Thanks, davez. I also wish TC2000 would upgrade their charting - those are the hardest-to-read candle charts anywhere. At least be able to set the grid colors differently, anything. The Wordens seem to be putting all their efforts into TCNet and abandoning TC2000
"Candle patterns are not reliable for short-term trading timeframes. " Nihaba where are you? Arise and blast this infidel.
Hi easyrider, I arrived back from my business trip/vacation late last night (been gone about 2 weeks). Will need about a week to catch up (reviewing, printing my intraday annotated intraday Emini charts)...and lots of other work. Yep...anytime someone saids something is not reliable...they meant to say they couldn't make any profits via it for whatever reason. Hmmm...why didn't they provide any details to how they used it and an example of a candlestick pattern that's not reliable (hopefully they weren't using low probability trade setups). I myself know for a fact that candlesticks are extremely reliable for intraday trading via my own trading methodology. I've been profiting via candlestick analysis for many, many, many years. Therefore...with that said...it's obvious that bone and BSAM are using them differently than I am or differently then any one else that uses them as a profitable trading tool. Like I have said many times before here at Elite...what works for one trader...most likely doesn't work for another trader. Thus, it's not the trading tool...it's the trader that's using a particular tool that makes the difference. My time frame for candlestick analysis is 1min, 3min, 15min and daily charts. I'm not trying to bash BSAM nor bone... but most traders I've met that used candlesticks and that had found them not to be reliable... either were applying them incorrectly or didn't understand the probabilities of particular candlestick lines (patterns) within many different types of price patterns. Here are some common problems I've notice among those that incorrectly used candlestick analysis: 1) They rarely allow candlesticks to complete themselves to confirm or void a trade signal 2) Attempt to pick bottoms with low probability candlestick patterns 3) Attempt to pick tops with low probability candlestick patterns 4) They do not understand supply/demand within the intraday cycle 5) Attempt to use candlesticks to designate price targets 6) Underestimate the importance of the body length and price close of the previous candlestick in relationship to the current candlestick. 7) Most common misinterpreted candlesticks are Haramis, Dojis and Hammers 8) Most do not even have a well written candlestick trading plan (most common reason of them all) NihabaAshi
Excellent post Nihaba... I too love candlesticks, since they provide the conceptually easiest depiction of the battle between the bulls and the bears in any give timeframe... I needn't go on further, my views are the same as Nihaba's in the previous post...
If you are having a really slow day and you are trying to figure out why, pick a set number of candles and count the shadows. For example 25 candles 50 shadows=very choppy 25 candles 25 shadows, very strong trend. The idea being that whatever time frame you are looking at, a low shadow count means trends are continuing beyond that time frame. And that's an original profitseer tip! On a 60 minute chart, the open and close are the most important things to watch, because that was the exact price at the top of each hour. If the open is higher than the close, that means that the close probably traded at the bid and the open traded at the ask. If you didn't have candlesticks, you would have to watch the clock and wait for the top of the hour and then see if it trades at the bid or the ask. If a white candle opens at the ask moves up one point and closes at the bid, and that is followed by a dark candle which opens at the ask, trades down one point and closes at the bid, that is called bearish engulfing, because it had a higer high and lower low. The close on an intraday candle is very important, because a lot of people like to get flat on the close before the next candle opens. And I have many more observations, because I have many slow days.
in es, a doji gap appears on your charts whenever there is a serious sytem failure. The system failure produces the gap and all the traders who couldn't figure out what was happening created the doji by simultaneously closing their positions.
Expert candle traders know the secret of combining candles. To combine 3 candles, you use the open of the firtst candle and the shadows of all 3 and the close of the 3rd candle. This gives you a confirmation candle. Or you can just simply reset your chart from one minute to 3 min and it will automatically perform this secret for you.
A dark candle in an uptrend makes for a stronger trend than just a series of white candles, because it shows the trend can endure some adversity.
If you like to place stops above the high and below the low, spinning tops are very good candles to use this strategy on. Although it works better on some commodities than others. Crude and es are notorious for taking out both sides of spinning tops. And rentering the third and fourth and fifth and sixth and seventh time can get expensive. (How do I know this?) But over a large portfolio, this aint a bad strategy.
an ok way to get your candle mojo working is to keep fiddling around with the time on your charts until you get reliable hammers at the bottoms. Of all the candles that are worth a darn and aren't worth a darn, a hammer at the bottom is probably maybe worth a darn. I may not be bullish, but I don't like to trade against a hammer. At any rate, if you can get them lined up at the bottoms, you may have a good time frame to trade on your chart.