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

  • #81
  • Mar 11, 2015 3:28am Mar 11, 2015 3:28am
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}
Thanks Sis.yphus. I finally get it!
  • #82
  • Mar 11, 2015 5:54am Mar 11, 2015 5:54am
Quoting nunrgguy
Stop thinking about what happened in the past. It is not relevant. Before the CURRENT candle can create a wick it has to create a body. You can trade the breakout from the open (the body), or the retrace from the extreme (the wick) IT WAS EVER THUS Stop making it so damned difficult
Great insight, my friend....
Make everything as simple as possible, but not simpler.
  • #83
  • Mar 11, 2015 6:16am Mar 11, 2015 6:16am
Quoting Sis.yphus
Great thread OP. and have loved reading the responses from every one on this matter. {quote} Also love seeing your pics and post my friends. I had to go digging through the bin to find them all. My interpretation of the pic {image} {image} {image} CP, I would be more than honored to hear your input when you return...

Very good, my friend. Very good.
Make everything as simple as possible, but not simpler.
  • #84
  • Mar 14, 2015 7:38am Mar 14, 2015 7:38am
Hey guys ,i think this thread is very interesting cause it is the main idea of my system,time doesn't matter PA only so you cant use Candlesticks alone or renko alone you have to use them both to avoid choppy and low volatile market and to identify a strong trend so i started a thread recently that discusses my system that i have been using for more than 4 years.it is called extreme analysis system.
Your perception dictates your behaviour
  • #85
  • Jul 9, 2015 2:43pm Jul 9, 2015 2:43pm
Quoting BadTunaSalad
I'm a long-time lurker, and never contribute, I get social anxiety even over the internet, ha... Anyway, I'm also a subscriber to CrucialPoint, among others, and have found much of his stuff very insightful, that is when I figure out what he's trying to say, or rather what I think he's trying to say. Expanding a little bit on some of your first post, I myself, did some statistical analysis on the relationship of the open with its counterparts and in keeping in line with what nunrgguy has said previously, I wanted to develop a system that relied...
Assuming that this is fact(the avg wick length is 25% of the length of a candle), would it be reasonable to assume candle wick formation averages 25% of a candle period?Thx
  • #86
  • Jul 14, 2015 7:53am Jul 14, 2015 7:53am
So, a while back, I was reading a popular thread on ET, that somewhat seems to relate to the cognitive bias problems we may have when viewing a chart. In that we are NOT seeing things that are clearly on the chart. I have been thinking about this more lately.

This point was drilled home by another member here on FxFactory by showing various images, and patterns that have other things in them that are not obvious to us until it is pointed out, or told specifically what to look for. The Fedex arrow, spinning lady, old man vase etc... So I do believe there are just obvious things that we don't see due to cognitive bias problems.

So, I'm wondering if there are some simpler answers in the realm of things we are NOT seeing on a chart, instead of looking for more complex answers. After all, most of the cognitive bias examples are really simple once you KNOW what to look for, and you virtually can't 'un-see' it once you see it.

So a chart was posted, and below the chart was the question, "Have you ever considered what you are NOT seeing within a chart?" I will repost the chart, but I think the chart itself is irrelevant, but more so the idea and question.

So initially I just sort of glanced over this idea and question, but I am wanting to think more about.

So the OBVIOUS thing I initially thought of, was just that we are not seeing how price moved INSIDE that candle. While this is true, I think that is a bit too obvious, and has nothing to due with the cognitive bias problem we are supposed to think about.

Also attached is an article from another thread, about the things we simply DON'T see on a chart from another forum. It is about the photo-receptors in our eyes, and they perceive various shapes. Do our eyes obscure what we should be doing?

