Candlesticks and ADX

S

simonfudge

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Hi

I am trying to decide which analysis software I am going to purchase. I have read that Sharescope is very good.
My wish list is to have a package that has candlestick pattern recognition and a function that can data mine for ADX.
I telephoned Sharescope a few weeks ago asking if they did candlestick pattern recognition or knew of any add on that was available. I was told there was no such package.
My questions are -
i) is there a candlestick pattern recognition option on Sharescope or can one be added?
and
ii) can I data mine ADX with Sharescope?

If not, can anyone recommend a decent, inexpensive package or give me any reasons not to bother with Sharescope?

What about any packages that can data mine candlestick patterns?

Simon
 
Last edited:
Hi Simon -

Sharescope is a good charting package, even the Gold EOD only package, and this is great value per month. It does not offer candlestick pattern recognition, and I would have to regards this as a false target anyway - candlestick patterns are just not that simple. The Sharescope data mining facility is hideously complex and I would bet 98% of their customers can not achieve the tutorials and do not use it for real. The SS website says their data mining tool is unique to Sharescope - its easy to see why.
 
Simon,

I think Updata.co.uk will be able to handle candlestick recognition, though I think it is somewhat limited to UK shares without external data feeds etc...

I will echo Toms point above about the simplicity element. Candlestick patterns can be relatively straigtforward to describe accurately in boolean logic (i.e. IF, AND, OR, NOT, < , > . = and so on), but to do so is sort of missing the point. I will draw an analogy with reading sheet music - you can't tell a computer program to pick out pieces of music, from a library, that you will like, having programmed a series of notes.

A far more fruitful exercise would be to become profiecient at reading the candlesticks ("music") yourself - with enough practise it will become second nature - I think you will find that the automated system will simply throw up far too many unsuitable patterns for your trading style (whatever that may be). If you can learn to spot the gooduns' yourself, and where they may be likely to appear, you will save yourself alot of deliberating and bad trades.

I believe you mentioned having traded in the past, so if I am totally off the mark and this works well, then take all i say with a great deal of salt. You do mention candlestick in combination with an indicator... I should think there are many packages that can filter stocks (or whatever) for ADX conditions, leaving you to do the candlestick bit yourself.
 
Thanks for your rapid replies, this seems like a great site.

I have traded before but with no great success, so I am keen to be more prepared and professional about it this time.
I take the point about candlesticks and I will try to learn the patterns - I have one of Steve Nissons(?) books.

My thread was prompted by an old thread I saw on this site where someone else was looking to data mine for ADX with SS and had experienced difficulties. This was back in 2006. I was wondering if SS had made life easier with later versions?

I saw on the old thread that someone was suggesting it was easier to manually go through each security with the ADX function enabled on each chart - perhaps this is way forward as one gets to scan the charts as well - fine if it is a limited number of stocks (or whatever).

My plan is to spread bet initially on breakouts and pullbacks using ADX as one of of my trade selection filters. I have been inspired by Malcom Pryor's The Financial Spread Betting Handbook. He recommends SS but then I saw this old thread about problems data mining ADX.

Perhaps I just need to get stuck in and all these issues will become clear. But it would be a shame to spend money on software and valuable time getting familiar with it only to discover that a much more suitable system was available elsewhere.

Simon
 
Simon,

Unfortunately I am not in a position to advise you on which package or SB form to use, I have little experience in these fields. However, I can certainly recommend Steve Nison's candlestick books. Due diligence with this and the ADX resources should steer you in the right direction.

Can I ask which timeframes and markets you wish to concentrate on?
 
simonfudge said:
Thanks for your rapid replies, this seems like a great site.

I have traded before but with no great success, so I am keen to be more prepared and professional about it this time.
I take the point about candlesticks and I will try to learn the patterns - I have one of Steve Nissons(?) books.

My thread was prompted by an old thread I saw on this site where someone else was looking to data mine for ADX with SS and had experienced difficulties. This was back in 2006. I was wondering if SS had made life easier with later versions?

