The problem with these academics, is that they are analyzing out of context data points and patterns, which are meaningless the moment you remove them from the context. Any trader can look at price action or a candlestick and understand what it means as it relates to buy and selling pressure for a specific time period for a specific equity based upon years of experience. A computer does not know how to interpret the meaning thus strictly trading off of candlestick pattern is most likely a mediocre strategy.
Just curious, WRB, You posted this------- * Do not use them all by themselves. Instead, use them as a secondary or confirmation signal. My question for you, you mention to use them as secondary or confirmation signal. For your own personal training, what do you use for you PRIMARY signal? Thanks
I met a guy who exclusively uses candlesticks with high precision. it is apparent candlestick works, but like any strategy in trading, very few can grasp how it works, otherwise, the market would not exist. regarding academic paper, if the author finds out a candlestick pattern that works, do you think he is foolish enough to publish it? that is why it is nonsense to use academic research to disprove anything relating to trade strategies.
My primary trading approach is the market context. Thus, it's not a trade signal. Instead, it involves key market events (e.g. global economics, economic report times, FED/ECB info, breaking news, open/close times of key markets) along with intermarket analysis, volatility analysis and supply/demand analysis. Without the above...I ignore any trade signal I get because the odds are very high I won't be profitable if I take the trade without the market context. Further, market context is still just part of the puzzle. The other part is the trading plan itself. That consists of many variables such as market experience, discipline, stress management, money management, position size management, trade management, proper capitalization, proper broker platform, proper computer equipment, proper at home/office trade environment and so on. These are all critical pieces of the puzzle that must be in place to give yourself a chance at being profitable prior to the appearance of any trade signals. Thus, those that say you can be a profitable trader via trade signals alone...that's b.s. because the markets are too complex for such in today's trading environment. Simply, they are profitable via other variables as mentioned above while their trade signals is just part of that puzzle they've been able to put together. Therefore, I use Japanese Candlesticks as secondary as I do all my other types of trade signals...market context is primary for me as a price action only trader (no indicators). My point is that if someone tells you he/she is profitable and you ask them what trade signal they are using...you're asking the wrong question. I don't know what your definition is of the word exclusively but I hope you're not implying this person you know does not have money management, market experience, discipline and all those other variables that's critical to successful trading as mentioned above in my other reply. Simply, if you're not implying such...he's not exclusively using Japanese Candlesticks unless you meant to say it's the only type of trade signal he's using while he has in place all or most of those other variables I've mentioned. Also, I hope you meant by the word met that you've seen such via your own two eyes in person or have seen verifiable proof accompany with detail Japanese Candlestick pattern description for each trade within the verifiable proof. Don't believe the hype because it ain't that simple. Mark