There is No Edge in a Single Candlestick | Forex Factory

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There is No Edge in a Single Candlestick

  • #1
  • First Post: Apr 5, 2015 3:03am Apr 5, 2015 3:03am
I see no edge in a single candlestick. Open price is the least significant price compared to High, Low and Close Prices.
Open price will get broken up and down several times in a candlestick lifetime, and is rarely respected.

Lows and Highs are the areas of interest to me. They represent possible future paths for price, when broken or respected, and all this in a formation of candlesticks, not a single candlestick which does not mean anything on its own.

This is the recent price action for GBP/USD H1 over the last 2 weeks. Which do you think is more important, open, or highs and lows ?

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No guts, no glory
  • #2
  • Apr 5, 2015 3:19am Apr 5, 2015 3:19am
In spot market 95% of the time open price is just a continuation of previous price action, the close of the previous candle. The other 5% is for gaps.
No guts, no glory
  • #3
  • Apr 5, 2015 3:59am Apr 5, 2015 3:59am
This topic gets raised so often .this surly demonstrates that maybe there is some thing to be gained from better understanding of these precious little candle sticks.

most things can be quantified , i find the information within the candle stick extremely useful. like i said one can determine such things as energy,momentum,averages ect.all from those 4 pieces of information.
  • #4
  • Apr 5, 2015 4:08am Apr 5, 2015 4:08am
Quoting abokwaik
I see no edge in a single candlestick. Open price is the least significant price compared to High, Low and Close Prices. Open price will get broken up and down several times in a candlestick lifetime, and is rarely respected. Lows and Highs are the areas of interest to me. They represent possible future paths for price, when broken or respected, and all this in a formation of candlesticks, not a single candlestick which does not mean anything on its own. This is the recent price action for GBP/USD H1 over the last 2 weeks. Which do you think is...

Of great importance is your horizontal lines in relationship to the active price after opening. Be them based in historic highs/low or arbitrarily chosen.
Solutions ONLY!!!
  • #5
  • Apr 5, 2015 4:18am Apr 5, 2015 4:18am
Making trading decisions based on a single candlestick in isolation of recent PA (S/R, Trend Lines, candle formations... etc) is like entering a dark room with one candle, compared to entering a dark room with as many candles as you can.
No guts, no glory
  • #6
  • Apr 5, 2015 4:40am Apr 5, 2015 4:40am
Looking at the chart from 1st post, the question is how are you going to trade it next week.

Although I am not trading GBP/USD at this time, but if I will, I would have:

  1. Pending Buy Limit Order around 1.486x with TP at 1.495x and SL at 1.479x
  2. Pending Sell Limit Order around 1.495x with TP at 1.485x and SL at 1.500x.

No guts, no glory
  • #7
  • Apr 5, 2015 5:07am Apr 5, 2015 5:07am
So why not trade the break outs using buy/sell stop orders in the previous example.
Well as you can see the whole price action for the latest 2 weeks is capped by High and Low of March 18th, so basically we are in a range.

I would trade breakouts at March 18th High/Low break.

So, to understand price action we need to look back (based on which time frame we are using), and see were are the higher probabilities lie for entering/exiting the market.
No guts, no glory
  • #8
  • Apr 5, 2015 6:16am Apr 5, 2015 6:16am
Trading a single candlestick at open in isolation of previous candles and confluence areas, is some sort of gambling.
It can make sense at news time, but again you need to know were to exit either in profit or loss,
and what would be the guidance for that ? Previous highs and lows.

What does a pin bar or a doji candle mean in the absence of support and resistance?
No guts, no glory
  • #9
  • Apr 5, 2015 7:07am Apr 5, 2015 7:07am
One of my early systems "Follow the Big Candle" was based on a single candle stick. But guess what, it was not based on the open of the big candle, because there is no way to know if it will be Big at the open, the system waits until it exceeds a specific size determined by the trader and based on ATR (hence relating to previous candles). The system provided an option to trade the big candle itself, or the next candle after the big candle. The system basically takes advantage of increasing momentum specially at news time or at demand/supply areas.
No guts, no glory
  • #10
  • Apr 5, 2015 7:26am Apr 5, 2015 7:26am
Moreover, looking at single time frame (not a a single candle), will not give the big picture. And so I am a believer in MTF trading.

