Here is why I think candlestick patterns have no value: with example

[Splitlink]

One of the chief advantages of trading without all the aids I listed is that opinion matters much less.

I am not going to deny that you have shown me much, but your lines are subjective. There is nothing wrong with that, provided that you are happy with them. of course, but I don't, always agree with them and draw my own. TBH, I believe that most of us are like that. Personal opinion comes into drawing lines, as well.

 

[dbphoenix]

I am not going to deny that you have shown me much, but your lines are subjective. There is nothing wrong with that, provided that you are happy with them. of course, but I don't, always agree with them and draw my own. TBH, I believe that most of us are like that. Personal opinion comes into drawing lines, as well.

If one can track the course of demand and supply without them, there's no reason to use them. Few of the traders I come into contact with, however, are unable to judge demand/supply balances. Therefore they consistently trade in the wrong direction. For them, drawing a simple line is helpful.

 

[30seconds]

nu 4h
I entered 1 pip plus spread above that bar, a classic BOPB.

If it was the bar printed 4 bars before (bar with bear stick) I would not have entered because it would confirm to me a possible side way market was on the way instead.

So you entered based on the shape of the candlestick (I assume the chart is 4h), but that shape just happened to appear to you because you are in UK. If you were let's say in Spain there would be 1h offset, therefore the 4h candlestick would look different (not sure how much different, but is possible to check). So you would still make that decision? If would be different I don't think you would do the same. I'm not saying you are wrong, I'm just asking you the question. What do you think?

I don't really have proof that candlestick patterns are worthless, but I would like to see what are the win/loss ratios of people using them. Notice that money management and time plays a big role (ex.: your entry might be really bad but after a while turns your way and you win money). Either way I would like to know if you are happy to present some stats of your trades (win/loss ratio, average profit per trade, trades per day, average trade time and similar). Also let us know if you just do TA on candlestick or you take in account something else.

Thanks

 

[dbphoenix]

Hi DB,

What do you think of PnF? It seems you don't talk much about this chart in Wyckoff discussion. Wyckoff used it to evaluate how many points a move could go. If this is the way to measure the distance, is there any scientific or logical reasons behind it, or just another subjective pattern thinking?

Regards,

abc

There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.

 

[30seconds]

There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.

Ok, thanks for the info.

The other day I've read this document https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TestingPointFigure.pdf which states that some patterns in p&f have 91% success rate, what do you think about it? Scam or not?

 

[dbphoenix]

Ok, thanks for the info.

The other day I've read this document https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/TestingPointFigure.pdf which states that some patterns in p&f have 91% success rate, what do you think about it? Scam or not?

I don't want to appear rude, but I really don't care enough about it to evaluate the research design, though if it's like most, there are probably so many holes in it that whatever conclusions are drawn may be baseless. I'd ask someone who really likes P&F and is successful with it, though how you'll know whether or not they are truly successful with it is another matter.

OTOH, if you're interested in it chiefly because you're disillusioned about candles, you may find my Wyckoff thread interesting. It's a strictly no-frills approach to trading.

 

[30seconds]

I don't want to appear rude, but I really don't care enough about it to evaluate the research design, though if it's like most, there are probably so many holes in it that whatever conclusions are drawn may be baseless. I'd ask someone who really likes P&F and is successful with it, though how you'll know whether or not they are truly successful with it is another matter.

OTOH, if you're interested in it chiefly because you're disillusioned about candles, you may find my Wyckoff thread interesting. It's a strictly no-frills approach to trading.

Ok, thanks.

 

[abc163]

There appears to have been a delay in this post, perhaps because it's your first. And it's not exactly on-topic, but I did mention P&F, so I'll answer as briefly as I can.

I don't use P&F because it doesn't tell me anything I don't already know and because it's not nearly fast enough. As for measuring the distance of a successful move, I haven't seen any rigorous evidence that it is able to do so, but that doesn't mean the evidence doesn't exist.

