Shunfeng's discussion about candlestick patterns (two candles)

Hi, All!

I have been in this forum for a long time (around 4 years, to be exact) and I've benefited a lot from ForexFactory. Not only for the indicators downloaded to facilitate my trading on MT4 but also many insights I've read from many active posters.

From this week (I can not garantee to be on FF everyday, but to post some pictures per week is usually fine.), I would like to contribute a little to this community too.

I have tried many trading systems since my trading endeavour and finally I've decided to use candlestick patterns as my trading method. (Some others would like to call it Price Action, but in my own vocabulary, I would like just call it "candlestick patterns".) So in my chart, you can see that my only "indicator" is the candlestick chart (in some charts there is also a bollinger band but it is not involved into the decision-making process, only for indicative purpose). My trading decisions are made by the reading, recognization/identification, and understanding of these candlestick patterns. Sometimes the understanding is the key as the patterns could be quite deceptive. But all is based on the reading of these patterns.

It seems impossible to not rely on anything but the candlestick chart to trade. I was in doubt too at the beginning. I've spent a year or two on Pivotpoint and then on MACD, but it was only when I started to remove all these indicators from my chart that I started to be able to understand the market (at least this is what I believe )

Anyway, I am not trying to convince anyone to trade in this style. The most wonderful thing in trading is you have a range of the power of choice, isn't it?

What I would like to point is : My post involves a lot of discussions, which means many questions, not answers. And I am eager to learn from you all about candlestick patterns as I am still quite unexperienced in Forex trading. I suppose that good questions are half way of the problem-solving. And I've found that only by a serious discussion on one topic with a brain-storming way would give some good ideas to get the question answered.

I would like to start the discussion for two candles from the Post 2. (Actually two candles already give a lot of variations, I do not know if I could discuss them all )

yours,
Shunfengcn

OK, let's start.

Actually, two candles involves a lot of things...
More than you can imagine, perhaps.

When I was in a "study mode" to try to detail all the possibilities for the first time, I was astonished by the more-than-imagine possibilities in this simple "two candles" pattern.

So, allow me to detail one by one and differenciate them in different categories, by using the name give by people before me as Nelson.

Category one:

two bullish candlesticks

Category two:

two bearish candlesticks

Category three:

one bearish one bullish candlesticks

Category Four:

one bullish one bearish candlesticks

(Without considering the candlestick with Open and Close price as the same.)


Post 3 will continue for a better detailed picture for Category one.

shunfengcn

now some charts!

trading is better discussed by chart, not words, right?

Category one is for two bullish candlesticks, then let's see a chart and identify these "two candles" in a EURUSD daily.

Aren't there so many of them?!

By a more detailed study, I differenciate them in several different sub-categories as the followings:

Bullish continuation (the second bullish candlestick has a higher high and higher low than the first one) with no color in the chart

Bullish drawback (the second bullish candlestick has a lower high and a lower low than the first one) with yellow (I know it is not a "standard" one!)

Bullish engulfing (the second bullish candlestick has a higher high and lower low than the first one ) with red

Bullish inside bar (the second bullish candlestick has a lower high and a higher low than the first one) with blue

(again, without considering the open and close price are the same)

Bullish drawback (the second bullish candlestick has a lower high and a lower low than the first one) with yellow (I know it is not a "standard" one!)

a better example on the EURUSD Weekly chart

As the nature of the two bearish candles are the same with the two bullish candles, I will not give examples for them.

Category 3

one bearish one bullish

sub-categories:

bullish engulfing (the bullish candle has a lower low and higher high than the bearish candle) with a color of red

bullish inside bar (the bullish candle has a higher low and lower high than the bearish candle) with a color of megenta

bullish reversal (the bullish candle has a higher low and higher hign than the bearish candle) with a color of olive

bullish piercing (the bullish candle has a lower low and lower high than the bearish candle) with a color of lime

the example is give for AUDUSD Daily

it seems that it is much more colorful than the previous one

Category four is also ommitted for example. There are just too many of them.

As we can sub-categorize all these two candle patterns, now we need to focus on some characteristic patterns. For consecutive patterns (two bearish or two bullish, Category one or Category two), what is interesting to me are the following patterns:

bullish drawback
bullish engulfing

BTW, there are just too many of the bullish continuation patterns and too few of the bullish engulfing and bullish drawback patterns, statistically.