I saw on the old thread that someone was suggesting it was easier to manually go through each security with the ADX function enabled on each chart - perhaps this is way forward as one gets to scan the charts as well - fine if it is a limited number of stocks (or whatever).

My plan is to spread bet initially on breakouts and pullbacks using ADX as one of of my trade selection filters. I have been inspired by Malcom Pryor's The Financial Spread Betting Handbook. He recommends SS but then I saw this old thread about problems data mining ADX.

Perhaps I just need to get stuck in and all these issues will become clear. But it would be a shame to spend money on software and valuable time getting familiar with it only to discover that a much more suitable system was available elsewhere.

Simon
Click to expand...

Simon,

Not that I want to discourage you on your quest but you should bare in mind that candlesticks present NO additional information to a Trader than that of normal bars. Granted, the individual patterns have exotic names and they are slightly more visual but that is all.

IMO Don't waste your time in learning how to identify a harami cross, piercing line, three river , etc, etc. Instead focus on learning to read "Price action", together with what is happening over the last few bars and you will soon understand the "patterns".

All IMO and please accept my apologies for sticking my nose in.......

Chorlton
 
ShareScope Plus and Pro include automatic candlestick recognition. They also include ADX and, although it can't be selected in the data mining wizard, you can create an ADX filter using ShareScript. In fact, one of our customers may already have done so - see the library at ShareScope ShareScript. With reference to some of the comments about using candlestick recognition, you can also data mine on whatever open, high, low and close configurations you like. And with regards to ShareScope's data mining, I don't understand why people find it complicated - I have always found it very simple to use. It also has the advantage that you can tweak it on the fly and see instant results. We also provide tutorials in the Help, on the website (ShareScope Training Zone), and on our training CDs.
 
Chorlton said:
Simon,

Not that I want to discourage you on your quest but you should bare in mind that candlesticks present NO additional information to a Trader than that of normal bars. Granted, the individual patterns have exotic names and they are slightly more visual but that is all.

IMO Don't waste your time in learning how to identify a harami cross, piercing line, three river , etc, etc. Instead focus on learning to read "Price action", together with what is happening over the last few bars and you will soon understand the "patterns".

All IMO and please accept my apologies for sticking my nose in.......

Chorlton
Click to expand...

Chorlton,

I absolutely agree that there is NO additional information in a candle that is not presented in a bar, they are pretty much the same thing. I think, though, that the nature of your post misses the point by a country mile.

Any claim that the notation of candlestick patterns is a waste of time, quite frankly, is b0ll0cks. The terminology involved, combined with an intuitive understanding of what specific terms mean, allow complicated scenarios to be described accurately and succinctly. A rose by any other name would smell as sweet, and in this case 'harami cross' is far more managable than "in an uptrend, a long real white body followed by an enclosed bar where the open is equal to the close, and the high's and lows are equidistant from said open and close". Never mind what they might actually mean.

The argument over Bar charts vs. Candlestick charts is one for only the most anal of pedants. Moreover, derision of candlestick terminology, followed by a suggestion to learn how to read "price action", IMO is a contradiction in terms. Candlesticks (or bar charts), and chart patterns, are infact the essence of price action. I am dumbfounded that one may claim the development of a solid understanding of Price Action can be built without the foundations of a language in which to describe the phenomena. It has been said that, because of the way candlesticks are presented, they place too much emphasis on certain levels, in order to be "easier on the eye". I counter this argument with the statement that one who "see's" the over-emphasis is not reading the candlestick correctly.

Whichever method one trader chooses to observe price action by, the value is not in their appearance or how they are described - the value is in understanding what they mean and how they should be put into context.
 
MrGecko said:
Chorlton,

I absolutely agree that there is NO additional information in a candle that is not presented in a bar, they are pretty much the same thing. I think, though, that the nature of your post misses the point by a country mile..