Does anyone have any thoughts on things from this perspective?
Attached Images
  • #87
  • Jul 18, 2015 10:20am Jul 18, 2015 10:20am
Candlesticks, bars, lines, etc... only represent what price has done.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #88
  • Jul 18, 2015 10:22am Jul 18, 2015 10:22am
Quoting TooSlow
Candlesticks, bars, lines, etc... only represent what price has done.
Obviously.
  • #89
  • Jul 21, 2015 11:15am Jul 21, 2015 11:15am
Quoting forrestang
So, a while back, I was reading a popular thread on ET, that somewhat seems to relate to the cognitive bias problems we may have when viewing a chart.
New Experiment... lols. I'm upset that I can't rotate my monitor the other direction
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  • #90
  • Jul 24, 2015 12:14am Jul 24, 2015 12:14am
Quoting forrestang
So a chart was posted, and below the chart was the question, "Have you ever considered what you are NOT seeing within a chart?" {image} {image}
Specifically in this chart at least we don't see current price. Maybe the idea of the asker was the same as one that discussed here: we pay too much attention to the history and not to the present moment. Again, it's obvious, but very often we don't see or don't think exactly of such things.
Let's go with the flow
  • #91
  • Aug 8, 2015 11:15am Aug 8, 2015 11:15am
Quoting kprsa
Good thread, thanks. I have used a similar idea to do an approximation of the "up" and "down" volume based on the candle shape and the tick volume within the candle. For example: The "up path" on the "up" candle can be approximated by (High-Low). The "down path" on the "up" candle can be approximated by (High-Close)+(Open-Low). (and similar for the down candle, like in the 1st post.) Total path=up path + down path. Up volume = Tick volume * up path/total path Down volume = Tick volume * down path/total path Cheers, k
It appears that Chaikin's accumulation/distribution line was based on a similar idea. This is a fantastic indicator for gauging (via the price/indicator divergence) if the usual double bottom/top are going to lead to true reversals. I will try to look if it makes sense to make separate indicators for accumulation and distribution based on the up and down integrated volume...

k
  • #92
  • Aug 8, 2015 1:04pm Aug 8, 2015 1:04pm
Quoting kprsa
{quote} I will try to look if it makes sense to make separate indicators for accumulation and distribution based on the up and down integrated volume... k
It doesn't make sense since both curves by definition behave monotonously, i.e. the accumulation only grows, and the distribution only decreases... My accumulation/distribution line based on the up/down volume behaves very similarly to the original Chaikin's one (which is shipped with MT4), so no big advantage there.

k

Attached Image (click to enlarge)
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Attached File(s)
File Type: mq4 ad_updownvolume.mq4   2 KB | 438 downloads
  • #93
  • Aug 8, 2015 1:08pm Aug 8, 2015 1:08pm
Quoting TooSlow
Candlesticks, bars, lines, etc... only represent what price has done.

This is not as true as you believe,certainly there is no absolute.the variables are to great,but ,with our limited information we can gain advantage from previous information,if for no other reason than our ingrained behavioral pattern does infact over time allow the power of average.it is above average ,th probability is higher. The unknown variables are also stemmed from human behavior traits,we are just not informed of them.ar you looking at this with a mindset which allows you to see.Ther are a number of ways to make money from the market ,but i have yt to read them in a book
  • #94
  • Edited 9:56am Sep 16, 2015 9:39am | Edited 9:56am
Hello everyone,

I did not have much to bring to the thread these last months. I still haven't much, but questions are still here, without answers. While my stay in Japan I bought a manga about the life of Honma Sky (or Honma Munehisa ) the creator of candlesticks, though I won't be able to read it before years
( not that I expect something from it, but just for curiosity )

So, I would like to think again about the reason behind building the candlesticks. Why they look as they look ? Why the body looks like it is more important than the wicks ? You can see on the picture below, why candlesticks would not look like the alternative candlestick I drew ?
We may say it is for visual facility, though I am not sure...

Attached Image

http://i58.tinypic.com/9a4uhh.png

Why barchart and candlesticks focus on these 4 data points that are the Open, the High, the Low and the Close ? What information can we get from the interaction of these 4 data points ?

Why High and Low only would not be enough ? (We could for example imagine a bar that would be like "/" or "\" depending the order of the High and Low during that time period ). As every traded price is by definition included between the high and low, why adding the open and the close ?

What more information does give the Open and Close ?

It seems that the High and Low are based on the Y-Axis, in the sense that they can occur at any time during the candle period, but the High will always be the Highest value of the candle period, and the Low the lowest value of the candle period. However, the Open and Close are based on X-axis, in the sense that the Open is always the first price of the candle period, and the Close is always the last price of the candle period. Is there something to dig here ? Maybe regarding 2D or 3D plans ? I don't know yet...

Also, is there anything we could find in the universe that is also based on similar 4 points and could help us to get some more understanding on the interactions of these 4 data points ?