I paid attention to all the insider bar patterns before but now I feel like it is one of the most tricky patterns to trade.

These two patterns have one characteristics which is very important: The second candle has made a false breakout at the low of the previous candle and then close either with a breakout of the high of the previous one or within the previous one. This characteristics could become an edge in trading, if properly interpreted and applied.

When I focused on these two patterns, I've found that actually there are many different sub-patterns for them. The fact is that there are still quite some variations of them. One need to accumulate much experience to identify them, record them, review them and then be able to find a certain consistent way to trade these sub-patterns. (I am also on the way to practice myself.)

For example, there are different bullish engulfing sub-patterns:

1 the second candle is very large compared to the first one (first two pictures)
2 the second candle has nearly the same range than the first one (3th and 4th pictures)
3 difficult to judge except using a precise criteria (last two pictures)


As you can see, depending on the trading set-up, some patterns fail eventually. What my experience tells me is that I can not count simply on this pattern (even if statistically it is valid) to push the trigger (I used doing this a lot ) as every time there are many other factors influencing the final result of a trade, not the pattern itself. Several things to be seriously considered include:
1 Risk/Reward ratio based on Risk management (is there enough space to touch my TP if my RR ratio is 3:1)
2 the pattern occurs in a uptrend or downtrend or consolidation (this sometimes makes a huge difference for the same pattern)
3 at which level the pattern occurs
4 any event there some hours later (huge volatility during a news release could make a huge change in pattern formations later on)
5 ...
......
anyway, after these years of trading, I have to admit that for most of my trades, I did not get my homework well done before pushing the trigger... (That is why I finally chose to trade at higher TF, which allows me to have more time to think about the trading, the market as well as myself and also, to get the homework well done)

yours,
shunfengcn

one live trade bullish engulfing pattern just formed on USDCAD H4 (my primary trading TF)

Hi Shunfeng,

Glad to see an aspiring trader using just candlesticks for entry/exit. If i may add,

1) why do you zero to using only 2 candlesticks as there may be overlapping price action occuring with the other candlesticks
2) Candlestick patterns are more relevant with market structure
3) The larger time frames summarize the movements of the lower time frames and while convenient, may not provide accurate reflection on the existing price action.

Just my 2 cents.

Hi, limzy!

Glad you could join in the discussion as the first one!

1) why do you zero to using only 2 candlesticks as there may be overlapping price action occuring with the other candlesticks

For your first question, I don't know if I can well understand what you mean by "there may be overlapping price action occuring with the other candlesticks". I assume that you mean the "first candle" in my discussion could be the "second one" if it is counted with the one before it. And the "second candle" in my discussion could be the "first one" if it is to be observed with the one after it. If I am correct, I would like to say that I just want to categorize the candlestick patterns in the first place with the most basic patterns, then the discussion will (possibly) go further, not only considering two candles, but a series of candles, etc... But the "two candles" concept is the starting point and for me, it seems that it is vital to have a fine understanding of them in the first place. Generally speaking, each week has five D1 candles, and every day has six H4 candles, and it seems to me taht "two candles" (characteristic ones, key ones) among these candles would have already given a lot about where the market is going. Don't need to watch too many of them.

2) Candlestick patterns are more relevant with market structure

For your second point, could you share more about your idea of "market structure", please? What do you mean by "market structure"? Have you got a clear definition on it? Ready to learn something from you.

3) The larger time frames summarize the movements of the lower time frames and while convenient, may not provide accurate reflection on the existing price action.

For your third point, Could you give an example on this, please? (I put an emphasis on MTF analysis since three years, but I don't know if we are talking about the same thing. I pasted a screenshot of my MT4 chart arrangement to show you how I watch the market. )

yours,

Shunfengcn

A little review of what I've posted yesterday：

Category 3

one bearish one bullish

sub-categories:

bullish engulfing (the bullish candle has a lower low and higher high than the bearish candle) with a color of red

bullish inside bar (the bullish candle has a higher low and lower high than the bearish candle) with a color of megenta

bullish reversal (the bullish candle has a higher low and higher hign than the bearish candle) with a color of olive

bullish piercing (the bullish candle has a lower low and lower high than the bearish candle) with a color of lime