Any claim that the notation of candlestick patterns is a waste of time, quite frankly, is b0ll0cks. The terminology involved, combined with an intuitive understanding of what specific terms mean, allow complicated scenarios to be described accurately and succinctly. A rose by any other name would smell as sweet, and in this case 'harami cross' is far more managable than "in an uptrend, a long real white body followed by an enclosed bar where the open is equal to the close, and the high's and lows are equidistant from said open and close". Never mind what they might actually mean.

The argument over Bar charts vs. Candlestick charts is one for only the most anal of pedants. Moreover, derision of candlestick terminology, followed by a suggestion to learn how to read "price action", IMO is a contradiction in terms. Candlesticks (or bar charts), and chart patterns, are infact the essence of price action. I am dumbfounded that one may claim the development of a solid understanding of Price Action can be built without the foundations of a language in which to describe the phenomena. It has been said that, because of the way candlesticks are presented, they place too much emphasis on certain levels, in order to be "easier on the eye". I counter this argument with the statement that one who "see's" the over-emphasis is not reading the candlestick correctly.

Whichever method one trader chooses to observe price action by, the value is not in their appearance or how they are described - the value is in understanding what they mean and how they should be put into context.
Click to expand...

Mr G,

Re-reading my post I can understand why you may have drawn this conclusion. My post was written too quickly and clearly conveyed the wrong message.

My intention was never to suggest that Candlestick patterns are a waste of time. Far from it in fact!! As you say they convey price action. I would agree 100% on this with you.

The point I was trying to make was that IMO someone new to trading shouldn't get too bogged down with all the different names associated to the various candlestick formations WITHOUT understanding WHY a particular pattern works.

Personally, I don't think its important to learn their individually names. As long as I understand what the "pattern" is showing me regarding Supply / Demand then who cares what that pattern is called. This is my view which clearly you do not subscribe to. We will have to agree to disagree on this as the bottom line is that it doesn't really matter.

I remember when I first took an interest in candlesticks formations. I spent many hours learning the different patterns and their associated names and at one point could name almost every individual formation. However, what I realised later on was that this wasn't time well spent as although I could name each one and knew which ones were bullish / bearish or neutral, I still failed to actually acknowledge "why" they worked.

Late last year, I came across a colleague who also used Candlesticks in his charting. Like myself back then, he could name most of the formations. However, when we discussed some charts in more detail it became clear that although his knowledge of them was very high, he lacked the ability to understand WHY they worked. It was because of this, that I decided to post on this thread.
 
Uncertain

MrGecko said:
Simon,

Unfortunately I am not in a position to advise you on which package or SB form to use, I have little experience in these fields. However, I can certainly recommend Steve Nison's candlestick books. Due diligence with this and the ADX resources should steer you in the right direction.

Can I ask which timeframes and markets you wish to concentrate on?
Click to expand...

Hi Mr Gecko

Thanks for your response.
Having failed to cut it as a trader in the past I am keen to take things carefully this time. I have read many trading books and I think I am at the stage where I am suffering information overload. Then I read Malcolm Pryors book on spread betting. I liked it and I liked his clear approach. I have decided now to keep it simple and just follow his advice. He is keen on trading the UK stock market in the intermediate time frame. He is also keen on ADX as one of his filters and candles.

So this is what I shall do. Having said that I still fear getting caught by a catastrophic market event while holding positions overnight. I cannot help but be drawn to day trading or the more liquid forex currency pairs. The trouble is that I am so inexperienced I need to stick to a simple plan.

Simon
 
Chorlton said:
Simon,

Not that I want to discourage you on your quest but you should bare in mind that candlesticks present NO additional information to a Trader than that of normal bars. Granted, the individual patterns have exotic names and they are slightly more visual but that is all.

IMO Don't waste your time in learning how to identify a harami cross, piercing line, three river , etc, etc. Instead focus on learning to read "Price action", together with what is happening over the last few bars and you will soon understand the "patterns".

All IMO and please accept my apologies for sticking my nose in.......

Chorlton
Click to expand...