030985

Edit : Okay, so I just noticed the issue with this alternative candlestick example : it would look the same whatever the original candle is up or down.
I should have noticed earlier ( But still the questions about the importance of the 4 points are still worth thinking )
Attached Image
  • #95
  • Oct 21, 2015 6:18am Oct 21, 2015 6:18am
Quoting nunrgguy
Stop thinking about what happened in the past. It is not relevant. Before the CURRENT candle can create a wick it has to create a body. You can trade the breakout from the open (the body), or the retrace from the extreme (the wick) IT WAS EVER THUS Stop making it so damned difficult
I've noticed a particular thought process in your posts.

Does your way of thinking about candles lead you to a similar set of trades each day(Assuming day trading a daily candle)? How many trades would you take at the same candle you are trading?

To come up with the logic necessary, is historical data required, in the sense of figuring out how to structure trades around each CURRENT candle?
  • #96
  • Oct 21, 2015 6:24am Oct 21, 2015 6:24am
Quote
About Candlesticks: Why they were created ? What do they reveal ?
Candlesticks reveal the Open, High, Low and Close of Price with stunning and uncanny precision.

As for interpretation of candlestick patterns I recommend training your vision with the Cloud Method:
Lie on your back under some nice clouds, with enough practice you can see whatever you want to see.
  • #97
  • Oct 21, 2015 11:15pm Oct 21, 2015 11:15pm
Quoting Atokys
{quote} Candlesticks reveal the Open, High, Low and Close of Price with stunning and uncanny precision. As for interpretation of candlestick patterns I recommend training your vision with the Cloud Method: Lie on your back under some nice clouds, with enough practice you can see whatever you want to see.
  • #98
  • Oct 21, 2015 11:33pm Oct 21, 2015 11:33pm
Quoting forrestang
{quote} I've noticed a particular thought process in your posts. Does your way of thinking about candles lead you to a similar set of trades each day(Assuming day trading a daily candle)? How many trades would you take at the same candle you are trading? To come up with the logic necessary, is historical data required, in the sense of figuring out how to structure trades around each CURRENT candle?
I've noticed a particular thought process in traders that don't have a clue...

My thinking and what is not only none of anyone's business but also completely redundant and irrelevant to anyone else's thought process and what they do.

Does anyone else live my life? Does anyone work the hours I do or travel when I do while trading the same pairs? Have they had the same childhood as me? Will they have the same emotional responses to things as me? When things go t1ts up will they do the same things as me?

The answer to all these questions is an emphatic NO.

Does YOUR way of thinking about candles lead YOU to do things in a certain way.
How many trades would YOU take?
What is YOUR logic?
What is YOUR risk management?
What is YOUR trade management?

Reading charts is EASY.
Anything you glean from a look at a chart tells you two things only: what price it's at (high/low?) and what the time is. That is it.
Anything else you may see is YOUR interpretation.
If YOU think price is high YOU sell. If YOU think price is low YOU buy.

Trading is EASY.
Look, observe, wait, click a buy/sell button, look, observe, wait, click a buy/sell button.

What the market does after you first click that button is in the hands of the Gods. Every tick is a brand new piece of information that never existed before, YOU knew nothing about it. Thousands of traders, with thousands of different lives, perspectives, emotions, reasons, methods, objectives, time objectives.....then there's the bots.
It's all about how YOU process this new information when YOU see it and how YOU act upon it.

No ONE is going to tell YOU how YOU should trade. Even if they did YOU would not be able to do it.

Information about what happened 3 weeks ago is MOSTLY useless.
  • #99
  • Oct 22, 2015 2:03am Oct 22, 2015 2:03am
About Candlesticks: Why they were created?
To compress time.

What do they reveal?
Open,High,Low,Close.

Nothing more.
  • #100
  • Dec 9, 2015 1:39pm Dec 9, 2015 1:39pm
Quoting UnnamedPlayr
About Candlesticks: Why they were created? To compress time. What do they reveal? Open,High,Low,Close. Nothing more.
I would say that these four points reveal much more.

yes they certainly are misleading.

Everything only reveals the information that is being considered for measurement but most things require those irrelevant points to understand something THAT REVEALS MORE.

not picking at your post but it seems silly
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