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We were fools to believe candlesticks can predict

  • #121
  • Oct 28, 2013 9:57am Oct 28, 2013 9:57am
Quoting pemully
{quote} listen to the part he says about how frustrated he was trading the S&P. http://www.google.com/url?sa=t&rct=j...55123115,d.ZG4
Thanks so much for this, will listen to it later.
  • #122
  • Oct 28, 2013 10:47am Oct 28, 2013 10:47am
Quoting TranceTrader
This is the first sensible thread I've seen for a while on this forum. Now for the bombshell that is, using technical analysis alone for entry is like driving a car using the rear-view mirror.
Technical analysis is perfectly OK. You just have to use the right tools. The right tool is the one that gives the best indication of price moving in a certain direction... whether up, sideways or down. Candle sticks on the other hand are just occur too randomly on a chart to be a reliable basis for making trades. Not to say that traders do use candle sick patters WITH other tools Like S/R etc. to make trades, and have success doing it. Frankly I would not do that either. I think that the only credible Indicator and variations of it (bands) out there is the Moving Average!!
  • #123
  • Oct 28, 2013 12:51pm Oct 28, 2013 12:51pm
You dont have to predict the market. Winners are not some magic gene who can predict and make this magical formula to predict. The market is unique anything can and will happen, there is no predicting randomness.

I use candlesticks to make money
All posts are my personal opinion
  • #124
  • Oct 28, 2013 2:25pm Oct 28, 2013 2:25pm
Quoting Rtm
You dont have to predict the market. Winners are not some magic gene who can predict and make this magical formula to predict. The market is unique anything can and will happen, there is no predicting randomness. I use candlesticks to make money
dumbest post on the thread with the no predicting but the cherry is "there is no predicting randomness.... i make money with candlesticks" lol

If you truly believe the market is random then you believe that profits (or losses in your case) are luck (bad luck), and candlesticks can't predict direction.
  • #125
  • Edited 1:09pm Oct 29, 2013 12:17am | Edited 1:09pm
Quoting chucklots
{quote} dumbest post on the thread with the no predicting but the cherry is \"there is no predicting randomness.... i make money with candlesticks\" lol If you truly believe the market is random then you believe that profits (or losses in your case) are luck (bad luck), and candlesticks can't predict direction.
That's what I meant in my final paragraph in post #105: that different people use words like "random" and "predict" differently, and it causes great misunderstandings in discussions like this.

I assume that when Rtm says "random", he doesn't necessarily mean that price movement is a completely random walk; and when he says "predict", he means that it's impossible to make statements like "I can predict with 100% certainty that EURUSD will close at exactly 1.37705 tomorrow". Like many other comments that I've read, he apparently uses the word "random" to describe anything that can't be "predicted" with absolute certainty.

However, there are people like me who use the terms differently. For example, I see every decision to buy or sell as being an implicit "prediction" (e.g. the trader believes that price is more likely to rise than fall, on balance of probability); and I see price movements as NOT being "randomly" generated, because there is a rationale behind every trader's decision, and it's those decisions that collectively create the order volumes that ultimately drive price. Even if viewed solely from a TA-based perspective, markets are not entirely random: for example, you can see price stall at key S/R levels, or 'spike' during a news announcement, and so on.

Hence IMO that it's perfectly reasonable to say that price movement is not "random"; and that every trading decision (buy, sell, cover, etc) involves some kind of implied "prediction", and that it is the trader's skill in being able predict price direction/behavior correctly more often, than not, that provides his 'edge'. But that's because I use the terms differently to people like Rtm (and Mark Douglas).
  • #126
  • Oct 29, 2013 1:04am Oct 29, 2013 1:04am
Candlesticks and patterns work indeed.If you look at history you`ll see plenty of double tops,triangels ascendind or descending,dojis and morning stars working
next to perfection.But why do they fail when YOU take the trade? A mistery t o solve....

A funny idea and I`m sure ALL traders had it ot one Point in their trading:George Costanza`s edge to do the opposite.Whatever trading position you
and opportunity you see,do the opposite!Apparently it is alaughing matter but ...maybe not.
  • #127
  • Oct 29, 2013 3:09am Oct 29, 2013 3:09am
Quoting webcom
Candlesticks and patterns work indeed.If you look at history you`ll see plenty of double tops,triangels ascendind or descending,dojis and morning stars working next to perfection.But why do they fail when YOU take the trade? A mistery t o solve.... A funny idea and I`m sure ALL traders had it ot one Point in their trading:George Costanza`s edge to do the opposite.Whatever trading position you and opportunity you see,do the opposite!Apparently it is alaughing matter but ...maybe not.
IMHO, candles alone don't give away much information one can use. All they do is pinpoint a possible point of interest on the chart. Contextual elements, like their location on the chart (eg, at supply/demand/no man's land; in uptrend/downtrend/range), are key considerations that help identify the better than 50/50 ones.

