Here is why I think candlestick patterns have no value: with example

This is a discussion on Here is why I think candlestick patterns have no value: with example within the Technical Analysis forums, part of the Methods category; Originally Posted by dbphoenix If you know someone who trades price without using any of the aids I mentioned, I ...

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Old Nov 3, 2016, 6:51am   #16
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Originally Posted by dbphoenix View Post
If you know someone who trades price without using any of the aids I mentioned, I look forward to learning who they are. It's always helpful to compare notes.
Is it? The more I compare notes with others, the more uncertain I become. I am reading less and less about what others do as I go along. Most of it is opinionated, including mine.
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Old Nov 3, 2016, 10:36am   #17
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personally I would not know how to trade without candle charts, to me everything is important in a candle: the open, the close, the length, where did it close and when...

In a down wedge of a bull I need a trend bull bar to go long confirming to me I am not the only one seeing it and there is participation in continuation....
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Old Nov 3, 2016, 10:37am   #18
 
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Is it? The more I compare notes with others, the more uncertain I become. I am reading less and less about what others do as I go along. Most of it is opinionated, including mine.
One of the chief advantages of trading without all the aids I listed is that opinion matters much less.
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Old Nov 3, 2016, 10:57am   #19
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They are an indicator of price, they are not price itself. But with that caution they are still useful, even if on a rolling basis, as long as you don't take them literally.

e.g. If I want to know it its raining outside, I can go out and directly feel the precipitation or I can look out the window to use an indicator - to see if passers-by have their umbrellas up. One gives a definite answer, the other gives an indication of a probable answer.
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Old Nov 3, 2016, 11:03am   #20
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Originally Posted by Fugazsy View Post
personally I would not know how to trade without candle charts, to me everything is important in a candle: the open, the close, the length, where did it close and when...

In a down wedge of a bull I need a trend bull bar to go long confirming to me I am not the only one seeing it and there is participation in continuation....

nu 4h
I entered 1 pip plus spread above that bar, a classic BOPB.

If it was the bar printed 4 bars before (bar with bear stick) I would not have entered because it would confirm to me a possible side way market was on the way instead.
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Old Nov 3, 2016, 11:35am   #21
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Originally Posted by dbphoenix View Post
One of the chief advantages of trading without all the aids I listed is that opinion matters much less.
I am not going to deny that you have shown me much, but your lines are subjective. There is nothing wrong with that, provided that you are happy with them. of course, but I don't, always agree with them and draw my own. TBH, I believe that most of us are like that. Personal opinion comes into drawing lines, as well.
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Old Nov 3, 2016, 11:46am   #22
 
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I am not going to deny that you have shown me much, but your lines are subjective. There is nothing wrong with that, provided that you are happy with them. of course, but I don't, always agree with them and draw my own. TBH, I believe that most of us are like that. Personal opinion comes into drawing lines, as well.
If one can track the course of demand and supply without them, there's no reason to use them. Few of the traders I come into contact with, however, are unable to judge demand/supply balances. Therefore they consistently trade in the wrong direction. For them, drawing a simple line is helpful.
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Old Nov 3, 2016, 1:19pm   #23
 
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Originally Posted by Fugazsy View Post
nu 4h
I entered 1 pip plus spread above that bar, a classic BOPB.

If it was the bar printed 4 bars before (bar with bear stick) I would not have entered because it would confirm to me a possible side way market was on the way instead.
So you entered based on the shape of the candlestick (I assume the chart is 4h), but that shape just happened to appear to you because you are in UK. If you were let's say in Spain there would be 1h offset, therefore the 4h candlestick would look different (not sure how much different, but is possible to check). So you would still make that decision? If would be different I don't think you would do the same. I'm not saying you are wrong, I'm just asking you the question. What do you think?

