As someone gains more trading experience, are candestick patterns something you still pay Attention to?
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I pay attention to candle stick patterns but within the context of the bigger picture such as the current long term trend, distance from major s/r levels, current market conditions, etc, not just as isolated events.
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I think itâs something you never stop looking at. Infact I think you look at them more with more experience because you recognize them easier and can somewhat rely on them. But of course nothing is 100%.
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I always check Candle stick patterns and use them with our trading system. The high time frames are best to work with candle stick patterns.
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Candlestick patterns fall into two types - reversal and continuation.
I only make trend-following trades, so I donât trade reversal patterns at all. Reversal patterns have a low success rate, though their returns can be dramatic if you get the direction and timing right.
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If a trader finds value from candlestick analysis in their earlier stages then there is no reason why they would discard that as they gain experience.
However, I am bit of a contrarian in these kinds of issues and I believe there is a lot of myth about how useful candlesticks actually are in practice.
One should remember that candlestick patterns are intended to be interpreted as a photograph of what the market actually did during that/those particular candles. E.g. a pin bar might show a bearish market initially pushing even further lower but only to run into heavy buying/profit-taking as it hits a certain area and ends up closing higher or the same as the opening - but it is no more than a hint to take a closer look at other factors to see whether this is maybe actually a reversal starting or just a contrary day in a continuing trend, etc.
For this reason, in my opinion, the daily chart (candles) is the lowest TF where candles have any real value because they exclude, by definition, all intraday trading. The close reflects where the longer term traders/investors are positioned. All intraday candles are totally absorbed within each daily candle and are not even visible at the end of the daily candle.
But even the daily candles are by no means infallible and, again personally, should always be viewed in the context of the market overall.
But Newbies tend to just learn patterns as âuniversal truthsâ like: âpinbar means reversal means buy(sell)â. And they tend to just regurgitate what they have read or heard from people selling books and courses, rather than what they have personally experienced in their own trading, and thereby the myths gets carried forward ad infinitum
In my opinion, candlesticks are like âFriday the 13thâ. We all âknowâ that bad things always happen on Fri 13th - but actually they donât happen any more often then than on any other day - but whenever something does go wrong on Fri 13th it is because it is Fri 13th!
It is the same with candlestick analysis. Because they reflect market action then they often do reveal a certain ensuing result - but not always by any means. And, in the same way, a certain candle structure does not have to be present in order that the market can reverse, etc. It is the underlying market pressures that create the candle - not the candle that dictates what the market should do next. So it is the overall market analysis that is important, not just the candles, which is only one component/clue within this process.
Like everything in TA this is just another tool in the toolbox along with all the other possible tools. We just need to pick the tools that work best for us - and often in combination with other tools.
By way of example, here is a daily candle chart for SP500. I have just quickly glanced at it and (by no means exhaustively) ringed a few examples of candles that worked (green), candles that didnât (red) and a big square in the middle where I am not sure any TA would have helped! 
It is also worth remembering that often candle analysis, and particularly involving multiple candle patterns, is far easier in hindsight than while it is evolving.
Well thatâs only my personal view, but based on my personal experience and not just what the books say.
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It all depends on the strategy that you use and the trading style you have.
I have a semi-automated system, it doesnât care at all about candlestick formations.
I am also a discretionary trader, trading with a different account. Candlestick formations are essential to me to analyze the market and, especially, to understand the right time to enter a trade.
One tip I would give you is not to focus too much on the names or standard knowledge like âbullish engulfing, you have to buyâ. Try to understand the logic of them, so you can read any single candlestick on the chart, even the ones that do not form any traditional pattern.
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Out of curiosity and without knowing the specifics of your strategy, have you considered taking advantage of some of these âlow success rate but occasional dramatic returnâ trade setups?
I ask because its beem my experience that sometimes a low success rate with the occasional homerun or grandslam can translate to positive expectancy over the long run.
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Geetings @anon46773462
I agree with alot of the points you make, in particular about how chart patterns should not be viewed as infallible, they should be viewed with other market conditions in mind and patterns on longer time frames are more reliable.
I would add however that imo candle patterns shouldnt be viewed as an indication of future price movement and these patterns shouldnt even give one the impression of an increased probability of movement in one direction or the other but should be viewed as a signal of the POSSIBILITY of a potential movement , when all other relevant technical factors are taken into consideration.
This difference in mindset might seem trivial, but it makes a world of differnce.
One mindset seeks to use PA patterns and other technical factors to PREDICT price movement while the other mindset seeks to use the same variables to take advantage of POTENTIAL price movement, knowing full and well that at the end of the day only the market itself knows for sure. Our attempts at predicting price are futile but we need not know the direction as long as we are aware of the possibilty of a possible movement and use risk management to play the market accordingly.
Best of luck to you all.
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Hi @PanchoVilla84! 
Good post!