For this category, my favourite sub-categoris would be the bullish engulfing and the bullish piercing ones. However, there should be some exceptions. Some patterns, with their characteristisc features, fall into other sub-category despite of the definition. I will show this phenomenon later. What I want to express is that, this phenomenon shows that a better understanding of the patterns based on experience and instinct is more important than those "strict definition" or "mechanical system" things and ideas. For me, trading is more semi-empirical, more artistic, more social science than "quantitative", "engineering-based" or "pure and natural science" subject. (Bearing in mind that the one saying this is with a science and enginnering background )

Both bullish engulfing and bullish piercing are reversal patterns, statistically speaking. And the words "reversal patterns" do not mean anything. Whether a pattern is valid depends on several other things as I've mentioned before :

1 Risk/Reward ratio based on Risk management (is there enough space to touch my TP if my RR ratio is 3:1)
2 the pattern occurs in a uptrend or downtrend or consolidation (this sometimes makes a huge difference for the same pattern)
3 at which level the pattern occurs
4 any event there some hours later (huge volatility during a news release could make a huge change in pattern formations later on)
5 ...
......

What I want to add to this disscussion is that, For one person happy with a RR ratio of 1:1 would say one pattern is valid. But for another demanding person only happy with a RR ratio of 3:1 would say the pattern is not valid. It all depends on the person (who reads the market, who arbitrarily decides his own risks and reward/risk ratio), not the market. But the majority of the people who dominates the market would decide to which level the market could reach. One needs probably to watch and study the optimal level for a good RR ratio with an approriate winning rate.

The following is only for illustration purposes (a real market participant could perform very differently than this assumptive example, I mean the reality could be much worse):

1 RR ratio 1:1; winning rate 70%; 1% risk per trade;
2 RR ratio 3:1; winning rate 30%; 1% risk per trade；

for 100 trades:

1 +40% (70-30)
2 +20%(30*3-70)

yours,
shunfengcn





here are some examples of them, bulls defeats the bears :

Nice thread, Shunfeng.
I'd like to give my two cents. My opinion is different and I think we can all learn from opposite opinions.
So I write this post not against you but to any trader that may benefit from it.
I hope it helps.

I studied candlestick patterns for years, I read dozens of books (well, maybe a dozen or so) and even wrote a couple of articles.
I'm not going to tell you they don't work.
I'm going to tell you to try two experiments, if you want to test it yourself:
ONE: Create an EA (or Excel formulas, or whatever you want) that analyzes every single candlestick pattern, and enter trades when they present. Try 1:1, 2:1, 1:2, up to 10:1 and 1:10. And then see if they work by themselves.
You say, as many, that they don't work as a mechanical system. And you're right.
So, if you want, do this second experiment:
TWO: Enter trades based on whatever you currently use that you mix with the patterns (S/R, Fibs, breakouts, whatever) and don't use the candlestick patterns. And then see if you have similar or exactly the same results without them.

We, humans, are wired to look for patterns. And when we find them and believe they are there, we see them everywhere and "confirm them as true", and we close our minds to any option against our belief. This process, selective perception, help us survive. However, we can always rely on Science to see if we're right or not.
And when evidence is presented to us, we say things that "well, it may not work for you but for me it does", without realizing that this statement is the very foundation of selective perception.
If looking for patterns on specific circumstances work for a trader, please use them and make a lot of profit with it. Good for you. Use your lucky socks if they work for you. Don't believe me. Be prosper and happy.
But don't write and sell books about patterns that don't work because you're taking away money from people that won't get any profit from it. And that is ethically wrong.

BTW: I did program the EA's and tested it for weeks. We find dojis in every top and bottom and say "Look, they work".
Here's an idea: If someone "knows" they work, open a $500 real account and trade with that, and see how it works.
Then the phrase will change for "Well, obviously they don't work by themselves".
If you can write down the rest of the system (let's say highest high on n candles + triple smooth stoch + HA below Ichimoku cloud AND + doji), try taking away the doji and see if you don't get exactly the same results.

Again, Shunfeng, it's not a post to you, the thread is great and can help a lot of traders. Very good job.
I'm just trying to take away some future frustration from newer traders.

Dear Lankaster,

Thanks for your attention and your thoughts on my post!

