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About Candlesticks: Why they were created? What do they reveal?

  • #41
  • Feb 11, 2015 11:37am Feb 11, 2015 11:37am
Quoting 030985
{quote} Thank you Sis.yphus for popping in ( I find your name quite appropriated regarding how I am doing with my researches about trading haha ) I think it is due to my english and semantics, but I am not sure to understand what you call the 'scale' if I may ask ? Is it an equivalent word for 'balance' ? If so, on your picture, what 'tilts' the scale is the body of the candle and the current close, is it correct ? ^^
In that case the Daily Open is the Scale( or balance). and which ever side the price is on the daily is buyer heavy or seller heavy.

the 50% line of the current candles Highs and Lows also works the same way. If price is above the 50% line of the current candles highs and lows on a daily candle, regardless of what color it is etc, it has above average buyers if its above the 50% line and above average sellers if its below the 50% line.
  • #42
  • Feb 11, 2015 11:39am Feb 11, 2015 11:39am
Quoting Sis.yphus
{quote} In that case the Daily Open is the Scale( or balance). and which ever side the price is on the daily is buyer heavy or seller heavy. the 50% line of the current candles Highs and Lows also works the same way. If price is above the 50% line of the current candles highs and lows on a daily candle, regardless of what color it is etc, it has above average buyers if its above the 50% line and above average sellers if its below the 50% line.
Thank you very much for your clarification, that is how I understood it : )

030985
  • #43
  • Feb 11, 2015 6:44pm Feb 11, 2015 6:44pm
Quoting CrucialPoint
Surely There Are Times When These Patterns Wouldn't Hold {quote} "For every action there is an equal and opposite reaction." Newton's third law of motion This is where a lot of traders fail to see and understand because of certain biases being activated in their brain. Find me any pattern and I will show you the equal opposite pattern.
Hi CP,

Thank you for taking the time to respond. What you said in bold above was basically what I was eluding too. Apologies that I didnt articulate my thoughts well enough.
From the links you provided I read your posts and then ended up reading your thread (which is in the Reycling Bin??) http://www.forexfactory.com/showthread.php?p=3400462. Very inspiring and knowledgeable information in there, thank you for giving back so much to the community!! I look forward to any further posts you make, as I love learning and you are certainly a great source.

Much appreciated.
What's it all about? It's all about money.
  • #44
  • Edited Feb 12, 2015 12:53am Feb 11, 2015 10:51pm | Edited Feb 12, 2015 12:53am
Quoting Sis.yphus
{quote} In that case the Daily Open is the Scale( or balance). and which ever side the price is on the daily is buyer heavy or seller heavy. the 50% line of the current candles Highs and Lows also works the same way. If price is above the 50% line of the current candles highs and lows on a daily candle, regardless of what color it is etc, it has above average buyers if its above the 50% line and above average sellers if its below the 50% line.
Sis.yphus,

What u have articulated is going to propel u to the top traders' realm. U should see amazing results. Come to think of it, the FF gurus can't even articulate half of what u have just said or comprehend what u have just discovered. They are still giving and explaining some hidden meanings from the candlestick pattern which had occured in the past. Just like pi, the reoccurence of the pattern may not repeat itself and their diciples were wondering why their sacred patterns are not working. Lol.
Make everything as simple as possible, but not simpler.
  • #45
  • Feb 11, 2015 10:59pm Feb 11, 2015 10:59pm
Quoting hunting pips
{quote} Sis.yphus, What u have articulated is going to propel u to the top traders' realm. U should see amazing results. Come to think of it, the FF gurus can't even articulate half of what u have just said or comprehend what u have just discovered. They are still giving and explaining some hidden meanings from the candlestick pattern which had occured in the past. Just like pi, the reoccurence of the pattern may not repeat itself and their diciples were wondering why their sacred patterns are not working. Lol.
Thank you kind sir!

There is definitely a lot of systems that over complicate it, that is for sure. People need to remember the only thing that matters is the Current Candle or What ever you are using to measure your period of the market you are trading.

Another pic from the man himself
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  • #46
  • Feb 12, 2015 1:06am Feb 12, 2015 1:06am
Quoting Sis.yphus
{quote} Thank you kind sir! There is definitely a lot of systems that over complicate it, that is for sure. People need to remember the only thing that matters is the Current Candle or What ever you are using to measure your period of the market you are trading. Another pic from the man himself {image}

Yes, most will dismiss this pic as simplistic and move on. But this is the essence of trading - price will either go up or down from a reference point/boundary. Choose any line/boundary that suits your fancy. Let the below example speaks for itself. It never fails to make me laugh. It is probably the best trendline in the world - the STAR !!!

http://www.forexfactory.com/showthre...64#post4740364
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Make everything as simple as possible, but not simpler.
  • #47
  • Feb 12, 2015 1:08am Feb 12, 2015 1:08am
Glad to see that there are people with minds 'simple' enough to understand and realise that 99% of TA is utter utter bu11sh1t. No coincidence that almost 99% of retail traders (of course Im making these stats up!) come to forums to learn all this bu11sh1t from the 95% of other losing traders. Blind leading the blind...to the slaughter.

