Candlesticks not profitable Massey University Research

[zambuck]

I would suggest that you and others read article called - How Reliable are Candlesticks? - By Giovanni Maiani in NOv 2002 edition of TASC.....One can perhaps get hold of this online....

He has carried out a statistical research on candle bodies and their sucess rate with some very interesting observations.....

The statistics (and I quote from that Article) in nutshell are:

Most Frequest formation - White body hammer and Black Body

Most reliable formations - Three Black Crows, Inverted Black Hammer and Inverted Hammer.

Most accurate formations in anticipating declining session - Three White Soldiers, Evening Star Doji and Bearish Harami

Most accurate in anticipating unchanged session - Gravestone Doji, Tweezer Bottoms and Tweezer Tops.

Most frequestly occuring formations - White Body, Hammer and Black Body

Most frequest patterns across International markets - As above

Worth a read....

PS Found a link to that article.......

http://premium.working-money.com/wm/display.asp?art=329

Actually, as usual you will not like this...

But the research conclusion coming out of Massey University is correct.

Candles do not work.

Candles are inanimate objects created to represent price tracks within a given period. Of themselves they tell you very little in the way they are displayed.

What tells you a lot is how you view them and what you are able to percieve by having an understanding of what they represent and why.

I am not going to go too deeply into this.

.

 

[SOCRATES]

Valid point, one I believe Spitlink(apologies if it was someone else) made a couple of pages ago.


This is a prime example of why you draw so much criticism on these boards Socrates.

Here is a thread that has run 4 pages without an insult. You come on here and rather than simply stating your opionion and then leaving having said your piece or possibly entering into a discourse, you feel the need to post a thinly veiled insult. Why is that?

I have said on many occassions that you do have interesting and thought provoking things to say. Why do you find it so impossible to simply state them and leave it at that? And please do not give any long winded speeches about how everyone attacks you. In this thread no one has mentioned you, no one has disagreed with you, no one has insulted you. Your very first post has been to make a valid comment and then back it up with an insult.

If you get attacked in this thread you have absolutely no one to blame but yourself.

Cheers,
PKFFW

Listen PKFW what you do not realise is that I have forgotten more than most people know about this subject having been involved with it for a very very long time.

The deletion refers to an upstart who chose to attack me during my absence during a period when my membership was suspended for a week, who is a bus driver in Jersey but presents himself to be an expert, which is nonsense, as it takes YEARS of observation to finally get a grip on what actually causes prices to change under what conditions, in what markets, in what instruments and the underlying reasons why, which are often not clear and succeed in baffling nearly everyone including me in the very beginning until by thinking out of the box the bafflement evaporated.

Therefore the study carried out is correct.

My statement will not please a lot of people, including vendors, who insert "signals" and other trivia to promote the sale of their products and who despite the evidence to the contrary persist in insisting on the validity of indicators and other nonsenses.

Mechanisation cannot and will not work.

Other approaches work but it involves WORK that the great majority are neither prepared nor disposed to do.

 

[SOCRATES]

I would suggest that you and others read article called - How Reliable are Candlesticks? - By Giovanni Maiani in NOv 2002 edition of TASC.....One can perhaps get hold of this online....

He has carried out a statistical research on candle bodies and their sucess rate with some very interesting observations.....

The statistics (and I quote from that Article) in nutshell are:

Most Frequest formation - White body hammer and Black Body

Most reliable formations - Three Black Crows, Inverted Black Hammer and Inverted Hammer.

Most accurate formations in anticipating declining session - Three White Soldiers, Evening Star Doji and Bearish Harami

Most accurate in anticipating unchanged session - Gravestone Doji, Tweezer Bottoms and Tweezer Tops.

Most frequestly occuring formations - White Body, Hammer and Black Body

Most frequest patterns across International markets - As above

Worth a read....

PS Found a link to that article.......

http://premium.working-money.com/wm/display.asp?art=329

Yes, all of this is plausible.

Notice that I say plausible and not workable.

This is because everything catalogued above is at a mechanical level only.

 

[SOCRATES]

Hi Socrates, glad you contributed to this. I have no problems with the research methodology, or indeed its findings. They formed a hypothesis, and tested it. Obviously they could have saved themselves a lot of time trouble and expense, as the outcome was obvious !

However, If I remember correctly, the study didnt include the use of volume, Id be genuinely interested to hear your thoughts on that, for example do you feel that certain patterns may have proved to be statistically significant if perhaps volume had been included in the analysis ?

If I where a vendor, peddling a product that was candlestick based, I think Id try to defend my product, by pulling the "lack of volume" argument, and Im genuinely surprised that to date no one has. I'd be interested to hear your take on this.

regards
zu

Volume is a very complex subject, and far more complex than most people will attribute to it.

