Candle stick signals

Beginner Questions
1

I am keen to use candle stick patterns to trade however i’m a little confused. I have been watching Nial fullers videos. He stated that the inside bar pin bar combo works for him about 55% of the time and the fakey works about 60% of the time.This is obvcourse “for a particular pair and particular time”

Well… sure price can go up or down. 50/50, so 55% is no better than taking a guess right?

So if a professional like Nial says this then how does it work if these patterns are not giving an edge… something more in the region of 70% would sound benificial.

Something like “if you see the inside bar and its followed by a pin bar or fakey by a key S/R level, then its a high probability trade” is what I would expect to hear. But to say 55% is just not making this a high probability trade…

I do understand that you dont just trade off the pattern, but pattern or no pattern. 55-60% is hardly any better than a guess. How are these patterns of any use in this case?

confused…

2

I fail to see the problem here - you win 55% of the time, lose 45% of the time - sounds good

3

ummm ok… 5% passed 50, I wouldn’t call much of an edge.

I guess its fine if there are no systems out there which can bring in more than a 55-60% win ratio. But I beleive there are…

I Would have though Pure Price action would have been right up there with the best of systems, especially for a professional like Nial Fuller. To hear 55-60% from him, does not fill me with entusiam, considering most people wont be as good at trading as him and can expect that 55-60% to be more like 40-50% untill enough experience is gained.

I guess its not the system at all that wins. Having a 50% win system must be good enough as long as you maximise your win and minimise your losses.

I just thought some good systems could give you maybe a 10-20 % edge up there at 60-70%

Maybe im wrong though.

4

Its all in the risk/reward ratio… at 2/1 you would be profitable

5

Nial Fuller is not the last word on PA.

6

Here is a screen shot of my own personal actual futures account. I trade 75% of my trades in forex futures, including eur/usd, gbp/usd, aud/usd…and the other majors.

25% of my trades here were taken in crude oil, the S&P futures, and a few trades in gold futures.

Here is my results from the 7th of november to the 17th of december. Mind you…this is just one account of mine. I also have a spot forex account, and I run managed money for a couple of friends/family, of which I make a percentage of profits.

Uploaded with ImageShack.us

As you can see… measly 58% ROI was good enough to NET me out almost 13K. …and that’s about 11K after comissions.

Now, I did “cherry pick” this… to show you a recent 5 week period that I had THE LOWEST amount of successful trades… had I chosen other periods, it would be closer to about 61%-68%…and a few days I had over 80%.

BUT…forget those days. this is a 5 week block of not even 60%. and it’s good to make 5 figures for me.

Don’t forget… Many casinos pay out about $0.92-$0.97 for every dollar that goes through them, depending on the game.

That means that they make BILLIONS per year with about a 51.5%-54% edge.

Good enough for billion dollar casinos… good enough for me.

Jay

P.S. some of the most successful trend following traders ever (Richard Dennis to name one… who ran a $400 stake up to over $300 million over a period of about 13-20 years trading. His LIFETIME WIN RATE was BELOW 50%.) never achieve even 50% profitable trades. But… their winners are very big…and their losers…much smaller.

I can show you a method that only works 40% of the time. and yet, if u trade it for 20 years, you’ll turn 10K into 100K easy. More food for thought.

7

LOL, yes, you are not seeing the bigger picture here. Try thinking of a 55% edge when all winning trades payout 10 times your risk, so 10:1…the maths is simple so i wont bother explaining, its you Christmas challenge to figure out if your wrong or not.

8

Ep…it’s like this buddy. if you think a 55% rate isn’t much of an edge… I will play you all day long in a game that would replicate this exact same scenario…and furthermore…you can bet as much or as little as you want… and you can stop at any time… up to $100 per bet. and i’m 100% serious when I say If you are interested, we will do this, for as long as you want to. Minimum of 100 flips…but there is no maximum. as much as you want…we’ll do this. and i will gladly pay if I owe you at the end of 100 flips…as long as you will pay me what you owe me if it turns out I win after 100 or more flips.

Take a fair coin. (we can set up a web cam here to do this with, and I’ll even let you control the coin and i’ll watch on my web cam)

if we flip it 100 times…we can be pretty sure that about 50% will be tails… so, about 50 flips. and the other 50 flips…heads.

Now, a 55% edge would be that out of 100 flips…i (over the long run) would win 5 times more than half. So… if we flipped it 100 times…i would basically end up winning 55 times.

SOOO. To account for this… here is how we are going to make it happen.

You are tails. I am heads. you flip the coin, and I watch on webcam to make sure it’s fair.

HOWEVER. On the 20th flip… I just win. I win if it’s heads. AND, I win if it’s tails. guaranteed.

I also have a guarantee win on the 40th flip, and the 60th, and the 80th, and the 100th flip.

So…that would give me a guarantee of 5 more flips in my favor for every 100 flips.

Now, go ahead…and bet anything you want (up to $100) per flip. You must bet the same exact amount per flip, AND, you must flip it a minimum of 100 times.

Reason for this is… say you risk a flat 1% of your trade account per trade. this is kinda like betting “the same amount per flip”…and 100 flips is easy to account for… during the course of an entire trading career…you will ABSOLUTELY take 100 trades if you are day trading, or even swing trading. probably if you are ANY trading (warren buffett has made over 100 trades in his career…and that guy holds FOREVER!)

you bet anything you want. from $1.00, up to $100 per flip. you must keep the same bet amount for every 100 flips… and you automatically lose on flip 20, 40, 60, 80, and 100. But the rest, you have a 50/50 chance to win.

Let me know if this sounds good to you. I mean…it’s “basically random”. To quote your first post:

“so 55% is no better than taking a guess right?”

If you really believe that it’s no better than taking a guess… you’ll happily take me up on my offer.

IN FACT…to make it worth your while. I’ll automatically pay you $1.00 on flip number 100. SO, if it’s basically no better than taking a guess…you’ll make at least $1.00 just to flip this coin 100 times…over the long run.

And, I’ll let you do this as much as you want. you can flip it 1000 times. or even 10,000 times. heck, I have all day and all night. Now, you automatically lose every 20th flip… and u can bet between $1 and $100 per flip, and you must flip it a minimum of 100 times, but can choose to flip it up to 1 million times if you want to. As long as we total up every 100 flips, and pay out who owes who every 100 flips… i’ll do this with you forever. until I am completely broke in fact. I mean FOREVER.

And look at it this way. You get a guaranteed $1.00 every 100th flip. Seems to me a good deal no? :wink:

I hope you are seeing now the power of even a very tiny edge.

Mind you…55% edge isn’t actually tiny. and if u win more money than you lose…when you DO hit that 55%… well… it can be decent.

Jay

P.S. Serious offer on the coin flip tho man. If you agree to the rules above… that would be a 55% win rate for me… “basically random” in your words… I’m SO game to play with you!