Forex: personally I look to the weekly open.
Why?
1: What is a valid time reference? When does the market actually open and close in a continuous 24/5 market?
2: What length of time can I reasonably hold such that price movement is enough to overcome spread/costs?
3: Do I want to hold over the weekend?
4: Why do I not want to hold over the weekend?
5: If I'm trading the weekly would I reasonably be considering opening a trade on Friday afternoon?
6: Statistically how far on average can I expect price to move within the time period I plan to hold?
7. How do I manage the trade once in progress?
8. Am I an idiot if I place my initial stop within the range where it is likely to get hit?
9: Is there any weight at all to using a higher open as another fulcrum? (It could help in limiting amount of trades taken, if nothing else) Or am I merely deceiving myself?

And so on....these are the questions you should ask yourself to develop YOUR style

Remember - where and when you open a trade is the least of your worries. It's when/where you close it you should be worring about.
  • #48
  • Feb 12, 2015 2:04am Feb 12, 2015 2:04am
Quoting nunrgguy
Glad to see that there are people with minds 'simple' enough to understand and realise that 99% of TA is utter utter bu11sh1t. No coincidence that almost 99% of retail traders (of course Im making these stats up!) come to forums to learn all this bu11sh1t from the 95% of other losing traders. Blind leading the blind...to the slaughter. Forex: personally I look to the weekly open. Why? 1: What is a valid time reference? When does the market actually open and close in a continuous 24/5 market? 2: What length of time can I reasonably hold such that...

Hi Nunrgguy,

I miss your thread on the mystical realm of forex trading. For forex, I look at the daily open as weekly can be too long with all the recent daily volatility. But again, the type of open is of the least concern. Closing or managing the trade is another area which was seldom discussed and could possibly have an impact to our resluts. I remember one thread which has a simple idea to close your trades in profit (couldn't find it now). Probably one of the most overlooked aspect - closing your trades in profit.
Make everything as simple as possible, but not simpler.
  • #49
  • Feb 12, 2015 2:43am Feb 12, 2015 2:43am
Quoting Sis.yphus
{quote} In that case the Daily Open is the Scale( or balance). and which ever side the price is on the daily is buyer heavy or seller heavy. the 50% line of the current candles Highs and Lows also works the same way. If price is above the 50% line of the current candles highs and lows on a daily candle, regardless of what color it is etc, it has above average buyers if its above the 50% line and above average sellers if its below the 50% line.
GOOD STUFF ,im using monthly down to 15 mins and trading from the value changes ,its quite striking to see how price is driven from one averaged period to another,its almost like peeking inside
  • #50
  • Feb 12, 2015 10:09am Feb 12, 2015 10:09am
Quoting diceman555
{quote} GOOD STUFF ,im using monthly down to 15 mins and trading from the value changes ,its quite striking to see how price is driven from one averaged period to another,its almost like peeking inside
Use a similar approach but with an MA to show what the directional bias is. Where current price is relative to the MA provides a guide to the directional bias relative to the TF of that MA. Essentially the same as Crucialpoint wrote about MTF analysis using different TF MAs on one chart to gauge the market condition and how traders assessed the markets direction before charts by asking what was the price 15 minutes ago, 1 hour ago, etc and assessing current price relative to those levels.
Audentes Fortuna Juvat
  • #51
  • Edited 10:41am Feb 12, 2015 10:26am | Edited 10:41am
Quoting Sis.yphus
{quote} In that case the Daily Open is the Scale( or balance). and which ever side the price is on the daily is buyer heavy or seller heavy. the 50% line of the current candles Highs and Lows also works the same way. If price is above the 50% line of the current candles highs and lows on a daily candle, regardless of what color it is etc, it has above average buyers if its above the 50% line and above average sellers if its below the 50% line.
Midpoint analysis is a largely an overlooked area. Found some interesting articles on it which I post links to later. As with most areas, there nothing is new in this game. Always some other smart individuals who have thought the same way. What struck me about the work on midpoint analysis was how they were using the terms accumulation and distribution to describe the imbalance of a close above or below the midpoint. Same language as Wyckoff, although Wyckoff himself did not actually use those terms. The greater the distance of the close from the midpoint, the greater the imbalance between buy/sell, an important measure of the strength of momentum.