Hanover explained it in detail earlier on this very thread. Here's the post:

Quoting hanover
{quote} Re candle types and prediction: I've come to realize that one very important element in analysis is context. Using my recent post here as an example, the 'how' (chart pattern) is explained in the first part of the post, and the 'why' (underlying drivers and reasons) in the second part. In the first example/screenshot, the signal candle (white arrow) is simply a strong bullish candle; in the second example/screenshot (white arrow) it is a bearish pinbar, or shooting...
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #128
  • Edited 8:29am Oct 29, 2013 8:06am | Edited 8:29am
Quoting hanover
{quote} That's what I meant in my final paragraph in post #105: that different people use words like \"random\" and \"predict\" differently, and it causes great misunderstandings in discussions like this. I assume that when Rtm says \"random\", he doesn't necessarily mean that price movement is a completely random walk; and when he says \"predict\", he means that it's impossible to make statements like \"I can predict with 100% certainty that EURUSD will close at exactly 1.37705 tomorrow\". Like many other comments that I've read, he apparently...
Agree with what you're saying Hanover, except your defense of this guy. I don't think he was using the terms in a different way. I don't think you can when I think about it, unless one is confused about the meaning, which I thought we went over way earlier in the thread. He is welcome to look up the term as are the rest that see the problem. When you make a prediction there is no implication you mean with 100% certainty, unless it is stated. It is synonymous with forecast, anticipation, etc.

He said "you cannot predict randomness" which by itself is true, but in the context of his sentence and the discussion, implies that he thinks markets are random, and there is no other way for you or me to interpret this unless the sentence is elaborated upon. If someone says things like "You don't have to predict, just follow" they are confused at what trading is, what you are doing when you buy or sell with expectation that a trade will profit and/or simply confused on the meaning of the terms in the language they are speaking. I don't see how this can be defended especially after he says "I make money with candlesticks" which then implies that candles give him an edge, which the OP was arguing doesn't and he was arguing isn't possible.

To add more to the thread though, I absolutely think there is an edge in learning price action and I would advise higher timeframe charts. One should get a live account and trade small until they get a grip on it. If you think you found a statistical, quantifiable edge then write an automated system for it and test it.

All this talk about knowing or reading where and when traders need to buy/sell and why... take it with a grain of salt. If it's true, it can be seen in the price action. The only thing I take seriously on that is when central bankers are talking up levels.
  • #129
  • Oct 29, 2013 8:58am Oct 29, 2013 8:58am
Quoting chucklots
{quote} Agree with what you're saying Hanover, except your defense of this guy. I don't think he was using the terms in a different way. I don't think you can when I think about it, unless one is confused about the meaning, which I thought we went over way earlier in the thread. He is welcome to look up the term as are the rest that see the problem. When you make a prediction there is no implication you mean with 100% certainty, unless it is stated. It is synonymous with forecast, anticipation, etc. He said \"you cannot predict randomness\" which...
I do agree that Rtm's post is confusing, even seems contradictory, but Hanover's may have a point here (I also get the clear impression that Rtm is using prediction as in with 100% certainty, rather than prediction as a probability % of outcome x). That's the root of the misunderstanding, I think. A lot of heated talk in discussions like this one breaks down to semantics. Only Rtm knows exactly what he meant. Better give the guy a break, and the chance to explain if he feels like to.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #130
  • Oct 29, 2013 9:12am Oct 29, 2013 9:12am
Quoting vox dei
{quote} I do agree that Rtm's post is confusing, even seems contradictory, but Hanover's may have a point here (I also get the clear impression that Rtm is using prediction as in with 100% certainty, rather than prediction as a probability % of outcome x). That's the root of the misunderstanding, I think. A lot of heated talk in discussions like this one breaks down to semantics. Only Rtm knows exactly what he meant. Better give the guy a break, and the chance to explain if he feels like to.