Firstly, I am eager to express my feeling that I've met a mind-like mate (or at least someone who's spent time in trading) to be able to make some serious discussions on trading. I think we would have a lot to exchange on many topics and I am happy to share with you my thoughts. (I have had doubts about the validity as well as the statistical stability for Candle patterns, and not for once, but several times since my first convictions on trading them. Also, I also backtested many patterns either by a simple EA or manually with the assistance of some pattern recognition indicators. The consistency of one pattern for one pair in one TF is horrible, and if we do not consider other factors, the failures of them do happen a lot! But, yes, there is a but, let's talk on this later. It is a big topic, but an essential one!)

Secondly, I would make a clear claim that I have no idea of selling anything to anyone on FF. A trader lives on trading, nothing else. (Although I like to call myself a FX artisan, not a trader.)I have seen enough scams in financial markets(not only for FX market). The financial market is where people cheat, lie to, trap others the most on earth. The most traded should be credit but actually the greed is of the real weight. There is one kind of the people on earth who are fond of selling the ideas with false promises, deliberately. Some of them can even succeed by committing this crime, why? Because they've found at least one of the weaknesses of human nature. What they are selling in fact, is the unrealistic desires and illusions. Desire to become rich quickly and the illusions of being successful easily. They are not only selling "secret methods", "1000% annual return EA", "miracle courses", but also "inside news" of various kind, which is already at the edge of serious criminal area. As to me, I keep myself as far as those people. Why? Because in order to cheat others, they need to successfully cheat themselves in the first place, convince themselves for something unrealistic and even ridiculous. And the key characteristics of a true trader is just his honesty. Be honest to himself, be honest to the market, be honest to the trading record. If a trader begins to cheat on himself, lie to himself, blind himself in the first place, if a trader starts to trade by his own willingness rather than a sound reasoning and good judgements, he is finished, isn't it? In a battlefield of cruelty such as the financial market, the personality of honesty comes from a good courage. Few people has the courage to overcome the fear of losing face (inner pride and dignity) as well as losing money, how can they succeed anyway?!(How many people on FF would show their losing trades, compared to those who show their winning ones......) To summarize all these words (of uselessness), I fully understand that in the trading, no matter long or short, bullish or bearish, there is no moral judgements involved at all (that is what I love the most of trading). Outside the market, ethical things do need to be considered. But I rather consider that the "taking away money from people that won't get any profit from it" behaviour shows not only a lack of courage, but also in lost of direction. Anyway, how much money a guy could make by selling things which don't work, compared to the potential return in a successful trading career (even if it needs years of hard working)?

Thirdly, your idea of " selective perception" is actually very familiar to me. I would like to share with you some of my path on the reflexion of trading. At the very begining of trading with real money in 2012 (I got to know FX trading back in 2008), I thought that trading is a science, or engineering project. Mathmathical formulas as well as models will work out in market of all kinds. Then, a mechanical trading system is compulsory. But only several years of trading experience (with years of reading, re-reading various kinds of things on trading, reviews of trades, hunting for true ideas on trading here and there, etc.... BTW to get something TRUE is really hard in financial industry...), I am quite convinced that trading is not a science, nor something engineering based on complex math. The fact is, the financial market is a place of Game. (Here the word Game is not in the meaning of the video game, but in the meaning of the Game theory.) Trading activity in nature is more similar to Texas pokers(variable change, etc.), sports betting(odds,etc.), chess(strategy,etc.), or War (everything ) etc... than a scientific or engineering project. Trading by nature is a highly-socialized human activity, not a natural phenomenon. The nature lies when it's got a chance. But the humans with opposite interests trap each other, all days long, all weeks long, all months long, all years long...... So if you always find yourself trade the wrong side, lose money, or specifically, trade a failed pattern, there is no wonder. The pattern has been deliberately made failed, because it is a man-made trap of the opposite side to hunt your SL! And with this "selective perception" I have chosen (yes, it is a belief I've chosen), a successful trading career has nothing to do with more study of indicators, etc with a "scientifc method" such as backtesting (review is important but not the way as robot to backtest, I will discuss on this later in a seperate post)... how the trap is designed and constructed should be the focus. But this does'nt mean we ignore candle patterns or the price action. Just the opposite, the candle patterns are the very basis on which all these human tricks are designed and constructed. Unfortunately, there is no quick way to master these these seemingly-easy-to-learn candle patterns. One has to spend several years to be able to know what chart patterns are "generally valid" in order to be able to see how Bulls and Bears constructed traps to kill each other. Then a professional speculator with an eye can make a bet on the right side, put a SL&TP and check the results. On the other hand, there must be something as a skeleton upon which your trading system (money managment, entry and exit signal, etc) could be built. In this level, Candlestick patterns provide me all what is necessary. Forget the indicators, smell the blood. But all are based on something openly visible and beautiful (I appreciate a lot the candlestick charts, I feel they are really beautiful as paintings.). And because they are openly visible, they are always "encoded". Only people with a trained eye could see what the picture is showing... If I would put a final word on this point, I would say : trading one's point of view on the market, one's method and system, one's methodology, one's philosopy is more like a belief in religion than a belief in science; in other words, there is no existance of science in trading, only some OK-Till-Now semi-empirical and semi-statistical conclusions (hard to understand? Read human history, especially the war history). (I would share my reflexion on the idea of Karl Popper and the notion of falsibility in another post, which will make my idea clearer.)


