Every candle tells a story...

JTrader

JTrader

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I've read various posters comments about how they can at times read the price action on a chart, like they could a piece of music.

So. this afternoon, I decided to really eyeball some candlestick charts, from left to right, and see what each candle told me, and how that message related to what followed.

I tried this on a few different instruments and timeframe.

What i have found is that my predictive interpretations of what each candle told me, based on the OHLC, and its relation to the previous and very recent candles, consistently unfolded on the following candles.

This would be extremely useful a skill, to use in real-time, as it would allow you to consistently and successfully, closely track the price action (trend and turns) for any given instrument.

Have a go for yourself. Just select any candlestick chart. Start at the left, and candle by candle work to the right. Think carefully about what each completed candle is telling you about what is happening in terms of the price, through the OHLC levels, and its relation to the OHLC of recently completed candles.

Try drawing up a few strict either/or criteria that must be met, for you to then enter or SAR at the open of the next candle (after a criteria meeting candle closes), that would have consistently allowed you to make a profit.........If this is possible, you are onto a winner!
 
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So, I am one of the guilty posters than makes the music analogy...

... for those who are interested, some examples of me "reading the music" to myself can be found in the thread "Mr. Gecko's Briefcase", along with some simple things to lookout for, and how I look to build a trade at the "crescendo"... Given all that, it doesn't always work. They're candlestick charts, not bl00dy tea leaves... It sounds ridiculous, but one needs to be "in the zone" and "in tune" with the market... difficult to describe, but something we have all experienced I'm sure.

As for the trading end, it helps if you have a good understanding of your market, and can access liquidity easily - my best result have been trading FX via ECN, where the spread is usually only a half to one pip, and you can get filled in and out in a matter of seconds.


http://www.trade2win.com/boards/first-steps/30825-mrgecko-s-briefcase.html


p.s.

yes, that Cold Feet ******* is getting on my nerves too!
 
Candles

I'm a candle reader too and I love it! But the founder(Nison) said that it cannot be use as a factor alone.It is just a tool and the way to increase the chance of success is to use it with western indicators(MACD,stochastic,etc) and the Technicals understanding (trendlines, Support, resistance,etc}
 
hyzelinho said:
I'm a candle reader too and I love it! But the founder(Nison) said that it cannot be use as a factor alone.It is just a tool and the way to increase the chance of success is to use it with western indicators(MACD,stochastic,etc) and the Technicals understanding (trendlines, Support, resistance,etc}
Click to expand...

Well at present, I'm not sure how you guys or the authors you mention read candles, so I am not sure how my method compares. But so far it seems pretty consistent.

What i have been coming up with fits in with my existing method of trading using trend and S/R, and drawing the odd straght line to mark breakouts, reversals etc. Yet the candle reading aspect is quite seperate and different to what i have been doing, in some instances, yet in other instances, it merely confirms one of my other types of entries. I've tried it on a fair few charts, now and seems unlikely to be a fluke, but you never know. But, so far so good.

Its early days, but I wouldn't say my candle reading method predicts what will happen next. It seems more a case of predicting what is unlikely to happen next, and acting accordingly. Slight difference, as at this stage, this means I am not predicting where the candle will close, not taking a longer term view than the next candle, just that i expect it to reverse or continue.

PS. Personally, I cannot endorse any technical indictor.
 
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options said:
There you go JT.

Bit of an awakening isn't it?
Click to expand...

So far it has, and its got me a bit excited, hence the posts.

However, I'm still half expecting it to fall flat on its face after some further analysis & tests. Though, I'd be surprised, due to the consistency seen so far.

My hopes are that this will enable me to -
1) Do more trades, more winning trades, even if my % of winners to losers stays as it is (still quite good).
2) help me to track the twists and turns more closely.
3) Help me to stay in trends for longer, catching more of it.

We shall see.

But it is a fact that each & every candle does tell us a story, about what has happened during that candle in relation to the recently closed candles.
 
NOW You are beginning to 'read the tape'.

It's not that hard to master, It just 'feels' weird because you are not using indicators that have been 'fed' to you from your trading birth.

It will always be right because you are reading price. So it cannot be wrong.

BUT. You will call it wrong on occasion because of 'how' the bars are displayed on your screen. If you can run 2 separate feeds of the same chart You may see what I mean.

Not too much of a problem though.

This is where your eyes start to bleed as SLBF would say. Now you can see why he has been saying do not put any indicators on the chart.

Funny thing is, after you grasp this way, you can put one or two indicators back on but you will be looking at them totally differently.
 
options said:
NOW You are beginning to 'read the tape'.
Click to expand...

Interesting you mention this... having traded currencies, I'm currently taking my hand to trading STIRS, using PA in combination with T&S and the DOM... while initially trading like a fish out of water, I'm starting to make some good trades, through both traditional PA and "reading the tape"... I agree that it's a whole new skill in it's own right, but I am getting ever nearer to the conclusion they are both infact about the same thing - watching the behaviour in price and participants, and trading to suit. It's very interesting.
 