Keep in mind, though, that some people love it, and if it meets their needs, then it certainly merits investigation. I suggest you begin with du Plessis.

Thank you DB. I would take a look on du Plessis. Your talk about the continuity of price does help me a lot in understanding Wyckoff.

 

[wallstreetwarrior87]

So you entered based on the shape of the candlestick (I assume the chart is 4h), but that shape just happened to appear to you because you are in UK. If you were let's say in Spain there would be 1h offset, therefore the 4h candlestick would look different (not sure how much different, but is possible to check). So you would still make that decision? If would be different I don't think you would do the same. I'm not saying you are wrong, I'm just asking you the question. What do you think?

I don't really have proof that candlestick patterns are worthless, but I would like to see what are the win/loss ratios of people using them. Notice that money management and time plays a big role (ex.: your entry might be really bad but after a while turns your way and you win money). Either way I would like to know if you are happy to present some stats of your trades (win/loss ratio, average profit per trade, trades per day, average trade time and similar). Also let us know if you just do TA on candlestick or you take in account something else.

Thanks

But the key being - it is relevant to him, and him only as its his own interpretation of the information. If there is no information deemed of value it simply means no trade, so you may take a trade and he may not because you both have different "images" of the information. What you need is a way of understanding the story; how best can you interpret the meaning etc?. This is only one piece of the jig saw, so best not to get too hung up over it, or you will lose focus on all other important factors to being a consistent trader. (Not saying you are not - just in general)

Only my opinion of course.

 

[dbphoenix]

Thank you DB. I would take a look on du Plessis. Your talk about the continuity of price does help me a lot in understanding Wyckoff.

If you're interested in Wyckoff, you may prefer de Villiers over du Plessis since de Villiers started the whole thing at about the same time that Wyckoff and Livermore were active.

 

[abc163]

If you're interested in Wyckoff, you may prefer de Villiers over du Plessis since de Villiers started the whole thing at about the same time that Wyckoff and Livermore were active.

I did read de Villiers books and also alexander Wheelan's, but all their works emphasize on patterns recognition. You mentioned market auction theory in Traders Laboratory and advised to read market profile books, but some of their concepts do not make sense to me, so recently I come back to PnF to see whether there is a way to differentiate some behaviours on bar charts.

 

[dbphoenix]

I did read de Villiers books and also alexander Wheelan's, but all their works emphasize on patterns recognition. You mentioned market auction theory in Traders Laboratory and advised to read market profile books, but some of their concepts do not make sense to me, so recently I come back to PnF to see whether there is a way to differentiate some behaviours on bar charts.

I doubt that I ever advised reading Market Profile books. As to interpreting behavior on P&F charts, I can't help you there. However, I've written extensively on interpreting behavior on bar charts, none of which has anything to do with this thread. The following are a start:

The Wyckoff Method

Trading Price

The Straight Line Approach

SLAyers' Notes

The latter two are long and you can skip a lot. If you've already read them, it's time to open up a journal and begin the real work. Trading Price is my attempt to consolidate what I consider to be most important into something that's easily digestible. It's chief value may lie in the fact that it's brief.

 

[abc163]

I doubt that I ever advised reading Market Profile books. As to interpreting behavior on P&F charts, I can't help you there. However, I've written extensively on interpreting behavior on bar charts, none of which has anything to do with this thread. The following are a start:

The Wyckoff Method

Trading Price

The Straight Line Approach

SLAyers' Notes

The latter two are long and you can skip a lot. If you've already read them, it's time to open up a journal and begin the real work. Trading Price is my attempt to consolidate what I consider to be most important into something that's easily digestible. It's chief value may lie in the fact that it's brief.

Maybe I made mistakes since it was years ago, or maybe someone else mentioned those books.

 

[Fugazsy]

So you entered based on the shape of the candlestick (I assume the chart is 4h), but that shape just happened to appear to you because you are in UK. If you were let's say in Spain there would be 1h offset, therefore the 4h candlestick would look different (not sure how much different, but is possible to check). So you would still make that decision? If would be different I don't think you would do the same. I'm not saying you are wrong, I'm just asking you the question. What do you think?