Some of my thoughts on trading and candle patterns

It would be a great pleasure to continue our exchange.

yours,
shunfegncn

Shunfegncn:
Thanks for the reply.
By any means I was thinking you were trying to sell something. What I said is that people who sell books about candlestick patterns sell them without any evidence of them to work.
It's easy to see a doji before a rally if what you want is to see a doji before a rally. It applies to advertising, marketing, religion, and Forex. The problem is one doesn't see the dojis in ranges.
Reality is reality and the evidence is what show us that something works or not.
I do think there's a mathematical part that is pure Science (you can see the last EA I'm working on in my profile).
I've studied art and I have several shows and sell paintings constantly. And I understand what you say about "art". However, I think that in some cases where people say "It's not a science but an art" (like trading) they are really saying "There's a mathematical part I see and can explain, and a mathematical part I don't see or can explain".
Telling if someone is lying may be consider an art, but in reality your mind is grabbing a lot of patterns and memories about liers from the past, and in nanoseconds has made an image for you to process. You don't think "This way of closing the eyes is exactly as the one I saw from my teacher in third grade when I knew she was lying", although is part of the conclusion you finally make.
Similarly, you can say that you have a "feeling" about the market. This is just your mind grabbing concepts and memories and patterns from the past (all mathematical) and giving you the information in a way you can use.
Most of the thing we can't understand or measure, and Forex is in fact chaotic (in the sense of Chaos Theory) and for some people (who don't want to take the time to study) it's just random.
So, for candlestick patterns, if you find one that makes a 1:1 or 1:2 winning ratio please prove me wrong.

Dear Lankaster,

I've found that our disscussion has become too abstract, can we have some more concrete examples (such as some charts)? Could you show something as charts to show how your EA proved the patterns with 1:1 or 2:1 RR ratio impossible? In your backtesting process, at the end of it, the results will be given in a table, but also all the signals (the candles pattern found) will be given on the chart during a specific starting time and ending date, you can just publish some of the screenshots of them. Let me see what your EA has found as "candle patterns" Then maybe we can, by reviewing your EA's screening process and criteria configuration, find something valuable for trading purposes. (In my EA, a huge problem once was that the criteria was "too loose" to find all the patterns exactly as the definition, but after years' of trading experiences, as soon as you see some of them, you know that they will not work out, at all! Some patterns "found" by my EA are so invalid that you suddenly realized that you can not count on EAs to trade by themselves, except maybe by some very sophisticated programming to further eliminating more than half of them. The computer could only do the very basics, not the intuitive work such as identifying ranging market and trendy market, tops and bottoms, etc.. not to mention identifying the "man-made" traps).

Just one idea comes into my mind now, I just want to remind one thing for all people in the financial market:

In the market, there is one thing very important but always ignored by people : In a very large piece of the game, we do not have the same definition of the same thing. This is extremely different from other industries. Maybe we can agree the price level of a specific time point, but think about the things like "trend", "top", "bottom", "resistance and support" etc. etc. etc... (One man could define two candles with a higher high and higher low is a trend, the other would say that at least N candles like that can be defined as a trend; One man could say the retracement of 0.618 of a downtrend is a resistance but the other would say that only the last bottom of the downtrend is the resistance and the two levels could be many pips away...)

