NihabaAshi, Thanks for your comments. Ok I think my point was lost in the details of what I was doing to test my hypothesis. My software is fine. I created some custom studies that allowed me to shift the start times for these candles to test the validity of the patterns. And I agree, I've never heard of anyone doing this either (wanted to see if there was an edge in it). The result of my test was that many of the supposed candlestick patterns didn't appear when the time was shifted by a minute or two. Maybe all this proves is that there is no edge in shifting start times of candlestick bars? ***** The premise of my testing was this: if a candlestick pattern is "valid" then it should occur regardless of a minor shift in time or # of ticks. If shifting time or # of ticks by a minute or two or a few ticks is enough to make a patterns not appear, then by my reasoning, this pattern isn't valid because it depends too much on the data and charting program. ****** The 5 minute candles was probably a poor example, as in my actual testing I was more concerned with longer time candle patterns like 15, 30, 60 minutes where in my view a 1-3 minute shift shouldn't significantly alter the outcome of the pattern. I tested many combinations such as 30 minute bars starting at 9:27, 9:30 and 9:33 respectively. I found that it did alter the outcome in many cases, so my conclusion was that candles are too dependant on start/end time and start/end tick in order to be of universal applicable value. In other words, I don't feel they are robust enough to rely on candlestick patterns for predictive value. Yes pretty much so, although it would probably be more like comparing 12,26,9 to 10,24,7 and 14,28,11 to see if I get confirming signals among similar ranges of values. The premise is the same, if I get different signals using similar values in my MACD then perhaps the signals I am getting aren't robust enough to be relied upon? Some signals will come sooner, some later but most of the signals should be confirmed by the other MACDs with similar inputs. And you are right with your other conclusions, I may just have been testing the wrong candle patterns in the first place, and as a result those patterns weren't profitable, regardless of how I shifted the start/end times. My study was by no means comprehensive or completely conclusive and I'm still open to candlesticks holding merit for trading. This is one reason I chose to make my first post in this thread. I wanted to share my experience and then see if anyone else was in fact getting positive results from the candle patterns they are analyzing. Let me ask this, are you using some candlestick patterns that are in and of themselves predictive or contain an edge, without applying divergence or another indicator to the pattern for confirmation? Thanks,
The reason I have started to cram candlestick analysis into my mind (never used them until two weeks ago), is for the simple fact that SO MANY other people trade off of candlestick patterns. The key point is everyone that uses Esignal or QCharts or whatever is all on the SAME time basis for candlestick data initialization. At 09:30 EST when the market kicks off, everyone that uses datafeed all have their first candlestick bar initialize at 09:30:01. The data race starts for everyone at 09:30:01 and all data on all time frames (1 min, 3 min, 5 min, 15 min, daily, etc) initializes at this point. Everyone is playing with the same sheet of music, and this is very important to see all candlesticks in a time hack reference to what all your competition is viewing. To alter the start times of the candlestick data would put you in a non parallel dimension to what the rest of the world is viewing for data. I now use candlesticks to take into account another aspect of actions other traders will take based upon the candlestick data they see. My entry or exit could be greatly altered by viewing a particular candlestick pattern that thousands of other traders see all in my same time dimension. If I am long the ES "in the money" for 4 pts and I am contemplating an exit for profits, and then I see a very high probability candlestick continuation pattern print, I will definitely stay in that trade longer. I would not ever be worried about what that continuation pattern would look like if I shifted the bar start data by a minute, because I know we all started the data initialization race at 09:30:01 EST. Hope this makes sense! BTW, I'm sure there have been traders that have shifted bar data initialization forward a minute or two to see if they could possibly see a particular pattern print before the rest of us to have an edge. This might just work! :eek:
Tripack is just saying if he shifts the origin, he can make a hammer turn into something else, for example. True. That's why you need to trade candlestick patterns, not single candlesticks. That's the single greatest thing i've learned from NihabaAshi. If you shift the time origin you'll modify the first and last candle of the pattern, but the pattern remains intact.
Focusing on time intervals is ok since timing a trade is important only when the time has come.<g> Candlestick patterns themselves are true to themselves in any time interval used. The patterns develop naturally. So the profitable use is entirely on the user. Continuation patterns form in every interval also. The market indexes and charts only reflect outside influences on price and movement so placing the correct interpretation and weighting on ones analysis is purely subjective speculation on reality or causes. Tools are tools.....it takes a craftsman to create art of profit and value for himself. The chart is attached for imagination and thinking only,no system is being implimented or suggested. The question is will the continuation pattern prove reliable in this case or will a reversal pattern develop? Find the descending wedge then time your bet. Remembering: âThe passage of time as a limitation on what can be achievedâ All market analysis is speculation! But you need to recognize the facts for yourself.<g> Regards, ~j
Hi TriPack, Thanks for the clarification. That's a very good question. I prefer to use the words like high, moderate or low probability instead of predictive. Hmmm...without applying divergence or any other type of indicator for confirmation... do some particular candlestick patterns still contain an edge? Yes and I am using a few via price action only methods on occassion. Note: The bulk of my methodology is based on indicators...a small portion of it is based on price action only methods. Here's my personal use or definition of price action only metods: I only use volume and an index to help with trade decisions. Do I still see an edge in certain candlestick patterns when I take this one step further via removing volume and my index? I don't know because I've never traded via such nor manually tested. NihabaAshi
I just wanted to post a follow-up chart of PCLN. The continuation patterns just kept on coming gaps are a good sign that momentum is in a stock. It has made decent gains since the first chart. I hope the chart speaks for itself.<g> http://share.esignal.com/groupcontents.jsp?folder=Other Indicators&picture=0818pcln.png&groupid=225 ~j
If the buyers lose faith over the next few days the island reversal will lead to a test of supports, granted the gap was small but it's there. http://share.esignal.com/groupcontents.jsp?folder=Stochastics&picture=0825nas.png&groupid=225