I hear you vox, but the guy would rather put me on ignore apparently then clearly state what exactly he meant. It's not like I didn't give him a chance, he could have responded just like anyone else. I can only go by what was said, you know? And what was said made no sense, and I am not going to speculate as to what he may have meant or what he thinks the terms mean compared to what they actually mean. Maybe I came off wrong on a message board as people feel the need to defend him, but if we were all in person I'm sure it would be different. Maybe if I put a smiley face as my avatar it will help...
  • #131
  • Oct 29, 2013 9:41am Oct 29, 2013 9:41am
Quoting chucklots
{quote} I hear you vox, but the guy would rather put me on ignore apparently then clearly state what exactly he meant. It's not like I didn't give him a chance, he could have responded just like anyone else. I can only go by what was said, you know? And what was said made no sense, and I am not going to speculate as to what he may have meant or what he thinks the terms mean compared to what they actually mean. Maybe I came off wrong on a message board as people feel the need to defend him, but if we were all in person I'm sure it would be different....
Well, speaking frankly, labeling someone as dumb (or other bad name) isn't exactly the most assertive thing to do.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #132
  • Oct 29, 2013 9:42am Oct 29, 2013 9:42am
Quoting vox dei
{quote} Well, speaking frankly, labeling someone as dumb (or other bad name) isn't exactly the most assertive thing to do.
said dumbest post, didn't label him dumb.. and quite frankly the post was dumb.

I'll end it here though totally done with this thread. I am here to talk FX not be a fake kind person to people who post crap that makes no sense. predict don't predict, use candles bars, defend people who clearly have no idea what the hell they are talking about, whatever you guys want.

meanwhile plenty of signals in fx this session, GL.
  • #133
  • Oct 29, 2013 9:47am Oct 29, 2013 9:47am
I have not had the opportunity to read through all the posts on this so apologies.

Candlestick shapes are a clue to what price wants to do and where it wants to go.
Like anything else, they are just that-a clue. If you look at candlesticks in a random area of the chart then should you be gleaning the same meaning from them as if a certain shape is emerging at a certain price point? The two areas are not created equal...

Following on from this, are all candlesticks clues-are they all created equal? In my opinion-no.

I use hammer bars/dragonfly dojis only (off the top of my head I think they're called that) as clues/indicators ONLY WHEN PRICE IS APPROACHING/AT AN AREA I DEEM TO BE OF INTEREST. Any trading plan, be it MAs/whatever, should tell you that a single indicator should form just part of your analysis. That is part of the problem of candlesticks-there are so many shapes-let alone the bewildering array of formations that are talked about.

GB/usd, eurusd,aud/usd pairs today are great example. Prices reach an area of interest. Are prices reacting in the way I would like to see a reversal (using candlesticks as mentioned). If they are, then guess what-you have a trading edge.

Obviously, the trick is working out which areas are the most of interest. THAT'S what has taken me years to figure out. Hope this helps/provides some meaningful debate.
  • #134
  • Oct 29, 2013 2:33pm Oct 29, 2013 2:33pm
Quoting redbaron1981
Hey Hanover, I can't really agree with you on one of your points from above, and as this is a discussion I would like to contribute my thoughts to this subject. Quote \"I likewise feel that spot, especially the majors, is becoming more efficient\" For me the markets are to psychological for this to happen. An efficient market requires rational thinking and when we bring humans in to the equation we know that humans are non rational by nature..........
Red,

I think we're still on the same page. Perhaps I could have chosen more apt words than "more efficient". However, a lot of the "edges" that I perceive have lost their effectiveness over the 2-4 years. For example, I use strength indicators to determine the strongest and weakest currencies on H4/D1/W1, as a proxy for macroeconomics. These indicators frequently signposted trends that would subsequently last several days, even weeks, but they seem to turn over more quickly nowadays. Prior to the recession, there was greater disparity in bank interest rates (NZ's was > 8%, at one point), which made the carry trade a good cash cow: longer term trends in pairs like NZDJPY would last for months, and you could gain positive swap, to boot. Nowadays, it's more difficult, and I've had to rethink a lot of my trading strategies, and indeed look for new ones. I've been forced back into testing, and demo trading, as a result, and back into non-FX markets (both active and passive investments) for the bulk of my income.

With regard to trading becoming more difficult recently, I've also been influenced by what I've read on various forums, and the views of the group of trader friends whom I regularly correspond with.

But I guess a lot of it comes down to the nature, and robustness, of the strategies that a trader uses. I agree that edges grounded in trader behavior/psychology are likely to be more durable, as human nature doesn't easily change.

I also agree with you about Gaston's post. In my previous post I listed 7 of my own perceived market 'truisms', which I believe will continue to hold good, and provide the opportunity for solid edges going forward.

