Do candle stick patterns work better on daily charts than intra day ?

tomorton

Legendary member
8,095 1,196
Yes they do, but not forex, where trading is continuous.

That said, candlestick patterns are reasonable approximate guidelines only, they're not like DNA or fingerprints. They work only a little more often than they fail.
 

thfrtht

Junior member
10 2
Do they really actually work better? No. Markets are fractal so there's nothing inherently different about a daily chart vs an intra-day chart. It's just the ATR is bigger so you'd generally have bigger targets and bigger stop losses.

Do they work better for most people? Most likely Yes... but only because of how people perceive them. More time to analyze, more days for someone to have the position go in there favor, people tend to trade smaller sizing when trading daily's generally speaking so they are less stressed vs putting on a day trade and etc etc.
 

tomorton

Legendary member
8,095 1,196
Do they really actually work better? No. Markets are fractal so there's nothing inherently different about a daily chart vs an intra-day chart. It's just the ATR is bigger so you'd generally have bigger targets and bigger stop losses.

Do they work better for most people? Most likely Yes... but only because of how people perceive them. More time to analyze, more days for someone to have the position go in there favor, people tend to trade smaller sizing when trading daily's generally speaking so they are less stressed vs putting on a day trade and etc etc.

I have to disagree, for the reasons already stated.
 

thfrtht

Junior member
10 2
I have to disagree, for the reasons already stated.

Well I am speaking of Stocks/Futures I don't trade forex, so we can't be disagreeing there. Even if candle patterns only work slightly more than they fail, still if you took every single one why would the Daily chart results be inherently better than a time, kase or etc chart that's comparable? And if those results aren't aren't drastically different, you could shave a little time off of the other charts and rinse and repeat.

In other words you'd have to tell me at what point do candle patterns lose there effectiveness? If the answer is they only really work on Daily charts, than that just isn't my experience at all and maybe we're using different candle patterns. If that's the case than I can't and won't claim you're incorrect, I can only state what I know to be true which is the candle pattern I use does not work more or less, simply by changing my chart.
 

xjtorerox

Junior member
19 4
I had the same quesiton. Does it make sense to pay attention to shooting stars, hammers, hanging men, or engulfing patterns on 5 M chart or a 1H charts?

Which is the best time frame for looking into these patterns?
 

thfrtht

Junior member
10 2
I had the same quesiton. Does it make sense to pay attention to shooting stars, hammers, hanging men, or engulfing patterns on 5 M chart or a 1H charts?

Which is the best time frame for looking into these patterns?
I don't personally trade any of the shooting star, hammer hanging men or etc(I'd be surprised if these are truly better results only on Daily charts, but I don't know for a fact that why I conceded that).

While not my main thing I will sometimes trade engulfing bars / patterns, particularly useful if you already have something else that's giving you an edge on knowing if better odds for up or down. I have looked at Daily, Weekly, Monthly, Time (1,2,5,10,30,60,120,240 min), Momentum, Kase, Volume, Range and Tick charts and I have not seen any noticable different in what I do personally(which makes sense, since the markets are fractal).

At any rate I don't feel like getting in a debate regarding this. So, may not be replying much more if at all. Just sharing my experience, but again can really only speak to engulfing bars / patterns.
 

fandango4

Newbie
2 0
Hi. I recently finished reading Stephen Bigalow's book on candlestick patterns and I'm looking to start trading them. My issue is how to use a screener in order to filter out potential trades. Do people here use screeners or manually scan?
 

tomorton

Legendary member
8,095 1,196
Well I am speaking of Stocks/Futures I don't trade forex, so we can't be disagreeing there. Even if candle patterns only work slightly more than they fail, still if you took every single one why would the Daily chart results be inherently better than a time, kase or etc chart that's comparable? And if those results aren't aren't drastically different, you could shave a little time off of the other charts and rinse and repeat.

In other words you'd have to tell me at what point do candle patterns lose there effectiveness? If the answer is they only really work on Daily charts, than that just isn't my experience at all and maybe we're using different candle patterns. If that's the case than I can't and won't claim you're incorrect, I can only state what I know to be true which is the candle pattern I use does not work more or less, simply by changing my chart.

