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candlesticks

  • #1
  • First Post: Aug 9, 2006 8:23am Aug 9, 2006 8:23am
Hi everybody, just a quick question. Exactly how worthy are candlesticks in trading? Are they something to be followed religiously or just as a reassurement to another indicator? Thanx for any comments or answers.
I dream, therefore I become.
  • #2
  • Aug 9, 2006 8:49am Aug 9, 2006 8:49am
http://elitetrader.com/vb/showthread...threadid=52880

You never thought the humble hammer was so complicated.

SilverB
In trading you are only as smart as your dumbest mistake. - Ralph Vince
  • #3
  • Aug 9, 2006 10:19am Aug 9, 2006 10:19am
Hi Mike W,

If you mean by "how worthy", wether c/stick patterns such as 3 Black crows are reliable, then no- i don't use them.
I use c/sticks because, pictorially, they are easier than a
bar chart, and combined with Guppy ma's they can tell,
with experience, a fairly accurate story about the trend.
  • #4
  • Aug 9, 2006 10:32am Aug 9, 2006 10:32am
I use them combine with other things, like support/resistance, divergence, overbought/oversold. Can be one more confirmation.

A big hammer on bottom at a strong support level in an oversold area can suggest lack of power to go bellow that level

I've trade only based on candlesticks to learn them, how strong are they and when they worth attention. I don't ignore them, but it's not my primary information.
Try hard, think fast, die young
  • #5
  • Aug 9, 2006 11:02am Aug 9, 2006 11:02am
I am new here, but, have been reading and wanting to start commenting. So, you my first. I like the Candles, over time I have learned to see when a currency is going to turn on me or continue up. BUT!!!! This is not a 100% truth, if it were everyone would most likely make money from candles. As you start watching your candles, over time you will get the "Feel" of some of the little things they can tell you. You just learn to see it, I not know how to explain it. But, I do believe they help me, after I started to see how they reacted.
  • #6
  • Aug 9, 2006 1:15pm Aug 9, 2006 1:15pm
Candlesticks are probably the most powerful "indicator" I've ever used. Read a few books like "Japanese Candlestick Charting Techniques", "Beyond Candlesticks", or "Profitable Candlestick Trading".

About half way through any of the books, but especially the first two, you stop looking at candlesticks as just "Oh, this is a hammer. The book says it's bullish so I think it is too". You realize that candlesticks are just an indicator that show how powerful the bulls are in relationship to the bears. That's the power of candlesticks. Hammers, haramis, fry pans, etc are just names given to frequently recurring patterns. It's hard to explain over the internet, but once you learn the theory behind them, they become an awesome awesome trading tool. I hardly use indicators anymore. Instead I rely on candlesticks, MAs, S/R, and pivot points. I'm doing far better now than I ever did use dozens of indicators.

One unfortunate thing about candlesticks though is that they work a lot better with equities though because with few exceptions, Forex doesn't gap. Gaps are a big part of most of the candlestick patterns.
  • #7
  • Aug 9, 2006 3:21pm Aug 9, 2006 3:21pm
Hey thanx for the posts everybody.
I dream, therefore I become.
  • #8
  • Aug 9, 2006 5:19pm Aug 9, 2006 5:19pm
Maybe we can start a discussion about major candlestick patterns and when/how we can use them.
Try hard, think fast, die young
  • #9
  • Aug 9, 2006 5:27pm Aug 9, 2006 5:27pm
I will start... My all time favorite is the Tweezers at the top of a run up or down.. It almost always signifies a reversal... I also find the hang man and the hammer and inverted hammer to be highly reliable if the next candle confirms them...


Scott
  • #10
  • Aug 9, 2006 5:33pm Aug 9, 2006 5:33pm
Quoting smjones
I will start... My all time favorite is the Tweezers at the top of a run up or down.. It almost always signifies a reversal... I also find the hang man and the hammer and inverted hammer to be highly reliable if the next candle confirms them...