There are 11 basic different types of volume which appear under different conditions in different markets in different instruments, as each one has its own "footprint" because the same group of professional players who specialise in them are active in them nearly all the time.

It is not like reading morse code. It is like reading morse code but additionally understanding the language in which the morse code is sent.

You can now begin to see it is not a simple subject or a plain open and shut case.

 

[rols]

Volume is a very complex subject, and far more complex than most people will attribute to it.

There are 11 basic different types of volume which appear under different conditions in different markets in different instruments, as each one has its own "footprint" because the same group of professional players who specialise in them are active in them nearly all the time.

It is not like reading morse code. It is like reading morse code but additionally understanding the language in which the morse code is sent.

You can now begin to see it is not a simple subject or a plain open and shut case.

Welcome back.

How was Coventry?

 

[SOCRATES]

Welcome back.

How was Coventry?

Coventry flying...thrilled..doing very well thanks.

 

[SOCRATES]

Not that you're blowing your own trumpet or anything Soc ;-)



Well you managed to say at least one thing I agree with. The value in reading Nison is in the way he relates the formations to market psychology (at individual and crowd level). Not something you can really automate, any more than you can tell a newbie do X if NFP does this and do Y if it does this. It's far more wooly than that, most people just don't like that truth as it means they can't get the reward without putting in the hours.

My $0.02 as always

GJ

You are right.

And also I can say a lot of things and blow a lot of nonsense sky high.

But I choose not to.

A lot of what I say goes misinterpreted or misunderstood or even misused.

Some of it gets deleted as it is considered "inflammatory"....[/B]

 

[blackcab]

That's that thread then.

 

[SOCRATES]

That's that thread then.

I agree with you.

"No personal effort = no progress"...

 

[TheBramble]

Volume is a very complex subject, and far more complex than most people will attribute to it.

There are 11 basic different types of volume which appear under different conditions in different markets in different instruments, as each one has its own "footprint" because the same group of professional players who specialise in them are active in them nearly all the time.

While I applaud the emphasis being placed on volume in any serious discussion of technical analysis, I do want to add my view that there is no such thing as a ‘type’ of volume, much less 11 types!

Volume must be taken in the context of the action and the timeframe being considered, And across subordinate and superordinate timeframes too. Within those contexts it is certainly possibly with experience and dedicated application to discern certain moves and specific intents of the bigger players in the markets, but these do not fall so cleanly as to be clearly and unambiguously defined for the novice to fully comprehend with little to no effort.

To suggest any such mechanical or specific number of types is to have missed the point to a large extent and perhaps indicates you may wish to consider getting back to basics. Clear out your preconceptions, which are in fact misconceptions, about volume and just review objectively the interplay of volume with price action across the various timeframes as I have suggested. I am sure you will eventually find ample evidence that there is indeed significance to volume, but it will not lend itself to superficial definitions as you currently believe.

Your comment that you find volume “a very complex subject” lends further confirmation that you are possibly going about the whole business in the wrong way. It is far from complex, but does require effort and time.

 

[SOCRATES]

While I applaud the emphasis being placed on volume in any serious discussion of technical analysis, I do want to add my view that there is no such thing as a ‘type’ of volume, much less 11 types!

Volume must be taken in the context of the action and the timeframe being considered, And across subordinate and superordinate timeframes too. Within those contexts it is certainly possibly with experience and dedicated application to discern certain moves and specific intents of the bigger players in the markets, but these do not fall so cleanly as to be clearly and unambiguously defined for the novice to fully comprehend with little to no effort.

To suggest any such mechanical or specific number of types is to have missed the point to a large extent and perhaps indicates you may wish to consider getting back to basics. Clear out your preconceptions, which are in fact misconceptions, about volume and just review objectively the interplay of volume with price action across the various timeframes as I have suggested. I am sure you will eventually find ample evidence that there is indeed significance to volume, but it will not lend itself to superficial definitions as you currently believe.

Your comment that you find volume “a very complex subject” lends further confirmation that you are possibly going about the whole business in the wrong way. It is far from complex, but does require effort and time.

Thank you for your advice, very wise, very kind.

 

[grantx]

Degrees,

I’m still trying to see the significance (unravel the complexity?) of price and volume. Maybe one day.

In the meantime, perhaps you could provide an example of “certain moves and specific intents of the bigger players”.

Thank you.

Grant.

 

[new_trader]

Degrees,

I’m still trying to see the significance (unravel the complexity?) of price and volume. Maybe one day.

In the meantime, perhaps you could provide an example of “certain moves and specific intents of the bigger players”.

