Well this thread on candlesticks is now here as promised. Indeed it has had a long gestation period. I have prepared many charts beforehand from last year especially for this thread.
Now this thread is for all to post and all ideas are welcome. I do candlestick scalping but posts giving information about long term trading should also be very informative to interested traders.
Like everyone else, I started out with conventional indicators and soon became frustrated with many losses on forex. I already knew about candlesticks from my share trading and it was only a matter of time before I looked at and studied candlesticks because I was losing with indicators.
Candlesticks give [U]up to the second[/U] information whereas indicators only tell you things upon the close of a bar. So candlesticks are completely up to date whereas indicators are basically delayed data.
Would you trade the sharemarket if your prices were delayed by, say, 20 minutes? NO WAY! So why do it with forex?
I have always believed in keeping posts relatively short - else the reader gets bored. So this post ends here.
Next post I will suggest one great advantage of candlesticks. Then charts will be slowly posted, one by one. Other posters are welcome to do the same so that we candlestick traders can all learn from one another.
This is my favourite candle setup. Downtrend, then a white candle with a long bottom shadow, then another white candle on the next day that closes above the last red candle of the downtrend.
You could call it a three inside up pattern, but its better because of the long shadow.
Bonus points if you know what Daily chart this is from! It sure highlights that candlestick pattern pretty well.
Bonus points go to Max99. Answer: USD/CAD in Nov. 2007
That’s an easy one, daily chart of USD/CAD. Do I get the bonus?
Nice pattern but I like to add Bollinger Bands to go along with candle patterns. I’m looking forward to this thread. I think it will be very helpful for a lot people.
One great advantage of candlesticks as I see it is that you do not need to look at other time frames to trade. Of course you can do so if you wish but the candlestick patterns do tend to stand on their own.
Take the evening star pattern. It tells you to trade short - no ambiguities.
That does not mean that it will not fail, but the choice is clear.
With indicators, several time frames are needed to confirm the direction of the trade.
Now there is a qualifier to all this - I am writing from the perspective of a scalper.
But there is another condition that makes the patterns even more reliable …next post.
I’m looking forward to this thread also since I love candlesticks trading. I like trading 4 hour charts though and nothing is better than a nice hammer [B]“closing”[/B] @ the 200SMA :). Or even a morning star on the daily at the 200MA, then a hammer on the 4 hour close.
i started forex wit $1000 and i lost $800 wht do i do i even but a softwear well recognised and i read well and apply the formular plz wht do i do or can u guys help me wit daily trade alert so i can know wht to trade…lexzi
Looking forward to your insight Tymen. It sounds like my trading style is similar to yours but I need some work and I�m not at the point I want to be.
I don�t have any charts prepared but I�ll briefly discuss my method, which is a work in progress. I don�t use anything other than candle patterns and Bollinger Bands on a 15 minute chart. I like reversals when the bands are extremely wide, preferably with the candles piercing through the bands, and then wait for an appropriate reversal candle pattern. I also use the bands when they are tight and look for a breakout. It seems that my biggest problem is the entry. I get too impatient and don�t wait for enough confirmation from the candles patterns.
Here is the condition that makes the patterns so much more reliable - it is none other than the Bolinger bands.
By having your pattern on the BB you are working with an extreme price range. At this point the price action will most likely walk the band, ie if you have, for example, price action crossing the upper band, then it will most likely continue to walk the band.
The band itself will widen rapidly and the price action will go up with it. At some point the price rises will reach exhaustion and the bands will begin to close again.
The exhaustion point is clearly shown by the evening star pattern. At this point the extreme price action has become extreme plus. Both the BB and the evening star combine to give very high prediction that the price action will go back to the centre.
This is very clearly shown in the chart below. The first evening star is on the middle BB and still could go anywhere (and does). Trading this one will result in a loss.
The 2nd one is on the BB - and look at the profit !!
Further posts ahead will show you special entry techniques to get the best out of the pattern. These will also highlight the stop loss.
As for time frames, I use a whole string of them for intraday trading. They go from 20, 25, 30 mins…1 hour in 5 minute increments for all 4 majors, EUR/USD, JPY/USD, GBP/USD, CHF/USD. I also trade AUD/USD and AUD/JPY but the pip spread on these last two is higher.
[U]More charts to come[/U]. I will probably also do a post to explain for Newbies how to post a full sized chart. Also an explanation of how to post a thumbnail.
If people would like me show how to post a chart/thumbnail, please reply to this post soon. It is easy once you know how.
So glad to see you back, your contributions are some of the best on this and any other forum. I had some success with your strategy using BB late last year but as you noted the trading oppotunities were few and far between.
I definitely need to learn how to post charts and thumbnail. I am tweaking an overnight strategy and if it proves to be a winner then I want to post charts and trades for others to see. Am I asking too much: how do you post comments, arrows, circles, etc within a chart? Probably pushing my luck.
Anyway, glad to learn from a master - welcome back. d.
great thread. i had just started learning candlesticks on my own, so i am hoping this will be a great help.
i have also started to study certain currencies pairings so as to gain a better understanding of how they move,so my question is, can someone explain to a newbie what exactley volume is in relation to an indivdual candle and how a figure is arrived at and how relavant it is to candle stick trading .
