As much as I hate replying to ancient threads, I guess I will anyway.
First off, I love candlestick patterns as much as the next guy. That saidâŚ
The problem people have with candlesticks (or bars) and the differing formations they see based on broker start/stop times essentially comes down to this: they overlook the fact that candlesticks are just another form of lagging indicator â just like the MACD, RSI, CCI or stochastics.
Candlesticks are just a snapshot of what price did during a certain amount of time. Looking at the last closed candle on a one hour chart, for example, will show that price opened at a specific price, moved to this high, went to that low and then at the end of the hour closed at whatever price it closed at.
The same is true of RSI, for example, using a look-back period of 14. Based upon the values used to calculate the RSI over the last 14 bars the current reading is X. If you change the look-back period to 5 then RSI will look completely different and the current reading will be Y. If you change the above mentioned one hour candle to a four hour candle then it too will look completely different because you are using a different look-back period on a lagging indicator. This time it just happens to be a candlestick instead of RSI.
So, which is the BEST broker time to use on a four hour or daily chart? It doesnât matter!!! You are just looking at what price did during a certain, completely arbitrary, period of time. Thatâs all!
But, you say, this brokerâs 4 hour chart shows a shooting star and this brokerâs chart shows a marabuzo! Which one is right? Which do I make a trading decision off of?
They are both correct â for the particular look-back period used by each brokerâs lagging indicator, the 4 hour chart candlestick. Which do you make a trading decision off of? Your brokerâs!!! Not mine, not some other guyâs⌠YOURS. Hopefully, you are using a little more than just a candlestick to base a trading decision off of but any brokerâs chart patterns are just as valid as another using different start/end times. The bars are only a reflection of the ticks that occur within a completely arbitrary time period.
I would suggest learning to look at price movements (through candlesticks, bars, lines, tick bars or any other format) to gauge the general ebb and flow of the market and the reaction of price at key levels (whatever levels you determine to be key â support/resistance, supply/demand, trendlines, volume levels⌠whatever) instead of demanding that price does a certain thing because the last bar (or two or three bars) said it must do that particular thing. Something I have needed to work on a bit more myself, actually.:15:
Markets are very fluid things. Arbitrary candlestick patterns, the arbitrary times imposed to calculate them and most trading systems are all very rigid things. In the end, the fluid markets win every time. Learn to trade the market, not a candlestick. Let the candlestick, regardless of broker GMT offset, assist in seeing what and where price is reacting in conjunction with other factors because the candlestick, again, is nothing but an indicator.