TY and I like the FU candle term as well
NoDoji's Day Trading Log
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I often in my head wondered about but never looked into why daytraders would use candlestick charts for daytrading. I mean in such a short time frame a simple bar chart which plots price by price alone tells you all you need to know. Price itself is not subjective, everything else is. A color change on a chart is nothing that price itself on a bar chart shows without making the bars color subjective to the user.
The USER him/herself has the job to decipher what has happened and attempts to use their skillset to relate the past to the future. (in my world the future is in the next bar, which is my only clue to how my anticipated move to the next level is shaping up)
I fully understand there are a ton of "CANNED" explanations why candlesticks are better than bar charts but never could grasp something that was not really there. Thats my take. what causes a color change? Yes, i know i can google all about candles but i am not looking for changing my work as much as wonderingwhy anyone would use a certain chart to decipher price action itself. Volume is useless to me because if price moved against me on a 10,000 volume per bar or just 10 the result is the same............price moved against me.
Any REAL good reason for candles?
Ok, done for now, Monaco Formula race is on SPEED. The grandest gran prix of all, fast cars, fast women, fast women loaded with money.
The USER him/herself has the job to decipher what has happened and attempts to use their skillset to relate the past to the future. (in my world the future is in the next bar, which is my only clue to how my anticipated move to the next level is shaping up)
I fully understand there are a ton of "CANNED" explanations why candlesticks are better than bar charts but never could grasp something that was not really there. Thats my take. what causes a color change? Yes, i know i can google all about candles but i am not looking for changing my work as much as wonderingwhy anyone would use a certain chart to decipher price action itself. Volume is useless to me because if price moved against me on a 10,000 volume per bar or just 10 the result is the same............price moved against me.
Any REAL good reason for candles?
Ok, done for now, Monaco Formula race is on SPEED. The grandest gran prix of all, fast cars, fast women, fast women loaded with money.
Color is irrelevant; the bars could be black and white or blue and yellow, no matter. But what I like about candles is they give me a very quick visual of a possible reversal setup, or a good entry point to catch part of a continuing trend.
This works in any time frame, as long as youâre using the time frame you're trading. For intraday trades of 1 minute to a couple hours, I prefer 3-minute charts, and 5-min charts work very well too. If considering a swing trade of 1 or more days, I would look at a 30-day daily chart.
As an example, here is one of my best "short" setups, indicated by the visual footprint the candles leave behind: I see a stock hitting the high ticker a large number of times, pull up the chart and notice an unbroken trend of green candles on increased buying volume. Since prices rise when demand exceeds supply, this leads me to believe that two things are happening: buy stops are getting hit, triggering short covering, causing some chasing in those who believe the price will go to the moon and they'll miss the ride, triggering more buy stops, more short covering, etc.
What happens at the top of a candle footprint like this is a quick pullback on exhaustion of buyers, coupled with smart profit-takers and short sellers selling into the buying strength. As soon as I see buying volume start to dry up on a run up like this, Iâm ready to short the first hint of a price pullback. I sell short with a stop just above the high of that entry bar. This provides a strong probability of success and a very minimized loss risk if I'm wrong.
The chart attached is a great example of this with OGXI Friday. It run up non-stop for over a week, pushed to new highs hard from the open, and late in the day came to my attention when it kept hitting the high ticker. I saw a decent series of green candles on reasonable buying volume. The minute the buying volume dried up and price pulled back a smidge, my sell order was in, good for a very quick 1.00 move if only shares had been available.
Yes, and don't forget it's flipped brother from down under, the "up-yours candle", otherwise known as the hammer
Other than the downside of commissions due to frequent entries and exits, and fees due to using market orders, this strategy works well in my experience.
And yes, colored candles are irrelevant. I prefer grey candles.
Quote from bighog:
Nod,
Thks for the answer. I think truth be known, the difference is really non existent between regular bar charts and candles. Even you said color is irrelevant but go on to say you were seeing green.I also like the color of money.
Bighog
I use candles as well â (my up/ down candles are literally in shades of grey)
But truthfully (other than the most basic patterns) â I could not tell you one âpatternâ from anotherâ¦
Candle charts are just want I learned on a few years back
Take Care Sir
RN
Thks, I just prefer to use the bar charts because they show the open tick, all in between swings during the formation of the bar (if you are focused and alert watching the price action) the high, the low and the close.
Thats all we need when we tie that in with the previous price action relative to our expectations as we anticipate a good result.
Colors be damned.
Thats all we need when we tie that in with the previous price action relative to our expectations as we anticipate a good result.
Colors be damned.
Someone recently asked me to post a screen shot of IB's Book Trader, so here it is.