It is the same for candle patterns. When I am talking about "bullish engulfing", it is very possible that someone else will define it otherwise (ex: for someone : a body engulfing is engulfing, not necessarily with an engulfing of High and Low price. ). I am trying to do a categorization work to make the engulfing pattern more in detail (with sub-categories), more live (with many many examples in this thread, so you do not even need to go elsewhere to get familiar with them), more meaningful (with many explanations and comments) and this work will allow the screening job better done. The purpose is to give up thoses "seemingly-valid" patterns and only focus those "solid valid" patterns; trade those patterns of true value; make money.

I have to admit that trading, is fundermentally very subjective.

I want also clarify that I am only half-way in my trading career now. Even if I begin to be profitable since I've chosen candle patterns as my primary trading method(also considering other factors such as where when and how they are formed) with four years' trading life, I need to learn, I need to study and I need to improve a lot.

This post is only for a discussion purposes, which means that I would like to learn from people who are also interested in the candle pattern trading method. (I personally have been fully devoted in trading candle patterns since 2014 November, so till now, only around 18 months. But by getting rid of MACD, etc., it works well for me and I am happy with this trading style I've chosen.)If someone who has been trading candles patterns for years would make a sound, I would absolutely like to hear. You are welcome if you are interested in candle pattern trading. And please do not be intruding by irrelevant questions and ideas. You have the freedom to speak, but thanks more for your silence!

After a categorization work which will last for several months, maybe. then I would like to add other criteria (such as where, when, how the pattern formed) for a better selection of the "solid valid" patterns.

yours,
shunfengcn

You'll get my silence, as you wish.
Last words: We must look for a definition of the same thing in everything, problems arise when they are not. Wittgenstein explained it clearly.
If you want to talk about art, I'm solid in the subject. If you want to talk about science, I'm solid in the subject.
But if you say "art", the subject needs to be addressed as so, not as a way of saying "it's kind of something that I can't really explain but don't want to say it like that". As you said it, we don't have the same definition of the subjects we are talking about.
Trading can be subjective, yes. But it can also be objective, so it's not "fundamentally subjective". You can see in my profile two systems I have running live, with different money management rules. It's merely objective, there is no subjectivity in a program created for trading.
But if this is profitable to you, I'm glad. But you won't find a set of rules that you can share with others to use candlesticks as a profitable way of trading. Because patterns in candlestick formations are just an illusion. There's a lot of literature on that, one guy even tested since 1971 for every single formation in different instruments, and the results speak for themselves. How dumb would the 99% of traders that read all the setups and formations in books have to be in order to not be profitable? It's in books, in forums, in videos, so it must work, and all the authors that sell those things and get money from hard working people must be profitable, right?
But as I said in my first post, don't believe me: do the two experiments I proposed, if you like, and see the results.
But hey, maybe I'm wrong, maybe the results I got from programming with all candle setups for body and candle sizes, percentages between H, L, O & C, all the risk:reward parameters I changed... maybe all of them are wrong.
This is your post, so I won't be intruding by "irrelevant questions and ideas". You asked me politely for my silence, I'll gladly give it to you.
Thanks for the coffee

Dear Lankaster,

Could you give some pictures to show how your EA (Which dis-valid the candle pattern trading method) was working? That was the first thing I asked, but you did not reply on it at all. I could show you how to make some screenshots if you like.

You misunderstood what I meant at all. You are someone who's studied candle patterns, with such a big effort by developing even an EA to backtest them, so you are absolutely not one of those who are "intrusive and asked irrelevant questions and ideas. " On the contrary, I just need to see where your "unbelief" comes from (probably in your EA)? And maybe we can work together to get it right. Don't leave me the space to think that only your pride made you irreluctant to admit that your own backtesting method or your way of trading the candle patterns was probably wrong/misconfigured but you just do not have the courage to admit that. It is only emotionally compensating for you to tell (only "tell" by discouranging with words, not "show" with charts/screenshots) others that it doesn't work(Probably you know the notion of "opportunity cost", so you just want to minimize your cost psychologically, but only by your soly own willingnesses).

BTW, It is very amusing, actually, to see someone argue against something which doesn't work in the financial market area. (In the financial markets, most people wish others wrong and so they can make themselves right). So, to be honest, to me, either you are a "very good person" with a real kind heart, or... ... well, you know what I mean... (Anyway, discussions do not take risks, and they cost no money.)

