Subject heading sounds like the title from a “Better Homes & Gardens” article, but it was the best I could do.
I have Pipsology up on one monitor, and MT4 up on the other.
I am going through the Candlestick and indicator section and looking for the individual and multiple stick patterns and then at the price action around them.
My question is, does the time period I’m in (M1, M5, H4, D1, etc) matter?
Or does it matter to certain time periods for certain patterns?
Thanks in advance,
A
Theoretically no, but there’s an argument that they’re more reliable on higher time frames.
Most TA was developed on daily charts for stocks, so that’s where things should work best.
Yes and No.
Price has a fractal nature so patterns repeat on all time frames but higher time frame candles and candle patterns will hold more weight because higher time frame candles are formed based on more price data and transactions. The lower the time frame, the more noise you’ll encounter. When I say noise, I mean for example that you may have multiple times in a day where 5 Minute bullish engulfing candle patterns form within a bearish daily candle.
Bearish Daily candle with OHLC levels marked
Multiple Bullish Engulfing candles that did not spark a rally or result in flipping the daily candle bullish for the day
When you’re on the lower time frames such as the M5, some of the M5 candles will hold more weight than others when considering a break of a level with a candle close. For instance, a 5 minute candle that closes at the end of 10:04 AM will be less significant than a 5 minute candle that closes at the end of 10:59 AM (on the hour) since the 10:59 close would also be a close of the M15, M30, and H1 candles.
All that being said, market structure has a higher priority than the formation of individual candles.
Good luck in your studies!
Interesting. Maybe Daily charts are the place to start then drill down from there.
Thank You,
A
Larger time frame = Larger sample & smoothing between individual data points.
Smaller time frame = more detail, and more noise to filter out.
Makes sense between these ears.
Thank you,
A
If you want a reliable, low stress strategy, Daily charts are great. You don’t need to spend lots of time looking at them can set your orders and have a much more relaxed experience. You’re not going to make mind boggling profits on the daily charts, but you’ll have much more reliable signals.
No candle patterns of historical Price x Time can predict future price direction or volatility of the next move with any more accuracy than random entry.
Price is all that matters. Waiting on a candle pattern to trade will always be at a disadvantage as the confirmation will give the worst pricing.
Ie; Buying the upward break of a bullish pinbar is the worst place to buy at that time. The best price to buy being when it was a full Bear candle.
Multiple time frame confirmations won’t help either as the higher time frame’s pattern will be conflicting patterns on lower time frames within. Signaling a Buy on one time frame, and a Sell on another.
The only use for patterns would be a visual trade structure/manage risk.
Thanks! I’m looking for steady consistent (somewhat) reliable gains that I can make over time while I’m working, or traveling.
I’m not looking for mind boggling profits. My mind is pretty boggled to begin with. 
I appreciate your feedback,
A
I’m trying to wrap my head around this, so please bare with me.
“No candle patterns of historical Price x Time can predict future price direction or volatility of the next move with any more accuracy than random entry.” - Candlestick alone? Candlestick with other indicators? Does it matter in your opinion?
Price is all that matters. Waiting on a candle pattern to trade will always be at a disadvantage as the confirmation will give the worst pricing.
Worst pricing because the sticks are lagging indicators?
The only use for patterns would be a visual trade structure/manage risk.
Where can I find how that works? (I have to do the learning on my own or it doesn’t stick.).
Thanks A
Yeah, timeframe definitely matters. Candlestick patterns are more reliable on higher timeframes (like H4 or D1) because they filter out noise. On lower timeframes (like M1 or M5), there’s more randomness, so patterns can be less trustworthy.
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Do you have a specific candle pattern you’re using as a reference? I guess you can call it lagging… the best price to enter long is going to be at what looks like a bearish candle. Indicators are just a different look at historical pricing as their formula derives from historical prices.
It’s going to be based on your risk appetite.
Ex1:
If you can find a reliable candle pattern, meaning it wins ~50% of the time, you can plan on entering with 1 lot, loses, enter next setup with 2 lots, wins. Track the max losses and curtail your position size to fit the risk of ruin. Maybe after a 2nd entry, lower the profit target, maybe 3rd entry will have a breakeven target.
Ex2:
In the case of entering on a break of a bullish pinbar, you can position small enough to plan to reenter the same size on break of the tail if profit target isn’t hit… giving you an average entry of middle of the candle.
The possibilities are endless. Backtest, curtail position size based on results, try it on static take profit levels, try it on dynamic tp based on average price, ect.
what are u testing exactly?!
