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

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Old Nov 2, 2016, 7:43pm   #1
 
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Here is why I think candlestick patterns have no value: with example

The issue I see with candlestick charts is that the same values produce different charts if the time is offset. So a pin bar can be "produced" if you offset the time, but if you don't then there is no pin bar. So I was thinking... If I just offset the time by 1s/1m/1h can have different patterns, what is the point of looking at those patterns? Just because happened to be the right offset doesn't mean anything...

For example on the hour chart in a country that has +30m timezone offset, will see all hourly charts completely different. Same with the daily charts between countries, they are different in all countries. So what is the point if the patterns appears in some countries but not in others?

What do you think?

Image 1:
Check attachment of the same chart. On the left you can see the pin bar, on the right you cannot, but the chart is the same, just a bit of offset.

Image 2:
The candlestick are different between providers
- 1st Ig
- 2nd livecharts
- 3th investing

Notice:

- IG vs livecharts and investing: Ig has an extra tick highlighted in black. That happens because of the time offset.
- livecharts vs investing: bottom right images, you can see the differences in the candlesticks. They are almost the same, but not the same.

Image 3:
So what do you think about point and figure charts? They change based on trend change and not on time. Check out http://www.investopedia.com/articles.../03/081303.asp
Attached Thumbnails
2131f599-4d26-486f-a713-60839a0708ac.jpg   candlestick-2.jpg   082703_chart.gif  


Last edited by 30seconds; Nov 2, 2016 at 8:37pm.
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Old Nov 2, 2016, 8:30pm   #2
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. . .What do you think?
Hi 30seconds,
Welcome to T2W.

I think you make an extremely valid point that traders would do well to consider. For the very reasons you outline, intraday time based charts are largely an illusion, as there is no open or close in the market. I have long advocated the use of non time based charts such as Point & Figure, Renko and Kagi as they pretty much eradicate this problem to enable traders to focus more easily and clearly on price. That said, many traders love their Pin Bars, Hammers and Dragonfly Dojis etc., and don't take kindly to the likes of me telling 'em they're starring at the TA equivalent of fools gold! Of course, if they can make money trading them, and do so consistently, then that's a different matter and I take my hat off to them.

Good debut post.
Tim.
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Old Nov 2, 2016, 8:41pm   #3
 
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Originally Posted by timsk View Post
Hi 30seconds,
Welcome to T2W.

I think you make an extremely valid point that traders would do well to consider. For the very reasons you outline, intraday time based charts are largely an illusion, as there is no open or close in the market. I have long advocated the use of non time based charts such as Point & Figure, Renko and Kagi as they pretty much eradicate this problem to enable traders to focus more easily and clearly on price. That said, many traders love their Pin Bars, Hammers and Dragonfly Dojis etc., and don't take kindly to the likes of me telling 'em they're starring at the TA equivalent of fools gold! Of course, if they can make money trading them, and do so consistently, then that's a different matter and I take my hat off to them.

Good debut post.
Tim.
Yes, exactly about the point and figure. I've been reading a book from a thread on trade2win that is exactly about point and figure, the one that goes really deep into it.

Anyway I think the charts that are affected the most are the daily in each country. For countries that have offset that is not multiple of 1h but multiple of 1m will have issues on the hourly, 30m, 15m, 10m and 2m...

I saw even trader_dante mentioning using candlesticks on the hour and daily candles, and he is a reputable member of the trade2win forum. I would like to know what is his opinion on this.
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Old Nov 2, 2016, 9:03pm   #4
 
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I don't want to offend anyone, but P&F, Renko, Kagi, "pinbars" and all the other filters we apply to evaluate "price action" are McGuffins. What matters is neither the interval (1m, 5m, 1h, etc) or the illustration (bar, candle, Renko, whatever) but rather the point at which price reverses. This morning on the NQ, for example, price reversed at 4768.5, and whether one uses a tick chart or an hourly chart is irrelevant. Traders are encouraged by "the industry" to be perpetually looking at the wrong thing in the wrong place for motives that should not be too difficult to unravel.
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Old Nov 2, 2016, 10:43pm   #5
 
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Originally Posted by dbphoenix View Post
I don't want to offend anyone, but P&F, Renko, Kagi, "pinbars" and all the other filters we apply to evaluate "price action" are McGuffins. What matters is neither the interval (1m, 5m, 1h, etc) or the illustration (bar, candle, Renko, whatever) but rather the point at which price reverses. This morning on the NQ, for example, price reversed at 4768.5, and whether one uses a tick chart or an hourly chart is irrelevant. Traders are encouraged by "the industry" to be perpetually looking at the wrong thing in the wrong place for motives that should not be too difficult to unravel.
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
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Old Nov 2, 2016, 11:21pm   #6
 
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Originally Posted by dbphoenix View Post
I don't want to offend anyone, but P&F, Renko, Kagi, "pinbars" and all the other filters we apply to evaluate "price action" are McGuffins. What matters is neither the interval (1m, 5m, 1h, etc) or the illustration (bar, candle, Renko, whatever) but rather the point at which price reverses. This morning on the NQ, for example, price reversed at 4768.5, and whether one uses a tick chart or an hourly chart is irrelevant. Traders are encouraged by "the industry" to be perpetually looking at the wrong thing in the wrong place for motives that should not be too difficult to unravel.
Very true, db. Don't the bars, candlesticks or whatever paint a picture of that reversal, though? If it is a meaningful reversal you might expect some downward momentum building up. As you see the price changing and that momentum building you know what the picture of it is going to look like for the period whilst it is going on (see the 15min at the reversal time).

There's nothing to say that will continue but a trader may judge the chances from observation of earlier instances and may trade it accordingly using the "picture" of the changing price over a period of the trader's choice?
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Old Nov 2, 2016, 11:35pm   #7
 
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By the time one has painted his picture, the reversal is already over. Which doesn't mean that the trader can't enter anyway, but he's much farther away from the reversal point and thus assumes greater risk. As to whether or not the reversal becomes "meaningful", that's a matter of management, not entry. And downward "momentum" may be surprisingly weak, as in the case of grind (slow pace, low activity, but an inexorable downward drift).

One of the chief advantages of trading price is being able to anticipate where the most likely trading opportunities will occur. This morning's reversal was anticipated since yesterday afternoon, but the fact of the reversal had nothing to do with how the trader chose to illustrate it.
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Old Nov 2, 2016, 11:43pm   #8
 
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Originally Posted by dbphoenix View Post
By the time one has painted his picture, the reversal is already over. Which doesn't mean that the trader can't enter anyway, but he's much farther away from the reversal point and thus assumes greater risk. As to whether or not the reversal becomes "meaningful", that's a matter of management, not entry. And downward "momentum" may be surprisingly weak, as in the case of grind (slow pace, low activity, but an inexorable downward drift).

One of the chief advantages of trading price is being able to anticipate where the most likely trading opportunities will occur. This morning's reversal was anticipated since yesterday afternoon, but the fact of the reversal had nothing to do with how the trader chose to illustrate it.
Yes, as I said, the chances of it being over comes from earlier observations. Perhaps it is a question of prefering some confirmation rather than trading a set level.

You say the reversal was anticipated - maybe it was and you could advances several technicals for where it might occur (50% of yesterday's fall for example) which would be apparent from the "illustration".
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