Moreover, looking at a single pair will not give you the full picture, so I am a believer in Basket Trading.

If someone likes to limit the market to a single pair, and that single pair to one timeframe and that one timeframe into a single candle and tell us that he has a secret edge trading that single candle and he can not share more than that with us, well, good luck.
No guts, no glory
  • #11
  • Apr 5, 2015 9:17am Apr 5, 2015 9:17am
Quoting abokwaik
Moreover, looking at single time frame (not a a single candle), will not give the big picture. And so I am a believer in MTF trading. Moreover, looking at a single pair will not give you the full picture, so I am a believer in Basket Trading. If someone likes to limit the market to a single pair, and that single pair to one timeframe and that one timeframe into a single candle and tell us that he has a secret edge trading that single candle and he can not share more than that with us, well, good luck.

I limit the market to one timeframe only. I trade several pairs but I don't use correlation's concept and I may sometimes use just one candle to take a trade.

I can't say that I'm the worst trader ever.
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  • #12
  • Apr 5, 2015 9:39am Apr 5, 2015 9:39am
Quoting Unabletrader
{quote} I limit the market to one timeframe only. I trade several pairs but I don't use correlation's concept and I may sometimes use just one candle to take a trade. I can't say that I'm the worst trader ever. {image}
Clearly you don't fit the profile I mentioned.
My opinion is that it is meaningless to take a trade based only on the current single candle, while we have additional information in front of us.
No guts, no glory
  • #13
  • Apr 5, 2015 10:05am Apr 5, 2015 10:05am
Hi there, I think it can be useful. The way the candle stick is formed during the course of its development tells us whether the market is steady or volatile. The absolute range of the candle tells us whether the market is active. The open and close are important components too as the wicks are formed in relations to them. Wicks are commonly use to indicate strength or weakness. Thus, I guess these are the ways it can be useful.
  • #14
  • Apr 5, 2015 4:24pm Apr 5, 2015 4:24pm
I see at least four edges, and sometimes five or six, in a single candlestick. Can you guess what they are?
Play the players, not the cards.
  • #15
  • Apr 5, 2015 4:38pm Apr 5, 2015 4:38pm
Open High Low Close Volume Spread. But they don't mean much if not compared with previous values.
No guts, no glory
  • #16
  • Apr 5, 2015 4:38pm Apr 5, 2015 4:38pm
You are right! classic Candlestick patterns DO NOT work in trading! They were developed for 18th century rice market, as you can see in any kind of test they do not work!
All posts are my personal opinion
  • #17
  • Apr 5, 2015 4:55pm Apr 5, 2015 4:55pm
The candle that seemingly does nothing significant at the frontier is the most telling.
  • #18
  • Apr 5, 2015 5:09pm Apr 5, 2015 5:09pm
Quoting abokwaik
Open High Low Close Volume Spread. But they don't mean much if not compared with previous values.
Close, but not right. A candlestick can't show you volume nor spread. I was referring to the sides of the candlestick, as well as their top and bottom, along with possible wicks. I hope you get now that I wasn't being serious about it.

Quoting Rtm
You are right! classic Candlestick patterns DO NOT work in trading! They were developed for 18th century rice market, as you can see in any kind of test they do not work!
Does this mean that we should look for new patterns? What if we end up finding the same patterns?
Play the players, not the cards.
  • #19
  • Apr 5, 2015 5:14pm Apr 5, 2015 5:14pm
Quoting skyway
The candle that seemingly does nothing significant at the frontier is the most telling.
only in hindsight!
All posts are my personal opinion
  • #20
  • Apr 5, 2015 5:30pm Apr 5, 2015 5:30pm
Quoting Rtm
{quote} only in hindsight!
Well, when it's at the live edge most are too afraid to even look at it.
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