Candlestick patterns that rely on gaps between close and open are inherently unreliable on all types of intra-day charts and forex daily charts. In these cases there are no or very small, uncommon gaps, and only the weekend forex D1 gaps are due to a closed session.

I admit I don't find candlestick patterns highly reliable and I do not use them as entry signals. But as unreliable as they are in their own optimum contexts, I see them as even less reliable in different, inappropriate contexts. Nothing contentious there, I'm sure.
 

Atilla

Legendary member
19,419 2,850
Strange peeps referring to chart patterns as whether they work or not? What does work mean? I'm guessing at predicting market moves.

Candle sticks are no different to any other view of where price movement has been. They are historical view on price movement and that's all imo.

I would not refer to technical charts patterns as whether they work or not. No they do not work imo. They are merely a view on price movement.

What candle sticks do is give you an insight into market psychology between the bulls and bears over who won the battle on the day. They are loaded with information presented in a simple candlestick pattern with body and tails.

Bulkowski has done a lot of work looking at statistical probabilities on pattern breakouts worth looking at. However, as with all things nothing is 100% certain.
 

new_trader

Legendary member
6,493 1,403
Strange peeps referring to chart patterns as whether they work or not? What does work mean? I'm guessing at predicting market moves.

Candle sticks are no different to any other view of where price movement has been. They are historical view on price movement and that's all imo.

I would not refer to technical charts patterns as whether they work or not. No they do not work imo. They are merely a view on price movement.

What candle sticks do is give you an insight into market psychology between the bulls and bears over who won the battle on the day. They are loaded with information presented in a simple candlestick pattern with body and tails.

Bulkowski has done a lot of work looking at statistical probabilities on pattern breakouts worth looking at. However, as with all things nothing is 100% certain.
👆This would be mostly my answer too.

A head and shoulders pattern is a head and shoulders pattern regardless of the time frame. The general rule is that what you forecast/project from the pattern is only valid on the time frame that it exists.
 

attila low

Active member
136 2
Hi. I recently finished reading Stephen Bigalow's book on candlestick patterns and I'm looking to start trading them. My issue is how to use a screener in order to filter out potential trades. Do people here use screeners or manually scan?
there are scaners but they are paid (AFAIK) , if you find a good one inform me as well .
 

Elitestefine

Newbie
1 1
I have been working on daily charts with candlestick patterns and I can say that it is quite effective for me. I think that candlestick pattern works more than it fails and thus to me it is great with daily charts more than intraday trading.
 
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tomorton

Legendary member
8,095 1,196
I have been working on daily charts with candlestick patterns and I can say that it is quite effective for me. I think that candlestick pattern works more than it fails and thus to me it is great with daily charts more than intraday trading.

Nice level-headed post.

New traders sometimes have an idea that a chart pattern or candlestick pattern or indicator-driven set-up must have a colossal win rate to be worth trading. Worse, they sometimes assume that these things are almost cast-iron 100%fire-proof ways to enter a trade and make a profit.

They're not and they don't need to be.

It has to be realised that if you have a pattern or set-up that has only a 55% win rate and you can trade it at a r:r of only 1:1.5, you are going to do very well financially out of it. It will take you just over 200 trades to double your money. 200 trades is nothing: but its the 200 trades that make the money, not the win rate , not the r:r.
 

thfrtht

Junior member
10 2
Nice level-headed post.

New traders sometimes have an idea that a chart pattern or candlestick pattern or indicator-driven set-up must have a colossal win rate to be worth trading. Worse, they sometimes assume that these things are almost cast-iron 100%fire-proof ways to enter a trade and make a profit.

They're not and they don't need to be.

It has to be realised that if you have a pattern or set-up that has only a 55% win rate and you can trade it at a r:r of only 1:1.5, you are going to do very well financially out of it. It will take you just over 200 trades to double your money. 200 trades is nothing: but its the 200 trades that make the money, not the win rate , not the r:r.

That's all the more reason why intra-day can potentially be more effective... you'll have more setups to take. I understand you've already stated the patterns you've looked into do not work as well or at all on other charts as the Daily. I will take you at your word on that.

However, I know factually the markets are fractal and I also know the pattern that I use, as well as other things I use do not become less effective just because I change the settings on my chart.

Out of curiosity do you not believe the markets are fractal?
 
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