Understanding Candlestick Charts

[PaulTrader]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

 

[Scataphagos]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

1. Shorter time frames are less reliable. Suggest watching daily charts.
2. The most valuable/indicative patterns are the reversal ones... morning star, evening star, engulfing, hammer, hanging man, etc. Candle patterns are not especially definitive. Whatever you see in candle charts, you can also see in other places.

 

[Bad_Badness]

Time frame is arbitrary in the true sense of the meaning of arbitrary. So all formations that based on a particular form of a candle shape carry that burden of "arbitrary". So yes you are correct. Good observation.

To learn them, look at some time frame, say 5 minute, and then look at 10 minute and 15 minute.. At first use paper to learn how to form the shorter ones into longer ones. It will only take a couple of tries. Then be able to do this by just looking at them.

Often people only use a select few "forms". Usually, the ones that are directly related to Price Action. They don't actually look at the formation directly, but at the formation, as a historical record of what happened.

Also look and Renko and Kagi styles. Also point and figure. Once you learn all these, your survey of the Japanese styles will be pretty good. Then move onto Tick charts, and Range or Kase Charts. Then go back to a simple line charts.

With all of these, where applicable, note the volume of the item being formed.

Finally, note that historical information, as represented by charts, is only part of the information that is available. How the bar-candle is formed in real time is also VERY important. Some would say WAY more important, than just the Open-Close-High-Low, that are "recorded" in their formation. Kind of like the difference between listening to a recording of a song and watching the performers live. Same song, vastly different experience.

Regards.

 

[PaulTrader]

Thank you very much. The two of you were a great help.

 

[murray t turtle]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

%%
YES\ your logic is exactly correct\
but have to consider this also.
NOT many funds do that or even day trade all the time/ a few do.
But since you are not a market maker or specialist [i figure]\ most market millionaires are investors, so word to the wise.
Also Don Bright daytrading did not like 5 minute charts much \too slow + close to your example
Plus few if any real estate investors use candlecharts\ i never did \........
+ i use candlecharts in some markets.
Back to my multiyear candle charts. Some smaller time frames are considered noise.
But your logic is correct/partly; one metals dealer time stamps seconds+ minutes.

 

[PaulTrader]

Thank you much. I am learning a lot. I have some real estate but I want to move faster.

 

[countryBoy641]

The problem with candle charts is that people have a nasty habit of "jamming" tickets to create that candle. Usually that happens at the close, but it can be anywhere during the session.

That's the reason for oscillators or other MAs. They smooth out the manipulation.

 

[BKR88]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

Yes, if looking at candle-by-candle, the patterns will be different but if looking at multiple candles then a series of candles will likely give a similar bullish/bearish pattern but with different entries/patterns.
Below are 2 examples of what a peak could look like if the clock was adjusted slightly.
Both double tops.
Both give bearish patterns (bear engulf vs. 2 pin-bars) but might give different entries depending upon trading style.
Changing timeframes will also change the patterns so entries will likely be different again.

 

[maxinger]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

Talk about day trading.


Which time scale to use?
It depends on the market condition / situation / temperature / temperament ....

Sometimes, you use 5 seconds chart.
Sometimes, you use a 1/2-hour chart.
So be agile, and be adaptable.

There is no such thing as one-size-fits-ALL things.

 

[TheDawn]

I am a new investor. I see a lot of interesting data about Candlestick Charts. I have two questions about these charts. Is there a minimum time scale for these charts?

If I generate a candlestick chart at 10 minute time intervals and then generate a second 10 minute interval candlestick chart using the same data but with a 2.7 minute offset, other than the trends, candlestick behavior could be completely different. This new chart could remove or displace all of the key trigger handles. Is my logic correct?

Yes. Candlestick charts are just like any other charts. Its open and close price is based on time so if you change the time when you collect the open and close price then of course the candlestick is going to be different. Candlestick charts are just as continuous as any other charts; they just display all the PA in a more visually descriptive fashion.