Candlestick Reversal Patterns

Discussion in 'Trading Software' started by daytrade5, Oct 7, 2002.

  1. daytrade5


    I am a long time RealTicks user day trading the Emini S&P and Nasdaq. Is there any software out there compatible with RealTicks that can identify candlestick reversal patterns on a 1min timeframe? Townsend Analytics has the programmer's toolkit available that can do almost anything. Unfortunantely, I don't have any experience with it. I am hoping that I am no the first person using RealTicks that has thought of this. Please let there be someone out there who as already invented this wheel!!!


  2. I've been using RealTick for quite some time as well. To my knowledge, the only way you'll be able to do this (short of finding RealTick supported software, which I don't think there is) is to use the RealTick API. I use the API for generating my own signals from RealTick data and it works great.
  3. daytrade5


    What is API? I'm assuming it is the programmer's interface. If that is the case then I'm a little out of my league. :(
  4. bone

    bone ET Sponsor

    Hammers and Doji are about the only realistic reversals to be found on a one-minute chart. Most advanced candle users tell me that multiple candle, complex patterns work best for longer timeframes like 60 minute and daily candles.

    Having used candles for several years, I tend to agree. There is just too much chop for that ultra-short timeframe. From my experience, if you get a Doji, a Hammer, or two red or yellow candles in a row on a one or two-minute chart, just go with it.

    I think that you'll find your work better rewarded by filtering the candles with a MACD or stochastic oscillator.
  5. I agree. Candle patterns for bars less than 5 minutes don't have enough significance to bet money on.
  6. nkhoi

    nkhoi Moderator

    for 1m time frame look for pair reversal formation
  7. Many of the text book patterns don't work well in any time frame IMO, plus some are not easy to spot in real time(I would forget about unique 3 river bottom). Some of them are better used with the opposite interpretation. With eminis, hanging men, hammers, stars are often negated on 1 min. basis except around the open, engulfing, piercing lines work better. Higher time frames show more patterns but the outcome can be surprising too! Candlesticks are just easier to look at but you'll have to come up with your own patterns by staring at the screen. :)
  8. nkhoi

    nkhoi Moderator

  9. bone

    bone ET Sponsor

    I guess I'm more than a little perplexed by the number of traders using one and two-minute bars/candles, and thinking that they can divine some sort of meaningful market action out of them. (Especially retail customers trading 1s and 3s in the E-minis) If a customer buys by lifting part of an offer, and a market-maker buys some back at the bid and decides to cross the rest of his offer for the balance, you've got a complex multi-bar pattern!! Maybe the specialist takes the market bid by pulling the rest of the offer he hasn't crossed and buying more from himself at the next highest offer. He gets some nibbles at his higher offer, then pulls his bid and takes it back sellers. But in reality the market hasn't moved out of sustained order flow- it's specialist/market-maker chop.

    Personally, I would think that a trader is better off using a longer timeframe like five-minute bars or candles and tape-reading the order flow.
  10. sierra charts has a candle screener, I've never used it, but it looks like it will do the job. Last I checked you can use a sample of IBM for a demo free on their site.
    #10     Oct 7, 2002