I checked your two accounts on Trades explorer, unfortunately both of them are in Demo, not real, which already de-legimate too much on if they really work out , not to mention that the life of both of them are just too short (two weeks and several days) and it seems to me that they are typical scalping style with a open/close trade duration very short. (Trust me, I've seriously checked in details many openly-published "successful" trading accounts on zulutrade, fxbooks,etc.. so I know what I am talking about). (I also want to kindly tell you that do not publish your trading record easily on the Internet, especially if it works. In a Game such as War, would you tell your enemy where your troop is and where your headquarter is located? Think about that, seriously.)

Lankaster, please show some real results (selection criteria - very important to see if you are right in the path; period checked - no need to back as early as 70s, the market condition changed a lot since 2008 crisis; data source - some sources are not good enough; TF - forget the monthly and TF below 60min; currency pairs - you can even include futures and Indices; parameter configurations on candles with a further screening such as top wick length, low wick length, body length, oh yes, I did that too, by even paying some programmer to get that job better done , sometimes the programmers ask things much more specifc than I would have thought...) with some pictures to prove that candle patterns trading method is invalid.

BTW, I appreciate a lot about your "But if you say "art", the subject needs to be addressed as so, not as a way of saying "it's kind of something that I can't really explain but don't want to say it like that". " comment. Actually, probably your understanding of candlestick patterns is something exactly in the same logic:
"I can not make money by trading candle patterns with my understanding/application in this method, but I wouldn't admit that, I would say that it is not my understanding but the candle patterns themselves which don't work." So Lankaster, show your own definition of candle patterns and your backtesting criteria and results, if you have the courage.

Also, please think about the following example:
Two students, studying the same subject. At the end of the term, one fails the exam and the other passes. Does the subject has a problem, or the first student has a problem with that subject? There is no way of saying "the subject" or "the exam" is not right and one can only argue that the understanding, way of working, attitute, etc.. of the first student may have some problems. Maybe it is not a good example, but my point is that candle patterns trading is a methodology, it depends on the people who are able to correctly use it to trade (based on his own understanding of the methodology, his efforts, his motivations, and his gifts sometimes...).

I recommend you to search and read the ideas about "self-fufillment" concept and the more I trade, the more I found it is valid in the financial market (not only chart patterns, but also with Fib levels, divergence, etc.. too). As I previously said, trading is a Game designed and played by humans , not a natural phenomenon. The self-fufillment of candle patterns trading prevails any other way with the popularity of it.


yours,
shunfengcn

Shunfengcn:
If I misunderstood you I apologize. Good to know.
Yes, both accounts are demo: I put new ideas on demo until I have a month or so leaving them alone with no manual help so I know when they fail and -hopefully- why. For instance, today with the NFP, given Draghi's declarations this week and all the hype with the Verizon situation, I would never, ever, had opened a short position. And today it was short when NFP news came out. This is important to me because I'd know which would be a worst case scenario for an EA. I took the hit and according to back testing, it will take a whole week to recover from the loss.
Now I know that I must filter NFP with FF's news calendar.
Regarding the candlestick patterns, I have an idea I've been working for months, we'll discuss it on private messages. Just give me some time to finish working on this EA.

Hello Shunfeng & Lankaster!

Nice debate between you guys, I was enjoying and trying to learn
Something from it, at least good English, but I am afraid not any more,
Because Lankaster has decided to PM Shunfeng for advance discussion
On Candle Charts.L:::LLLL

Anyway you take care,
loveandpeace

LOL. I didn't.
I just said I'd PM him with some discoveries I've made and an idea I have.
Anyone can join the party, just need to add value.
First: this is his thread and I think it would be disrespectful to add a topic he is not talking about.
Second: I think at some point, if there are traders giving value to a solution, they can all work together to make a better system.
I'd gladly share my knowledge and ideas to search for a profitable solution... with people who add value to it.
I was recently in a trader's chatroom showing some of my results and some jerk just insisted in me giving away an EA.
I gladly did with some traders that helped me with the development. But why should I give away years of studying and programming to some guy just because he wants to be rich? There's value in work, in intellect, in effort... but not in wanting something from nothing. I think this is incorrect.
So if you have something of value, let's build something bigger than the parts.
Just not here so we don't hijack Shunfeng's thread, which is very good and probably helps other traders.