The next step is to convert a discrete data flow like candles into a continuous data flow so we can measure the strength of momentum at any point, bit like how they developed tracking systems for rockets (Itos Lemma). This is how we can help assess if a move is a fake out vs a break out, by assessing the energy behind the move ie smart money. This is the Newtonian aspect of a move. We may never know when a move will occur but at least we can use some physics to help assess its strength when the moves actually does happen.
Audentes Fortuna Juvat
  • #52
  • Feb 12, 2015 3:15pm Feb 12, 2015 3:15pm
Except you do not know the mid point of the current bar until the fat lady is singing
  • #53
  • Feb 12, 2015 3:22pm Feb 12, 2015 3:22pm
Quoting nunrgguy
Except you do not know the mid point of the current bar until the fat lady is singing

Not true, the Mid point of the current bar is dynamic and will always be the average of the current high and Low. if the high or low gets broken the mid point bar moves in the direction of the price. This makes it a little better than just using the open line in my opinion.
  • #54
  • Feb 12, 2015 3:52pm Feb 12, 2015 3:52pm
Quoting 030985
{quote} Thank you very much kprsa for your sharing ( and glad to see you had a good time among us : D ) On my chart I displayed both UpPath and DownPath as positive values, and then derived some moving averages of it. It seems that it can give interesting information ( stop hunting ? ) but there are times where Market keeps trending, and I'm not sure how to deal correctly with this. I wonder if there is a way to anticipate "breakout/false breakout" only thanks to these datas.
I am not sure if one can determine stop hunts in advance just based on those data.
If it were me, for the stop hunt, I would check (a) the trend, (b) open positions, for example from Oanda labs on the cheap, or just by anticipating where technical traders would put the stop losses (see for example the book by Darkstar). Also, one can see some stuff (oscillations perhaps caused by execution of very large orders in multiple steps) perhaps looking at the tick chart. But it would be easier to see what you mean if you post or send me a screenshot.

k
  • #55
  • Feb 12, 2015 4:18pm Feb 12, 2015 4:18pm
As it was written before, candlesticks bring an element which isn't taken in consideration by most traders: Time.

Basically we can say that price may up or down in a similar way from a given random price level. However specific price reactions can give a clue about direction but only for a limited and specified amount of time. Therefore candlesticks are a very interesting way to segmentize the auction process and it allows trader to plan his timing.
  • #56
  • Feb 12, 2015 7:50pm Feb 12, 2015 7:50pm
Quoting nunrgguy
Except you do not know the mid point of the current bar until the fat lady is singing
Another reason to go to the lowest TF possible.
Audentes Fortuna Juvat
  • #57
  • Feb 13, 2015 3:06am Feb 13, 2015 3:06am
Quoting kprsa
{quote} I am not sure if one can determine stop hunts in advance just based on those data. If it were me, for the stop hunt, I would check (a) the trend, (b) open positions, for example from Oanda labs on the cheap, or just by anticipating where technical traders would put the stop losses (see for example the book by Darkstar). Also, one can see some stuff (oscillations perhaps caused by execution of very large orders in multiple steps) perhaps looking at the tick chart. But it would be easier to see what you mean if you post or send me a screenshot....
i also, still cannot with any conviction determine if the stops will be hunted or not,what i have managed to do is determine were they are and trade from them.using my mtf averages and a simple calculation from those averages which i call there potentials,this is the potential maximum energy should the stars align,high point and low point,ive discovered that the lower t/f potentials on occasion converge towards the larger t/f averages.this indicates a price area, were interest is abundant.the asian markets closing and europe and london opening are typical of this type of price moves.i trade from value changes in related pairs,cable is the only currency i tend to trade.i can determine that price is trading above the averages and the market is trading as a whole with a buy bias.price will fall sharply 15 to 30 pips or so against the market and take out those converged levels ,i have no idea if this will happen so tend to trade the price back to agree with over all market.these trades i find to be far safer and have a positive hit rate,r/r is optimum as your trading from the lows,the key to this is the related values .the trades you loose are normally a indication of the pound being lead currency and my bias is now short ,were below all the averages .
  • #58
  • Feb 13, 2015 3:06pm Feb 13, 2015 3:06pm
Quoting Sis.yphus
{quote} Not true, the Mid point of the current bar is dynamic and will always be the average of the current high and Low. if the high or low gets broken the mid point bar moves in the direction of the price. This makes it a little better than just using the open line in my opinion.
And what would be the mid point at the open if not the open my friend?

After that you're just trading a moving average.
  • #59
  • Feb 13, 2015 3:15pm Feb 13, 2015 3:15pm
Quoting Nijee
{quote} Another reason to go to the lowest TF possible.
I wouldn't say possible. I would say practicable.
If you have a life you will not be sat watching the one minute, or even the 5 minte chart if your hold is going to be a week (or more).
  • #60
  • Feb 13, 2015 3:17pm Feb 13, 2015 3:17pm
Something that confuses me?

So if you take ANY point of reference, there is no doubt at some point in the future price will eventually trade AWAY from it. This alone can be useful it seems.

But as to the 50% point, this seems like it 'could' be useful. But I can't help but think simply taking the midpoint of some arbitrary candle doesn't help much? I can see how using something like the weekly OPEN, or any other candle that has a WELL-DEFINED settlement to it, i.e. a true OPENING -> CLOSE, the 50% might tell some useful information.

Hard to explain what I'm thinking, but if price is continuous(other than clearly defined OPEN-CLOSE), and a TF can be split into 1, 1.5, 6.3, 20.5 minutes, or any other arbitrary increment, is there actually any use to those midpoints?
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