I have 3 windows up at once, because 3 seems to be IB's limit and that is probably a good thing considering my level of deftness managing 3 trades at once.
You can see right away the importance of differentiating between right-click and left-click, of canceling the other side of a bracketed order once one side is lifted, and of double-checking quantities. These three things got me several times last week, but I definitely improved as the week wore on.
I have 3 windows up at once, because 3 seems to be IB's limit and that is probably a good thing considering my level of deftness managing 3 trades at once.
You can see right away the importance of differentiating between right-click and left-click, of canceling the other side of a bracketed order once one side is lifted, and of double-checking quantities. These three things got me several times last week, but I definitely improved as the week wore on.
+ $122
Still trading 100-200 shares. No order entry errors today!
Covered overnight BVN short at 27.27, oversold pivot: +$136. Nice gain for just 100 shares.
Short GIL @ 16.50, lower high, stop just above HOD. When GIL & SPY became oversold, moved stop to b/e, then covered @ 16.44, pivot off previous support: +$10
Short GIL @ 16.57, overbought, SPY overbought, stop above previous resistance. At the moving average, moved stop to b/e because this level would determine whether a reversal was actually established or whether there would be continuation of the previous trend up. Stop hit b/e.
Short GIL 16.56, pullback from failure to break previous resistance, stop above previous resistance. Exited @ oversold pivot when it found higher support: +$10
Short GIL @ 16.52, pullback from failure to break previous resistance, stop above previous resistance. When it broke previous support I expected a breakdown, but it again found support and buyers returned, so I covered for + $8.
(Good lord, talk about scalping a rangeâ¦)
Short ANR @ 25.99, pullback from overbought failure to make a new high, stop above HOD, hit -$36.
Short ANR @ 26.10, pullback from high, stop above HOD, hit for -$19.
Short ANR @ 26.64, pullback from double top, exited @ b/e when it found support above previous support. Looking to short again at a lower high, but that happened while I grabbed some tea, ha!
Short SYNA @ 36.19 pullback from 4th lower high of the day, trailed a limit to 36.03, figuring there would be a bounce just above the round number. Indeed there was a very quick bounce off 36.02 up to 36.38: +$15
NTAP looking good for a swing short to retrace a bit of that move up. Bought June $19 puts @ .55. Low risk trade, only $275 on the line, and a $500 gain is quite likely. (Chart attached)
This weekend I was thinking about placing double stops when theyâre just above the HOD to catch the follow through on invalidated trades and I forgot to try that today. It would have paid off nicely with ANR, especially with ANR having plenty of room to move up based on the daily chart still not far from oversold. REMEMBER TO CHECK THAT ANGLE!
Still trading 100-200 shares. No order entry errors today!
Covered overnight BVN short at 27.27, oversold pivot: +$136. Nice gain for just 100 shares.
Short GIL @ 16.50, lower high, stop just above HOD. When GIL & SPY became oversold, moved stop to b/e, then covered @ 16.44, pivot off previous support: +$10
Short GIL @ 16.57, overbought, SPY overbought, stop above previous resistance. At the moving average, moved stop to b/e because this level would determine whether a reversal was actually established or whether there would be continuation of the previous trend up. Stop hit b/e.
Short GIL 16.56, pullback from failure to break previous resistance, stop above previous resistance. Exited @ oversold pivot when it found higher support: +$10
Short GIL @ 16.52, pullback from failure to break previous resistance, stop above previous resistance. When it broke previous support I expected a breakdown, but it again found support and buyers returned, so I covered for + $8.
(Good lord, talk about scalping a rangeâ¦)
Short ANR @ 25.99, pullback from overbought failure to make a new high, stop above HOD, hit -$36.
Short ANR @ 26.10, pullback from high, stop above HOD, hit for -$19.
Short ANR @ 26.64, pullback from double top, exited @ b/e when it found support above previous support. Looking to short again at a lower high, but that happened while I grabbed some tea, ha!
Short SYNA @ 36.19 pullback from 4th lower high of the day, trailed a limit to 36.03, figuring there would be a bounce just above the round number. Indeed there was a very quick bounce off 36.02 up to 36.38: +$15
NTAP looking good for a swing short to retrace a bit of that move up. Bought June $19 puts @ .55. Low risk trade, only $275 on the line, and a $500 gain is quite likely. (Chart attached)
This weekend I was thinking about placing double stops when theyâre just above the HOD to catch the follow through on invalidated trades and I forgot to try that today. It would have paid off nicely with ANR, especially with ANR having plenty of room to move up based on the daily chart still not far from oversold. REMEMBER TO CHECK THAT ANGLE!
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