Huh? You dont quantify an edge from candles. Your edge becomes apparent after hundreds of trades. Your trade data will tell you what your expectancy is and provided it is positive - you have an edge . If you dont have a +expectancy then you have work to do on your method. Your method is everything from your psychology, your indicators, your patterns, your money management etc...
People like to quarrel instead of trying to understand If you have a chart or want to show what you're looking for, there are some here who have some degree of attention span. If not, that's fine too
Sorry got cut off had to go in a trade... The other point to make is that everybody has a personal style and ability to read price action or derivative price action (i.e. indicators) so you could put up candlesticks and 2 MAs and 10 people will simply see it different, especially since not everyone can see the same thing in the same time frame. All in all, indicators are objective pieces of information that can be interpreter in very subjective ways. Even if you read a book on a system that the author proves made money you will trade it differently or see things differently.
The same way you quantify it whatever you're using, surely?! Sorry, the question doesn't compute: why would using only candlesticks (not that I use them, myself) alter "how you quantify your edge"?
"THE" indicator does not exist. There are millions of different indicators that can be built. The combination of two things define success or failure: the indicator the trader I have an "indicator" and my friend also has an "indicator". I make money and my friend loses money. If we would exchange the "indicators", so that I have the bad "indicator" and my friend has the good "indicator, I would lose money and he would make money. So the carpenter with hammers and nails are a bad example. Because the starting point is that only the person will be different, the rest would be identical, which in real trading is almost never true. The person as well as the tool have an impact on the result.
Call me a skepchick, but I don't really believe that (as I think you don't, either?). I think that if you swapped indicators, there's actually quite a high probability that you'd continue to make money and he'd continue to lose it. Just my perspective. No analogies are ever accurate, are they? (I didn't quite like it because I felt that the hammers and nails are something nobody can really do the woodwork without, but people can and do trade for a living without indicators. I'm "just saying".)
Sorry there is no such thing as a bad indicator.... an indicator is an indicator.. MA....MACD...Stochastics... It just produces a value. Your friend losses money because of his inability to read price action and risk control. Only an amateur trader blames the indicator. The reason his indicator does not work for you because you are not him and have a different style. The hammer and nails is a good example to focus on the tool (let's not get into the philosophy of needing indicators or not, that is an individual choice) because the hammer and nails are the same tool no matter who holds it and a hammer's job is to bang in the nail. If you don't know how to use it you can't do shit with it but the problem is never the hammer, it is the one holding it.
I saw his indicator, believe me he was horrible. Impossible to make money with that thing. But it was an achievement to built him, so horrible, went beyond my imagination. If I would continue to make money it would mean that the indicator is irrelevant. Which would mean that people should throw away all indicators because the moneymaking would have nothing to do with the indicator. An indicator is an indicator? A hammer is a hammer? Indicators produce values, but there are values and values. Not all values contain relevant information.
Well you see thats the part that gets me. Lets say we are both fluent in, and conversing in english, why would I insist on having 3 other people present to 'translate' what you are saying to me? Before I am allowed to respond to anything you say, I must first make sure that the other 3 chaps have given me their opinion of your meaning. I know what you are saying, if I get something wrong, well then you will point it out to me...just like the market makes a point of letting me know when I misinterpret it
Since you're only "looking" at candle sticks, you're relying on visual cues, so you can't even accurately document or quantify your entry/exit conditions. You rely on your perception and how you're "feeling" in the moment. Taking this approach you don't know if a draw down is the result of a market regime change, or if it's the result of your own personal bias changing. I really doubt it. In fact it's probably nothing like the process I follow. -I code starts based on conditions built around time series data. This involves using equations which you could say are custom "indicators" , even though they are really just common mathematical techniques used in data analysis. -I conduct in sample testing/ out of sample testing/ walk forward/ Monte Carlo etc Ya know, like I try my best to follow a proper scientific process instead of relying on my discretionary interpretation of arbitrary candles sticks on a chart. .