Strongest Candlestick Formations

[forker]

candles are smoke and mirrors in my opinion. time is the main factor in their formation which coupled with market noise leads to all sorts of variations. its like fortune tellers.

 

[the hare]

I've just been reading a thread at FF. One of the members was actually backtesting a method based on pin bars at areas of support and resistance. Amusingly, he was using randomly generated OHLC data. Its kind of funny watching people retrospectively arguing about the quality of various randomly generated pin bars, and then justifying why they would and wouldnt have taken a particular set up.

There are muppets over there who are justifying set ups as if what they are seeing was a representation of a market comprised of buyers and sellers.

The guy testing claims he was able to profitably trade these random bars. There's probably one, maybe two contributors to that particular thread who actally understand the statistical liklihood of that occurring (and its much higher than most would asume), and probably noone who understands that if he is profitable trading random bars, why he's able to do that.

The whole focus (as usual) is on the quality of the pin bar, the characteristics of the randomly generated bars which are adjacent, the randomly generated price action, which preceeds the randomly generated pin bar and the randomly generated support and resistance.

Reading that suff is the modern equivelent of the victorians visiting the lunatics in bedlam.

 

[forker]

sounds like a james16 thread

 

[songcon]

I found a copy of Steve Nison's candlestick book over the weekend at the bottom 
of a box of junk, I must admit, its an entertaining read, I havnt laughed quite 
so much in ages.

 (and I [COLOR="Blue"]have used them[/COLOR],  
and maybe even will again in the future),

If I'm being charitable, I think that Mr Nison is being fooled by randomness.

Its quite interesting that even in his hand picked examples for the book,
there are charts that show numerous failed examples of patterns covered
elsewhere in the book.[/HTML]

I'm a bit confused on your writing, this is how your story comes to my mind:
You had bought Steve Nison's book (or may be you got it free through your
junk dealing business). You never read it but somehow the candle concept
from your junk yard "beamed" through your mind and you have used them,
and may be even will again in the future.

On a recent weekend, you'd found the book at the bottom box of junk, and you
found it very entertaining, you havn't laughed quite so much in ages.

If you had read it when it first got into your hand you would have not laughed
as much.

There's practically a whole chapter arguing why a candles which show open, high, low and close, are SUPERIOR to bars (which show precisely the same information!)

I totally agree with Nison on that and I hope that the people who use candlestick
charts instead of bar charts due to its simple and easy to recognize of the size
and color of the body of the candle, and the shadows and correlations to the candle body.
The combination of the 2 pictures provide a vivid picture of the
fight between the bulls and the bears.

Nison has been openly critisised by a number of authors, and has to date been totally unable to refute that critisim other than to reply with platitudes regarding "applying the patterns in context", or "applying with discretion".

Technical analysis teaches traders and investors to identify the trend, the first
and foremost. Any book that teaches technical analysis advises reader to
wait for the technical signal to be confirmed, use other indicators to support the selection
from Magee & Edwards to P&F of Jeremy du Plesis to Nison on Candlestick. . .
They all say the very same rules, it's not Nison who uses that line of defense.

Nison did not create Candlestick chart, he got credit for being the first person who
brought the Candlestick technique to the Western world.

Its quite interesting that even in his hand picked examples for the book, there are charts that show numerous failed examples of patterns covered elsewhere in the book.

If his hanpiced example d of evening star candles with all of the detail of the color
of the first candle, the second and the third etc . . . as an example of a strong
reversal signal, and in another example to talk about three white solders, you
see the very identical candle formation showed up in the presentation of the new
subject. Nison is not confused on his presentation, and he does not have to make
a notation that my apology for showing an evening star that did not bring a reversal
on this pattern. It's part of a,b,c of technical analysis that he does not have to
remind the readers.

I use candlestick for short term decisions and they seem to help me a great deal,
and I want to spend more time to learn more about this tool, I use Nison's materials
but I only see him as a person who has gets into the area long before me, and spend
much more time than me. Other than that, he is a human being and I do not pay too
much attention on how he earns his living.

Cheers,

 

[prst]

I found a copy of Steve Nison's candlestick book over the weekend at the bottom 
of a box of junk, I must admit, its an entertaining read, I havnt laughed quite 
so much in ages.

 (and I [COLOR="Blue"]have used them[/COLOR],  
and maybe even will again in the future),

If I'm being charitable, I think that Mr Nison is being fooled by randomness.

Its quite interesting that even in his hand picked examples for the book,
there are charts that show numerous failed examples of patterns covered
elsewhere in the book.[/HTML]

I'm a bit confused on your writing, this is how your story comes to my mind:
You had bought Steve Nison's book (or may be you got it free through your
junk dealing business). You never read it but somehow the candle concept
from your junk yard "beamed" through your mind and you have used them,
and may be even will again in the future.

On a recent weekend, you'd found the book at the bottom box of junk, and you
found it very entertaining, you havn't laughed quite so much in ages.

If you had read it when it first got into your hand you would have not laughed
as much.

There's practically a whole chapter arguing why a candles which show open, high, low and close, are SUPERIOR to bars (which show precisely the same information!)

I totally agree with Nison on that and I hope that the people who use candlestick
charts instead of bar charts due to its simple and easy to recognize of the size
and color of the body of the candle, and the shadows and correlations to the candle body.
The combination of the 2 pictures provide a vivid picture of the
fight between the bulls and the bears.

Nison has been openly critisised by a number of authors, and has to date been totally unable to refute that critisim other than to reply with platitudes regarding "applying the patterns in context", or "applying with discretion".

Technical analysis teaches traders and investors to identify the trend, the first
and foremost. Any book that teaches technical analysis advises reader to
wait for the technical signal to be confirmed, use other indicators to support the selection
from Magee & Edwards to P&F of Jeremy du Plesis to Nison on Candlestick. . .
They all say the very same rules, it's not Nison who uses that line of defense.

Nison did not create Candlestick chart, he got credit for being the first person who
brought the Candlestick technique to the Western world.

Its quite interesting that even in his hand picked examples for the book, there are charts that show numerous failed examples of patterns covered elsewhere in the book.

If his hanpiced example d of evening star candles with all of the detail of the color
of the first candle, the second and the third etc . . . as an example of a strong
reversal signal, and in another example to talk about three white solders, you
see the very identical candle formation showed up in the presentation of the new
subject. Nison is not confused on his presentation, and he does not have to make
a notation that my apology for showing an evening star that did not bring a reversal
on this pattern. It's part of a,b,c of technical analysis that he does not have to
remind the readers.

I use candlestick for short term decisions and they seem to help me a great deal,
and I want to spend more time to learn more about this tool, I use Nison's materials
but I only see him as a person who has gets into the area long before me, and spend
much more time than me. Other than that, he is a human being and I do not pay too
much attention on how he earns his living.

Cheers,

I feel one cannot trade based on candles entirely.
Else how would one justify the sequence of hammers one would see in a long downtrend. if one enters expecting a turnaround in trend, he/she would be trapped in a falling stock.
However, one can combine them with SR and/or pivots.

 

[kalott]

http://www.thepatternsite.com/CandlePerformers.html

 

[malaguti]

Try Heikin Ashi..far better than candlesticks