I don't really have proof that candlestick patterns are worthless, but I would like to see what are the win/loss ratios of people using them. Notice that money management and time plays a big role (ex.: your entry might be really bad but after a while turns your way and you win money). Either way I would like to know if you are happy to present some stats of your trades (win/loss ratio, average profit per trade, trades per day, average trade time and similar). Also let us know if you just do TA on candlestick or you take in account something else.

Thanks
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Old Nov 3, 2016, 1:35pm   #24
 
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Hi DB,

What do you think of PnF? It seems you don't talk much about this chart in Wyckoff discussion. Wyckoff used it to evaluate how many points a move could go. If this is the way to measure the distance, is there any scientific or logical reasons behind it, or just another subjective pattern thinking?

Regards,

abc
There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.
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Old Nov 3, 2016, 1:40pm   #25
 
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Originally Posted by dbphoenix View Post
There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.
Ok, thanks for the info.

The other day I've read this document https://www.fidelity.com/bin-public/...ointFigure.pdf which states that some patterns in p&f have 91% success rate, what do you think about it? Scam or not?
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Old Nov 3, 2016, 2:05pm   #26
 
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Ok, thanks for the info.

The other day I've read this document https://www.fidelity.com/bin-public/...ointFigure.pdf which states that some patterns in p&f have 91% success rate, what do you think about it? Scam or not?
I don't want to appear rude, but I really don't care enough about it to evaluate the research design, though if it's like most, there are probably so many holes in it that whatever conclusions are drawn may be baseless. I'd ask someone who really likes P&F and is successful with it, though how you'll know whether or not they are truly successful with it is another matter.

OTOH, if you're interested in it chiefly because you're disillusioned about candles, you may find my Wyckoff thread interesting. It's a strictly no-frills approach to trading.
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Old Nov 3, 2016, 2:26pm   #27
 
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I don't want to appear rude, but I really don't care enough about it to evaluate the research design, though if it's like most, there are probably so many holes in it that whatever conclusions are drawn may be baseless. I'd ask someone who really likes P&F and is successful with it, though how you'll know whether or not they are truly successful with it is another matter.

OTOH, if you're interested in it chiefly because you're disillusioned about candles, you may find my Wyckoff thread interesting. It's a strictly no-frills approach to trading.
Ok, thanks.
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Old Nov 3, 2016, 3:27pm   #28
 
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Originally Posted by dbphoenix View Post
There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.
Thank you DB. I would take a look on du Plessis. Your talk about the continuity of price does help me a lot in understanding Wyckoff.
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Old Nov 3, 2016, 3:29pm   #29
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So you entered based on the shape of the candlestick (I assume the chart is 4h), but that shape just happened to appear to you because you are in UK. If you were let's say in Spain there would be 1h offset, therefore the 4h candlestick would look different (not sure how much different, but is possible to check). So you would still make that decision? If would be different I don't think you would do the same. I'm not saying you are wrong, I'm just asking you the question. What do you think?

I don't really have proof that candlestick patterns are worthless, but I would like to see what are the win/loss ratios of people using them. Notice that money management and time plays a big role (ex.: your entry might be really bad but after a while turns your way and you win money). Either way I would like to know if you are happy to present some stats of your trades (win/loss ratio, average profit per trade, trades per day, average trade time and similar). Also let us know if you just do TA on candlestick or you take in account something else.

Thanks
But the key being - it is relevant to him, and him only as its his own interpretation of the information. If there is no information deemed of value it simply means no trade, so you may take a trade and he may not because you both have different "images" of the information. What you need is a way of understanding the story; how best can you interpret the meaning etc?. This is only one piece of the jig saw, so best not to get too hung up over it, or you will lose focus on all other important factors to being a consistent trader. (Not saying you are not - just in general)

Only my opinion of course.

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Old Nov 3, 2016, 3:39pm   #30
 
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Thank you DB. I would take a look on du Plessis. Your talk about the continuity of price does help me a lot in understanding Wyckoff.
If you're interested in Wyckoff, you may prefer de Villiers over du Plessis since de Villiers started the whole thing at about the same time that Wyckoff and Livermore were active.
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