Hi Chorlton

No apologies needed. I appreciate your input and I see the point you are making. As a novice I feel that Nisson's book helps me visualise market psychology and price action - Something to hang your hat on. I also think he does a good job of running through price action wih many of his examples.
Perhaps I will find that I gain more feel once I start trading again.

This really is a good site though. I am impressed with the help available - wish I had used it before. Stick your hooter in any time you like.:cheesy:
Simon
 
Thanks

SS Marketing said:
ShareScope Plus and Pro include automatic candlestick recognition. They also include ADX and, although it can't be selected in the data mining wizard, you can create an ADX filter using ShareScript. In fact, one of our customers may already have done so - see the library at ShareScope ShareScript. With reference to some of the comments about using candlestick recognition, you can also data mine on whatever open, high, low and close configurations you like. And with regards to ShareScope's data mining, I don't understand why people find it complicated - I have always found it very simple to use. It also has the advantage that you can tweak it on the fly and see instant results. We also provide tutorials in the Help, on the website (ShareScope Training Zone), and on our training CDs.
Click to expand...

Hi SS

Thanks for your response. I telephoned you today and I was reassured. I also like the fact that you are UK based. I dealt with Ameritrade and metastock in the past and contacting them was always a pain.
Simon
 
MrGecko said:
Chorlton,

I absolutely agree that there is NO additional information in a candle that is not presented in a bar, they are pretty much the same thing. I think, though, that the nature of your post misses the point by a country mile.

Any claim that the notation of candlestick patterns is a waste of time, quite frankly, is b0ll0cks. The terminology involved, combined with an intuitive understanding of what specific terms mean, allow complicated scenarios to be described accurately and succinctly. A rose by any other name would smell as sweet, and in this case 'harami cross' is far more managable than "in an uptrend, a long real white body followed by an enclosed bar where the open is equal to the close, and the high's and lows are equidistant from said open and close". Never mind what they might actually mean.

The argument over Bar charts vs. Candlestick charts is one for only the most anal of pedants. Moreover, derision of candlestick terminology, followed by a suggestion to learn how to read "price action", IMO is a contradiction in terms. Candlesticks (or bar charts), and chart patterns, are infact the essence of price action. I am dumbfounded that one may claim the development of a solid understanding of Price Action can be built without the foundations of a language in which to describe the phenomena. It has been said that, because of the way candlesticks are presented, they place too much emphasis on certain levels, in order to be "easier on the eye". I counter this argument with the statement that one who "see's" the over-emphasis is not reading the candlestick correctly.

Whichever method one trader chooses to observe price action by, the value is not in their appearance or how they are described - the value is in understanding what they mean and how they should be put into context.
Click to expand...

See, told you......:innocent:
SF
 
simonfudge said:
Hi Chorlton

No apologies needed. I appreciate your input and I see the point you are making. As a novice I feel that Nisson's book helps me visualise market psychology and price action - Something to hang your hat on. I also think he does a good job of running through price action wih many of his examples.
Perhaps I will find that I gain more feel once I start trading again.

This really is a good site though. I am impressed with the help available - wish I had used it before. Stick your hooter in any time you like.:cheesy:
Simon
Click to expand...

As a sidenote, although I don't want to create "information overload" for you, I would also suggest that at some point you take some time to look at VSA (Volume Spread Analysis) as I believe it would nicely fit with your current trading approach.

Although, others may question the usefulness of volume, I have found it helps to improve the realiability of price action / candlestick patterns.

Good Luck,

Chorlton
 
Chorlton said:
As a sidenote, although I don't want to create "information overload" for you, I would also suggest that at some point you take some time to look at VSA (Volume Spread Analysis) as I believe it would nicely fit with your current trading approach.

Although, others may question the usefulness of volume, I have found it helps to improve the realiability of price action / candlestick patterns.

Good Luck,

Chorlton
Click to expand...


Thanks Chorlton, I will do.
 