Whilst I agree with the sentiment that candle patterns are not, taken alone, a very consistent indicator of future price movement, I donât really agree with the wording here.
As traders, the only thing we are interested in is the future direction. And since we all accept that we can never be 100% knowledgeable of that, then all we are trading, whatever the instrument, is probability.
But probability is a very different thing to âpossibilityâ. And if anything, such as candle patterns, only indicates a âpossibilityâ then it is of no value whatsoever to us as traders and shouldnât be in our toolbox. We already know that there are three possibilities: up, down, unchanged. And (excluding some options strategies) we are only interested in âupâ and âdownâ.
So the purpose of everything we include in our assessment should be to evaluate the strength of probability in one direction compared with the opposite or relative to another product. Is this not the core concept in, for example, strong v. weak currency trading?
This probability evaluation is what provides us with the âedgeâ or âpositive expectancyâ. For example, in my case, I rely almost 100% on a few MAâs. But whatever tools we use, the basic idea is the same: to change the default probability outcome of 50/50 to a biased probability outcome of, say, 60/40 or even 70/30. And anything that does not contribute to building this probability bias is redundant. But I donât think candle patterns are totally redundant in this respect.
Having said that, a win ratio of greater than 50/50 is not essential to consistent winning. Which points to your other comment:
Personally, I fully agree that direction alone is not the key to consistent profitability. Obviously, it has to be right sometimes, but it is the exit strategy combined with both risk and money management that determines the traderâs consistency in profitability. I am sure there are few traders who have never lost a weekâs work on one big rash âcertaintyâ trade, or a revenge streak or greed.
But, overall, I believe we are talking the same talk and walking the same walk here. If candlestick patterns work for someone then fine, if not, then ignore them. But,like any other form of indication, they should be understood for what they are as well as what they are not - and not just taken at face value.
Whatever candle we look at, on whatever timeframe, and whatever fancy name it carries, all it is telling us is where the market opened, what happened during that particular period, and where it ended that period. Most candles are meaningless in isolation, and it is up to us to decide when a particular price action demonstrated by a candle (or series of candles) is telling us something significant that we should take notice of.
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@anon46773462
I have to agree, probability instead of possibility is the word I should have used.
I guess the point I was trying to make is that its my belief that a trader has to shift ones mentality from the mindset of âpredictionâ to the mindset of taking advantage of situations where the probability of movement favors a certain direction while allowing for a low risk setup in order to take advantage of that potential movement.
And if we are in fact talking the same talk and walking the same walk then I take that as a compliment of the highest order.
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Absolutely! (at least in my opinion! )
I fully agree and there is also, I think, a strong psychological factor here. If we concentrate on probabilities then it forces us to take a rational and analytical approach to each trade in order to assess its likelihood of success.
But if we just try to predict the next move then it can omit the analytical necessity and include instead more intuition, gut feel, emotions, etc and easily turns our trading into gambling - and, strangely, the only consistent thing about gambling is that one usually tends to lose!
I have always appreciated your postings here, the only âcomplaintâ is that there should be more of them! 
If trading is indeed a foolâs game then at least we are fools together! 
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Its a very rational and quite fair point. But it just doesnât suit my temperament. I canât say Iâm great at timing entries and I become distressed by negative win rate experience.
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yes, It is much more reliable to candle sticks with multiple timeframes
asbigger the time frame as more relaiable the pattern is âŚwhen using candles as entry signal on ltf i wait for price to hit my zone or sweet spot if it shows a pattern i like to see there its a good sign for an entry
always depends on the area and location they show up in chart
I am still in the beginning stages of my forex journey and i still wonder about candlesticks. Do they tend to have more power in the higher or lower time frames? It seems to me that when day trading on the 1m, 5m, or 15m charts that candlestick patterns are almost the number one way to find a trade setup since support, resistance, fib levels, etc. donât have much power in those time frames
What makes you think those candle patterns in the red didnât âworkâ? I have a different interpretation âŚ
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Well that, in itself, is a valid comment on the use of candlesticks. Different people will see different things.
This was not intended as a detailed analysis, just a quick at-a-glance scan across the chart. Two of them are pin bar types that would have suggested (a) a further break down and (b) a follow-through move up.
That middle red grouping of three candles are almost inside days but the second down day, finishing right on the lows, would have suggested to me a confirmation of the first down day and possible continuation down - which didnât happen.
I am sure there are other ways of interpreting these, depending on which groupings, etc, are included - and especially with the benefit of hindsight.
I had memorized all the candlestick patterns and had created a screen wallpaper comprised of the patterns I thought were the most important and reliable. That was a long time ago. Now I primarily use range charts and can only remember 2 or maybe 3 patterns. I donât use them anymore.
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When you were using patterns, what timeframes were you mostly applying them to?
Do you have any view on which timeframes they did/didnât function most, or was the result the same on any timeframe?
(I just thought this might be of interest to people using candle patterns)
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