David
  • #135
  • Oct 29, 2013 3:49pm Oct 29, 2013 3:49pm
Just sell highs and buy lows.
  • #136
  • Nov 1, 2013 6:57am Nov 1, 2013 6:57am
QUOTE:" However, a lot of the "edges" that I perceive have lost their effectiveness over the 2-4 years. For example, I use strength indicators to determine the strongest and weakest currencies on H4/D1/W1, as a proxy for macroeconomics. These indicators frequently signposted trends that would subsequently last several days, even weeks, but they seem to turn over more quickly nowadays. Prior to the recession, there was greater disparity in bank interest rates (NZ's was > 8%, at one point), which made the carry trade a good cash cow: longer term trends in pairs like NZDJPY would last for months, and you could gain positive swap, to boot. Nowadays, it's more difficult, and I've had to rethink a lot of my trading strategies, and indeed look for new ones. I've been forced back into testing, and demo trading, as a result, and back into non-FX markets (both active and passive investments) for the bulk of my income.... David (Hanover) "

========================

Although Hanover and I, have completely different views on trading, it really saddened me to have read this from one of the good intent and well respected contributor of FF.

On a side note: Even if market returns to their previous market environment (ie; NZ >8% etc... etc...) Macroeconomics and Fundamentals has serious flaws inevitable for a black swan. Metaphorically speaking; There is nothing to stop me from going to my bank, borrowing loads shit of money, blowing those borrowed money, turn around and file for bankruptcy and in no way be accountable. Lock me up and put me in jail but there is no way of regaining those lost currencies.

When one realize that (the whole world) our monetary system and our economy system (has serious flaws) is f*cked up... trading with macroeconomics and fundamentals is setting yourself up for a shocking black swan. Don't get me wrong regarding great traders (such as Jim Rogers) who trades fundamentals and macroeconomics. These great traders/investors with through sheer vast knowledge, experiences and skills have somehow hedged/insured/minimized themselves from such black swans. I've read several interviews/biographies of great fundamental traders and getting into their head-space is mind-boggling; it's like having a 100m race with Usain Bolt >>> they are waaaaaay out of your league.... Yet they are so humble that they say to the interviewer that they are not that smart.
  • #137
  • Nov 1, 2013 7:12am Nov 1, 2013 7:12am
I'm sure that previous posts to this brainless thread have elaborated significantly on the initial post, but I feel compelled to say this - that no indicator, whether it be a candlestick, moving average or whatever, can be trusted in isolation. It is when you get a signal combined with strong corroborative signals from other indicators that you can act, a confluence of signals backed up by price action that you know from your own experience from many thousands of hours trading the markets, that you have a good enough edge for you to risk a certain percentage of your trading account. So to speak of candlesticks in isolation shows naivety, nothing more. Enough said.
  • #138
  • Nov 1, 2013 7:25am Nov 1, 2013 7:25am
Quoting cat
I'm sure that previous posts to this brainless thread have elaborated significantly on the initial post, but I feel compelled to say this - that no indicator, whether it be a candlestick, moving average or whatever, can be trusted in isolation. .
This is where a wolf draws the line and calls you all out for making statements of any kind. That's where you're all wrong, believing that what you say is correct or has any merit whatsoever. The market will simply find a way to fk all of you in the long run. It's economically necessary, and completely tradable.

Everyone wants to box a market, but a markets sole purpose is to "un- box" itself.
Howlin' at the Moon on the Roof
  • #139
  • Nov 1, 2013 7:38am Nov 1, 2013 7:38am
Quoting Wolf_Wicked
{quote} This is where a wolf draws the line and calls you all out for making statements of any kind. That's where you're all wrong, believing that what you say is correct or has any merit whatsoever. The market will simply find a way to fk all of you in the long run. It's economically necessary, and completely tradable. Everyone wants to box a market, but a markets sole purpose is to \"un- box\" itself.
For starters, your post doesn't make any sense whatsoever, and if you truly believe that ultimately we're all fuxxxd, including you, then what in heaven's name are you doing here?
  • #140
  • Nov 1, 2013 7:39am Nov 1, 2013 7:39am
Quoting cat
I'm sure that previous posts to this brainless thread have elaborated significantly on the initial post, but I feel compelled to say this - that no indicator, whether it be a candlestick, moving average or whatever, can be trusted in isolation. It is when you get a signal combined with strong corroborative signals from other indicators that you can act, a confluence of signals backed up by price action that you know from your own experience from many thousands of hours trading the markets, that you have a good enough edge for you to risk a certain...
I couldn't agree more.....great post
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