Scott
My favorits are shooting star at the top and hammer at the bottom. Bigger the shadow better the signal. Confirmation from next candle is mandatory
I don't like inverted hammer or hang man. I don't know why, maybe because I saw Steve Nison saying that they are not so strong, and since then I have that impresion, maybe is wrong.
Try hard, think fast, die young
  • #11
  • Aug 9, 2006 5:36pm Aug 9, 2006 5:36pm
By themselves, they are not a strong candle.. What I generally like to see is a couple of hangmen then maybe a high wave and the tweezers... All of these together is a good indication of a change... But only if there has been a run up in price or a run down in price...




Quoting dof
My favorits are shooting star at the top and hammer at the bottom. Bigger the shadow better the signal. Confirmation from next candle is mandatory
I don't like inverted hammer or hang man. I don't know why, maybe because I saw Steve Nison saying that they are not so strong, and since then I have that impresion, maybe is wrong.
  • #12
  • Aug 9, 2006 5:43pm Aug 9, 2006 5:43pm
Sometimes I use them as exit points. When they apear might after a strong move they sugest to me the end of the big move, not necesary a reversal. It can be a consolidation, a long consolidation.

Some people use the high/low of them as entry points, what do you think?

What do you think about the candles on gpp usd on the daily chart, do they say that is the end of the strong up move?
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Try hard, think fast, die young
  • #13
  • Aug 9, 2006 5:56pm Aug 9, 2006 5:56pm
If you are asking me if the candles displayed in your chart indicate a reversal, I would say they do not. They are not pronounced enough. I would want to see a big High Wave and I would definitely want to see a tweezer pattern, because that would indicate a failure in price movement.
In this case price going up and then not being able to hold the ground and falling back. The next candle after would have to be a solid down candle. Not the wishy washy little candles here...

What do you think?

Scott


Quoting dof
Sometimes I use them as exit points. When they apear might after a strong move they sugest to me the end of the big move, not necesary a reversal. It can be a consolidation, a long consolidation.

Some people use the high/low of them as entry points, what do you think?

What do you think about the candles on gpp usd on the daily chart, do they say that is the end of the strong up move?
  • #14
  • Aug 9, 2006 5:59pm Aug 9, 2006 5:59pm
I think I would be taking my profits, or at least a part, big part if i was trading this pair for a couple of days. It's not a reversal, I wish it was that simple
Try hard, think fast, die young
  • #15
  • Aug 9, 2006 6:02pm Aug 9, 2006 6:02pm
I agree with you there buddy. I would definitely not be a buyer on that chart... LOL Scott



Quoting dof
I think I would be taking my profits, or at least a part, big part if i was trading this pair for a couple of days. It's not a reversal, I wish it was that simple
  • #16
  • Aug 10, 2006 1:51pm Aug 10, 2006 1:51pm
Candles tell the same story as price bars, same language, different accent. If you believe that price action ( what the price is doing right here right now!) is important then you had better watch those candles. But just remember they give a clue to the future not predict it.

Most indicators get their information from price action so work it out...

Just my two penneth

Lyndon
  • #17
  • Aug 10, 2006 2:57pm Aug 10, 2006 2:57pm
Quote
Candles tell the same story as price bars, same language, different accent.

I disagree. At least that's not the case for me anyways. Price bars are good at telling you if the market's going up or down, pretty much nothing else. You see a bunch of lines going upward or downward.

Candlesticks on the otherhand tell you not only where the market is going, but how fast and how powerful the movement is. You can get a pretty good idea when a reversal is occurring much earlier than with bars. There are also many patterns in candlesticks that don't show up on bar charts.

Sure you can extract the same information from bars as candles, but in order to do so, you have to "covert" them into candles first. You have to go through each and every bar and say, "where is the close in relationship to the open, how big is the spread between the high and low, etc". With candles you glance at the chart and all that work is done for you. You just need in interpret the results.

JMHO.
  • #18
  • Last Post: Jul 25, 2022 10:55pm Jul 25, 2022 10:55pm
I love them. I have no indicators on my charts, just candle sticks. I do look at overall trend and price action. It is not as simple as just trading general patterns but if you start observing them, you can spot when a good trade is comming up. I have 60% win rate with average of 1.8:1 in RRR.
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