Thank you.

Grant.

Grant,

It will do no good for someone to explain it to you. It takes hours and hours of observation and practice. And I mean, hours and hours...and hours. But just when you think you've grasped it something else comes along to shatter your preconceived ideas. I'm slowly unravelling the mystery and all I can say is that I am GLAD I abandoned indicators (apart from volume) and mechanical trading. I've said it before and I will say it again, Socrates was a major influence in my progress. I am NOT part of the PL, nor has he mentored me. It's the gems he has posted here. Particularly, Journey from the basement.

 

[timsk]

Your comment that you find volume “a very complex subject” lends further confirmation that you are possibly going about the whole business in the wrong way. It is far from complex but does require effort and time.

The Degrees,
In addition to grantx's request, perhaps you'd care to expand upon the quote above as well. The highlighted text infers that volume is quite a simple subject to get ones head around - which will be sweet sweet music to many peoples ears I'm sure! Perhaps you could reply on one of the threads in the Price & Volume forum, as this thread isn't the best place to discuss the topic. I suggest the following thread as the ideal repository for fresh ideas on this much debated topic:
http://www.trade2win.com/boards/showthread.php?t=12480
Cheers,
Tim.

 

[Paul71]

Actually, as usual you will not like this...

But the research conclusion coming out of Massey University is correct.

Candles do not work.

Candles are inanimate objects created to represent price tracks within a given period. Of themselves they tell you very little in the way they are displayed.

What tells you a lot is how you view them and what you are able to percieve by having an understanding of what they represent and why.

I am not going to go too deeply into this.

.

Decision, indecision, motive, strategies, games, shakeouts, fakeouts? Where's Mr. Marcus, when you need him?

Of course, candles tell you all this and more.

Candles possess strength, but so does a linechart.

Candles create pretty little patterns, so do linecharts.

Candles indicate S/R, so do linecharts.

There's really no need to be left in the dark, without candles.

They work, but not in the way people think they should work, line charts do the same job, only better.

 

[SOCRATES]

Decision, indecision, motive, strategies, games, shakeouts, fakeouts? Where's Mr. Marcus, when you need him?

Of course, candles tell you all this and more.

Candles possess strength, but so does a linechart.

Candles create pretty little patterns, so do linecharts.

Candles indicate S/R, so do linecharts.

There's really no need to be left in the dark, without candles.

They work, but not in the way people think they should work, line charts do the same job, only better.

Mr Marcus is not there, He is here with me on this side of the glass and not on that side with u and verri bizzi 2 and verri verri happi.

I am surprised you venture to make these comments, as all of you have been told many times, that everything is known in advance, but to no avail.

 

[jacinto]

the whole argument just keeps making the point that it is extremely relative. it has been said above by more than on member.

a candle or a candle pattern (if it must be called that) isnt effective on its own but depends on the context.

what part of "context" is it so difficult to understand. only has 7 letters. cant be so hard

j

can we move on?

 

[SOCRATES]

the whole argument just keeps making the point that it is extremely relative. it has been said above by more than on member.

a candle or a candle pattern (if it must be called that) isnt effective on its own but depends on the context.

what part of "context" is it so difficult to understand. only has 7 letters. cant be so hard

j

can we move on?

You are perfectly correct in your statement Jacinto.

However, one must be careful of what one posts.

Now sometime ago, you must believe this because I swear to you it is true, I got into an argument with someone who insisted that the candles drive the prices.

I dare not tell you who it is, because if I did, it would be considered inflammatory.

 

[jacinto]

You are perfectly correct in your statement Jacinto.

However, one must be careful of what one posts.

Now sometime ago, you must believe this because I swear to you it is true, I got into an argument with someone who insisted that the candles drive the prices.

I dare not tell you who it is, because if I did, it would be considered inflammatory.

well, dont need to use matches to light the candles, now do we

i wonder what inherent capability may a candle have to move prices

saludos

jacinto

 

[alexander]

Clear out your preconceptions, which are in fact misconceptions, about volume and just review objectively the interplay of volume with price action across the various timeframes as I have suggested.

This is too philosophical for me. I'm just a trader. When I look at volume figures I wonder: how much of the volume is really from market participants risking their money and actually having a view of where prices are going to and how much is market maker interplay to create the impression that there is really a lot of action going on and to lure people in?

If, as someone has said, the question is what is the question, then this is the question.

The answer is that volume probably says nothing as related to price except in the case of violent downward moves where increasing volume may indicate that downward pressures continue, maybe.

Besides that, I don't think volume says nothing at all, given that some people can exchange shares at virtually no cost to them.

Alex