SS Marketing said:
ShareScope Plus and Pro include automatic candlestick recognition. They also include ADX and, although it can't be selected in the data mining wizard, you can create an ADX filter using ShareScript. In fact, one of our customers may already have done so - see the library at ShareScope ShareScript. With reference to some of the comments about using candlestick recognition, you can also data mine on whatever open, high, low and close configurations you like. And with regards to ShareScope's data mining, I don't understand why people find it complicated - I have always found it very simple to use. It also has the advantage that you can tweak it on the fly and see instant results. We also provide tutorials in the Help, on the website (ShareScope Training Zone), and on our training CDs.
Click to expand...

I'm not trying to be sarcastic, but if you know people find it complicated, doesn't this suggest it should be made simpler? And until you do understand why they find it complicated, you will not be able to do this.

I suspect that most SS subscribers are ignoring the data mining facility, and for Ionic to feel compelled to provide so much help for subscribers, although well-intentioned, tends to suggest that I am right, and it is too unintuitive to be a useful tool that fulfils its potential.
 
I use Sharescope and find it really pretty good. It has a few stability issues on Vista- nothing dramatic but you get the occasional hang. It arguably has mor eoptions than you could ever want, sometime trying to find them is all a bit bewildering. I wouldn't call it complicated so much as feature rich. :D
The data mining feature is good and I bought the training cd which i found a great help from a novice user point of view.
I can do a bit javascript and php scripting anyway so have found the sharescript easy to pick up (the basics anyway) and have written a handful of scripts that are published on the sharescript website. The ideal thing to do is write scripts to provide a simple boolean output i.e 1 or 0 in response to some criteria or processing then set the data mining to simply look for stocks with a 1 or 0 (or sometimes a -1 in the case of short positions) . As someone else says there is an ADX script for the plus and pro versions on the share3script site- it finds stocks with an ADX abovea certain level (think its 25 but you can tweak this) It does not spot thatt he ADX trend is valid ie heading up and 25) so you need to look - but it only takes a minute scrolling through the charts to filter this down.
To get the best out of datamining I find the scripts combined with inbuilt indicators are good at pointing out stocks or markets with further research to follow up on.
Personally i really can't fault it and what little support I have needed has been answered quickly.
It does have a candlestick pattern filter though I don't always find it as accurate as I would like- I tried wrining one for myself- -a four bar fractal system I was told about- but its only been marginally successful in actually working- its quite hard to do this. (not due to the scripts just due to the criteria you need to define) This would be the same in anything i suspect.
 
TanushiHeadbash said:
I use Sharescope and find it really pretty good. It has a few stability issues on Vista- nothing dramatic but you get the occasional hang. It arguably has mor eoptions than you could ever want, sometime trying to find them is all a bit bewildering. I wouldn't call it complicated so much as feature rich. :D
The data mining feature is good and I bought the training cd which i found a great help from a novice user point of view.
I can do a bit javascript and php scripting anyway so have found the sharescript easy to pick up (the basics anyway) and have written a handful of scripts that are published on the sharescript website. The ideal thing to do is write scripts to provide a simple boolean output i.e 1 or 0 in response to some criteria or processing then set the data mining to simply look for stocks with a 1 or 0 (or sometimes a -1 in the case of short positions) . As someone else says there is an ADX script for the plus and pro versions on the share3script site- it finds stocks with an ADX abovea certain level (think its 25 but you can tweak this) It does not spot thatt he ADX trend is valid ie heading up and 25) so you need to look - but it only takes a minute scrolling through the charts to filter this down.
To get the best out of datamining I find the scripts combined with inbuilt indicators are good at pointing out stocks or markets with further research to follow up on.
Personally i really can't fault it and what little support I have needed has been answered quickly.
It does have a candlestick pattern filter though I don't always find it as accurate as I would like- I tried wrining one for myself- -a four bar fractal system I was told about- but its only been marginally successful in actually working- its quite hard to do this. (not due to the scripts just due to the criteria you need to define) This would be the same in anything i suspect.
Click to expand...

Thank you.
S
 
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