JTrader said:
I've read various posters comments about how they can at times read the price action on a chart, like they could a piece of music.

So. this afternoon, I decided to really eyeball some candlestick charts, from left to right, and see what each candle told me, and how that message related to what followed.

I tried this on a few different instruments and timeframe.

What i have found is that my predictive interpretations of what each candle told me, based on the OHLC, and its relation to the previous and very recent candles, consistently unfolded on the following candles.

This would be extremely useful a skill, to use in real-time, as it would allow you to consistently and successfully, closely track the price action (trend and turns) for any given instrument.

Have a go for yourself. Just select any candlestick chart. Start at the left, and candle by candle work to the right. Think carefully about what each completed candle is telling you about what is happening in terms of the price, through the OHLC levels, and its relation to the OHLC of recently completed candles.

Try drawing up a few strict either/or criteria that must be met, for you to then enter or SAR at the open of the next candle (after a criteria meeting candle closes), that would have consistently allowed you to make a profit.........If this is possible, you are onto a winner!
Click to expand...


Interesting,

Why do candles give the best 'description' of what the market is 'up to'? Why not a line chart?
 
hyzelinho said:
I'm a candle reader too and I love it! But the founder(Nison) said that it cannot be use as a factor alone.It is just a tool and the way to increase the chance of success is to use it with western indicators(MACD,stochastic,etc) and the Technicals understanding (trendlines, Support, resistance,etc}
Click to expand...

I don't think he actually trades does he?

Putting mac/stochs etc on is the WORST thing you can do!

And it is not that sort of candle reading we are talking about.

It also works on bars and lines. In fact sometimes just a line chart is easier to work with.
 
MrGecko said:
Interesting you mention this... having traded currencies, I'm currently taking my hand to trading STIRS, using PA in combination with T&S and the DOM... while initially trading like a fish out of water, I'm starting to make some good trades, through both traditional PA and "reading the tape"... I agree that it's a whole new skill in it's own right, but I am getting ever nearer to the conclusion they are both infact about the same thing - watching the behaviour in price and participants, and trading to suit. It's very interesting.
Click to expand...

Much the same Mr G.

The only thing that confused the hell out of me was orders being 'pulled' before being actioned on the dom. I knew why it was happening, but still confused.
 
KLfutures said:
Interesting,

Why do candles give the best 'description' of what the market is 'up to'? Why not a line chart?
Click to expand...

I've not thought of a line chart.

For me, the advantage of a candle is that it shows all of the OHLC, and the colour coding makes it easy to see what the end result was.
 
JT. I'll give you another little trick.

Try having the candles the same colour. use a 'neutral' colour. ie not 'red' (down) 'blue' (up)

You can go back to colours later.
 
For anyone interested in some good books as a starter, a couple I recommend are:

The Candlestick course, by Steve Nison

** anything by Nison should be OK. No, he isn't the founder of Candlesticks, that'll be Japanese rice traders a good couple of thousand years ago :rolleyes:. And no, I don't think he was a trader, I think he worked as "Top TA Dog" for Mitsubishi and Merrill.

Trade Chart Patterns like the Pro's, by Suri Dudella (might have to hunt around for it).

Both will give you a pretty sound introduction for the hundreds of hours or so you'll spend trying to decipher the charts.
___________________________

OK, now to get to the point, this has started out pretty well. Lets keep it on track, and take the name calling elsewhere, yeah? There is even a thread dedicated to fighting if thats what your looking for (and, in this case, it was JT who started!!)
 
All you'll need soon JTrader is this and a pad of paper and a pencil.
 

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options said:
JT. I'll give you another little trick.

Try having the candles the same colour. use a 'neutral' colour. ie not 'red' (down) 'blue' (up)

You can go back to colours later.
Click to expand...

Yes, cheers.

So far, for me, this does the following -
Although i can still tell with most candles, where the open and close was based on proximity to the close of the last candle, and therefore also if this candle closed up or down.......
It makes me focus much more on the high/low, and possibly the close, removing the concern of whether or not the open was above or below the close, without changing the placement of trades.
 
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sweepylongbananafiend said:
All you'll need soon JTrader is this and a pad of paper and a pencil.
Click to expand...

Hmm, you never know ;).

I doubt it though, as although i do have a fairly good head for numbers, memory etc. I think i would always need some kind of physical/visual representation in front of me, to see and focus on. Still, never say never!
 
JTrader said:
Hmm, you never know ;).

I doubt it though, as although i do have a fairly good head for numbers, memory etc. I think i would always need some kind of physical/visual representation in front of me, to see and focus on. Still, never say never!
Click to expand...


Try it! We are not talking allusive, mystical trading here but by doing this; watch the ticker, jot down support and resistance as you see it and compare with a chart at the end of the day.

The obvious benefits of this is it removes all the textbook, trading book cliches as you watch the chart, you remove all ideas of candlestick patterns and you see price and reaction right now...

IMO, you will then have a much better representation and view of S/R and be better of from it.
 
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