I don't really have proof that candlestick patterns are worthless, but I would like to see what are the win/loss ratios of people using them. Notice that money management and time plays a big role (ex.: your entry might be really bad but after a while turns your way and you win money). Either way I would like to know if you are happy to present some stats of your trades (win/loss ratio, average profit per trade, trades per day, average trade time and similar). Also let us know if you just do TA on candlestick or you take in account something else.

Thanks

I am not based in England but I do not understand what you saying in regard. For what I know candle stick difference are based on the broker and the way you set them. Mine are set on daily start/end time 17:00 New York which is also the set up for MT4.

I am not a Steve Nison (corrected, thanks Tim) fan but I dived my candles in three parts: bear candles, bull candles and doji candles or range bar candles: if my sentiment is long and market pulls back at what I consider an important technicality I will not enter above a doji bar. (In a range I sell high and buy low, clearer on a smaller time frame).

I need to see my timing is right, my job is too anticipate the move and I need a confirmation the moved is on his way (In a trend I buy high, break out).

Otherwise how do I know where and when to enter? At a specific level with limit orders? But a bull flag can turn into nothingness.... and where do I place my protective stop? At the previous swing low? And what about RR?
With a trend bull candle in a bull flag I buy above the trend bull bar and my protective stop is placed below that swing low. (most of the time is the low of that bar)

When I take a trade I presume my setup have a 60% (if it gets to 80% the better) probability to succeed, If I am reading right I am taking the trade in the direction of the least direction and if I sit tight in the proper market condition I can make my bread.

I am pure technical trader but I keep my ears on sentiment (I only trade forex).

Said that technicality is an art form, it is just a tool to interpret the market and participate in it in a timing matter.

Finding a way that reflects our personality could be the solution, for what I am concerned there are not any secrets in trading but only skills and TA is a vast subject of interpretation, there are not absolute truth in trading unless someone is trying to sell you something.

 

[tokyojoe]

I am not based in England but I do not understand what you saying in regard. For what I know candle stick difference are based on the broker and the way you set them. Mine are set on daily start/end time 17:00 New York which is also the set up for MT4.

I am not a Steve Nison (corrected, thanks Tim) fan but I dived my candles in three parts: bear candles, bull candles and doji candles or range bar candles: if my sentiment is long and market pulls back at what I consider an important technicality I will not enter above a doji bar. (In a range I sell high and buy low, clearer on a smaller time frame).

I need to see my timing is right, my job is too anticipate the move and I need a confirmation the moved is on his way (In a trend I buy high, break out).

Otherwise how do I know where and when to enter? At a specific level with limit orders? But a bull flag can turn into nothingness.... and where do I place my protective stop? At the previous swing low? And what about RR?
With a trend bull candle in a bull flag I buy above the trend bull bar and my protective stop is placed below that swing low. (most of the time is the low of that bar)

When I take a trade I presume my setup have a 60% (if it gets to 80% the better) probability to succeed, If I reading right I am taking the trade in the direction of the least direction and if I sit tight in the proper market condition I can make my bread.

I am pure technical trader but I keep my ears on sentiment (I only trade forex).

Said that technicality is an art form, it is just a tool to interpret the market and participate in it in a timing matter.

Finding a way that reflects our personality could be the solution, for what I am concerned there are not any secrets in trading but only skills and TA is a vast subject of interpretation, there are not absolute truth in trading unless someone is trying to sell you something.

Last paragraph is key

 

[crauria]

I've tried to do systems using candlesticks but I've never been succesful, other strategies worked for me but not candles. Some months ago I saw a guy in Zulu4me with A+ rank using candles or at least that said the description, I guess he's still top, maybe you can check the strategy to try to understand how it works, I tried it but was impossible, if you discover the secret let me know ;p