how to understand the reliability of a bull candle?

This is a discussion on how to understand the reliability of a bull candle? within the Technical Analysis forums, part of the Methods category; i thought there would be some form of reliable prediction, not just some randomness. It kind of seems like the ...

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Old Aug 16, 2012, 6:04am   #11
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Re: how to understand the reliability of a bull candle?

dotcom started this thread i thought there would be some form of reliable prediction, not just some randomness. It kind of seems like the theory of probability. It's hard to accept that the market is completely random. Is their not some fixed set up? some way of sure prediction, other than its bad habits?

after i asked this question, i started reading more on charts, so far i only know what each candles mean. But have yet to understand how to predict the next move. What does last weeks ups and downs have to do with predicting today's moves? (i think i get it now) is it just a manipulation? if things are based on fundamentals, why not just give good word and keep things up?
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Old Aug 16, 2012, 4:57pm   #12
 
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Re: how to understand the reliability of a bull candle?

It's been a while since I have posted but I needed time to test before I would be able to contribute. I was extremely hopeful that I could swing trade Nasdaq stocks with candles as my in and out signals along with a variety of other technicals and so I programmed a fairly elaborate system and backtested many setups. I was trying to profit from direction changes. I discovered that it is possible to eek out some money from the method but the drawdowns are killer and I couldn't take the heat.

Along the way I found out that trades a little longer and following established trends fits my ulcer better. I use my candle knowledge to see signs of trend degradation but my entry and exists are based on pivot lines and MAs now. I usually beat the candles to the punch this way. Best of luck to you all.
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Old Aug 16, 2012, 6:27pm   #13
 
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Re: how to understand the reliability of a bull candle?

Quote:
Originally Posted by dotcom View Post
i thought there would be some form of reliable prediction, not just some randomness. It kind of seems like the theory of probability. It's hard to accept that the market is completely random. Is their not some fixed set up? some way of sure prediction, other than its bad habits?

after i asked this question, i started reading more on charts, so far i only know what each candles mean. But have yet to understand how to predict the next move. What does last weeks ups and downs have to do with predicting today's moves? (i think i get it now) is it just a manipulation? if things are based on fundamentals, why not just give good word and keep things up?
I gather from your writing that English is not your first language but I think you are asking why you cannot predict the future from past candle formations ?
The honest answer is that if "we" knew, how to do that, we would all be rich.
The past is no guarantee of the future. We see a candle shape (pick one) and guess a direction. Sometimes it works; sometimes not : Hence stop losses.
Add psychology, favoured approaches, various technical approaches, variance of opinion among traders, lultz, con artists, and you will realise that trading is not something you pick up by osmosis but by actually doing and moulding yourself to a trading approach. This is only a portion of why candles or pitchforks do not make everyone rich but at this point I have lost interest and need some food.
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Old Aug 16, 2012, 6:32pm   #14
 
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Re: how to understand the reliability of a bull candle?

Quote:
Originally Posted by dotcom View Post
i thought there would be some form of reliable prediction, not just some randomness. It kind of seems like the theory of probability. It's hard to accept that the market is completely random. Is their not some fixed set up? some way of sure prediction, other than its bad habits?

after i asked this question, i started reading more on charts, so far i only know what each candles mean. But have yet to understand how to predict the next move. What does last weeks ups and downs have to do with predicting today's moves? (i think i get it now) is it just a manipulation? if things are based on fundamentals, why not just give good word and keep things up?
There is a way to determine reliability (although never certainty), but it's not something you can extract from the one candle itself. You need to know so much more. And even if you can get to that point where you can know reasonably well which to take and which to not take, you'll still have a mammoth task of exits to deal with.
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Old Aug 16, 2012, 7:44pm   #15
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Re: how to understand the reliability of a bull candle?

dotcom started this thread
Quote:
Originally Posted by numbertea View Post
It's been a while since I have posted but I needed time to test before I would be able to contribute. I was extremely hopeful that I could swing trade Nasdaq stocks with candles as my in and out signals along with a variety of other technicals and so I programmed a fairly elaborate system and backtested many setups. I was trying to profit from direction changes. I discovered that it is possible to eek out some money from the method but the drawdowns are killer and I couldn't take the heat.

Along the way I found out that trades a little longer and following established trends fits my ulcer better. I use my candle knowledge to see signs of trend degradation but my entry and exists are based on pivot lines and MAs now. I usually beat the candles to the punch this way. Best of luck to you all.
is there a way to predict the trend degradation or do you just wait to see where it goes? and from their you look at everything else?
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Old Aug 16, 2012, 8:04pm   #16
 
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Re: how to understand the reliability of a bull candle?

I let the market consolidate, lengths of this differ. Then I observe a Support / Resistance line above the consolidation. I wait for market to penetrate the resistance. I buy in. I use a SMA under the market as my stop loss. When it is crossed and stock closes underneath, I get out. My program screens for some MAs I choose to be in order and the SR line to be crossed upwards. That is my in. Out of 500 Nasdaq stocks I screen an average of 1 a day hits. As many as 5 have hit same day. I only use daily bars. When my exit MA is crossed going down I get out so I don't predict anything, the trend is changed, the MA shows this. I'm done with guessing, it's too expensive.
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Old Aug 16, 2012, 11:29pm   #17
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Re: how to understand the reliability of a bull candle?

dotcom started this thread
Quote:
Originally Posted by numbertea View Post
I let the market consolidate, lengths of this differ. Then I observe a Support / Resistance line above the consolidation. I wait for market to penetrate the resistance. I buy in. I use a SMA under the market as my stop loss. When it is crossed and stock closes underneath, I get out. My program screens for some MAs I choose to be in order and the SR line to be crossed upwards. That is my in. Out of 500 Nasdaq stocks I screen an average of 1 a day hits. As many as 5 have hit same day. I only use daily bars. When my exit MA is crossed going down I get out so I don't predict anything, the trend is changed, the MA shows this. I'm done with guessing, it's too expensive.
i understand this, i think. So i have to wait for a break in support and resistance and based on the direction of the break, i go that way. May i have a refresher on what an SMA and MA's is (im searching right now anyways), what do you mean by "When it is crossed and stock closes underneath", and what you mean by "I choose to be in order and the SR line to be crossed upwards" (what do you mean by crossed is the real question. are you just referring to the candles going up and down?)


also on EUR/USD i noticed that it goes up or down dramatically every night/morning between 12 pm and 7 am (1 -3 am being more prominent). What are your thoughts on that? (just thought i'd asked, im assuming your trading in this - just curious on what runs through your head when you see that)
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Old Aug 17, 2012, 6:07pm   #18
 
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Re: how to understand the reliability of a bull candle?

By SMA and MA here I mean simple moving average. While trying to learn the basic linguistics of stock trading I found the Investopedia website an indispensable resource.
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Old Aug 17, 2012, 6:26pm   #19
 
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Re: how to understand the reliability of a bull candle?

normally, you can tell how reliable a bull candle is by watching what happens after it occurs.
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Old Aug 17, 2012, 8:26pm   #20
 
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Re: how to understand the reliability of a bull candle?

if you set your chart background to black,
and then change the settings for Up candles to black,
and for Down candles to, err black,
you will find that Bull candles are very reliable
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