The Perpetuated Fraud of Candle Charting
- Thread starter Fleming Snopes
- Start date
Completely Agree.
Summary:
* It's human nature to change something in an effort to improve upon the original nor is it fraudulent to make such a change.
* Reliability doesn't change amongst different intervals.
* Every different interval has price noise.
* Most traders using candlestick charts are not using Japanese Candlestick patterns.
* Each Japanese Candlestick pattern has sub-groups and those sub-groups have dramatically different reliabilities (see my earlier discussed Bullish White Hammer pattern example in this thread).
* Generic common candlestick patterns from the typical Japanese Candlestick book aren't reliable and should only be viewed as dictionary like terms. Do not apply these generic common patterns all by themselves to real trading because they are not reliable for such.
* Reliability of Japanese Candlestick patterns dramatically changes when combined with another trading approach (e.g. s/r levels or zones) along with money management, market experience, discipline, trade management et cetera.
* Those that bash candlestick charts in favor of bar charts is illogical considering both charts are using the exact same data set.
* Those that bash Japanese Candlestick patterns are mostly backtesters or traders that made the newbie mistake of using those generic common patterns...these are the same folks that have excuses why they don't test it the way profitable traders apply Japanese Candlestick patterns. Once again for those with memory lapse, profitable traders do not apply Japanese Candlestick patterns all by itself (no other trade method) nor do profitable traders use those generic common patterns.
Simply, if someone wants to discredit Japanese Candlestick patterns or have their research viewed with merit...don't use those generic common patterns all by itself as the basis of your debate or research.
* TraderZones commentary is really about technical indicators (e.g. macd, rsi, stoch, cci et cetera) and not about technical analysis because he's on record here at ET stating many times that he finds value in s/r levels, trendlines along with the fact that he does use a chart...all of which is TA. However, he just enjoys yelling fire.
The above summary covers many years of discussions here at EliteTrader.com and if you want more details about anything said above...use the below links.
http://www.elitetrader.com/vb/search.php?s=
http://www.google.com
Mark
Yeah, like in the thread where I provided evidence the H&S pattern(as defined in 8 TA books) does not work in practice. then the mod went ahead and edited my OP(I had never seen that before, and I'm here since 2002) to write how he is not giving up in his TA religion because 'you are supposed to antecipate the H&S', so he essentially agreed the pattern doesnt work. When presented with contrary evidence, you want to close your eyes, that sounds like an awesome idea
Candle patterns do not work, and this is based on empirical tests performed by statisticians(check out Practical Speculation). Since they dont work one could say 'but I found/created some that do', if you keep testing long enough of course you will find stuff that works, its called curve fitting, doesnt mean it will work in the future although it can help in that regard.
The point is since most candle patterns dont work this shows that the idea that the 'japanese old traders were so wise and one can get rich from their stuff' is junk. So trying to find ones that do work might just get you fooled by randomness because you will be trading in a flawled trading theory
Daal,
Please stay away from those generic common candlestick patterns and do not use them all by themselves. Seriously, I don't understand why some of you folks have this infactuation with the generic stuff and why insist on testing or trading it all by itself via some canned code or any code.
My guess is someone here at ET or somewhere online elsewhere got underneath your skin via telling you that the generic stuff works and that they don't use anything else...is that what happen ?
If so, send him/her my way, I'll straighten that person out for you via some stats, +20 years market experience and some real time trading examples showing the stuff not working (I'll ignore the stuff that do work).
Simply, we basically agree with you but you need to realize it's time to move away from the generic stuff you seem to base you debates upon...it's old news.
With that said, you got to give the Japanese folks some love...they are the first to invent many things that you probably use every day in life. They are more wise than you think.
http://en.wikipedia.org/wiki/List_of_Japanese_inventions
P.S. Japanese rice traders NEVER said one can get rich from trading via Japanese Candlesticks so stop using that argument as part of your debate. They used it to find a fair value as changes occurred in supply/demand of rice or any other commodity.
Mark
Quote from NihabaAshi:
Daal,
Please stay away from those generic common candlestick patterns and do not use them all by themselves. Seriously, I don't understand why some of you folks have this infactuation with the generic stuff and why insist on testing or trading it all by itself via some canned code or any code.
You telling me I should focus in the patterns you are selling in your website and not the ones that populates 95% of the books on candle patterns that hurt people everyday?Please
They may hurt people everyday because those very people are TOO DAMN LAZY to learn how to structure price so that can actually READ these bar patterns correctly.
It amazes me that so many of you do not seem to understand that you cannot JUST look at a bar/candle pattern and expect price to consistently move accordingly.
It amazes me that so many of you do not seem to understand that you cannot JUST look at a bar/candle pattern and expect price to consistently move accordingly.
I'm telling you to read some of the freely discussed stuff about how to properly use Japanese Candlesticks here at ET or any other forum. After you've read it...ask for more details and I've seen many folks (including myself) cough up more details (freely) if you come across as someone with a sincere interest to learn and be objective.
However, I've seen you say several times you don't have the time for such along with other excuses which is a contradiction considering you seem to have time to continue the debate.
Seriously, do we need to talk about trades, economics, FED actions within the credit crisis to get you interested because you're not the only one that uses credit crisis info to help with trade decisions....that's my point...don't use candlestick analysis all by itself because there's a much bigger picture than that in today's markets.
Yet, something tells me you're not the objective type and you most likely don't have the ability to know when to stop debating with those that actually share commonalities with you (time for you to know do more research...hint).
Mark
Could you give us an example of any book that can educate a new trader to the level of making him profitable straight away? Do any books teach when to exit a trade? Having no exit strategy hurts people more than any single entry signal, be it Japanese candlesticks or Norwegian cloud patterns.
Candles very old method to work. I suggest you geeks try learn something new. When I hear someone talk about candles I know he loser.