. The 4th bar will show all - and the oscillator study on the lower time frame will give clues about the fourth bar (ie H+S formation on oscillator on a lower time frame when it is happenning concurrently on a 4th bar 1-2-3 reversal is a sure sign the market up is exhausted.

Many times the oscillator is saying one thing and the candlesticks do not support that and vice versa - when they are in confluence it is a powerful signal. Both oscillator and candlestick (patterns) are leading indicators.
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Sounds great!

What good books discuss this approach of candlestick trading?
 
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