Candlesticks not profitable Massey University Research

[SOCRATES]

It being a quartile months and all . . .
And this being a thread about candlestick charting yes?

Yes, and what was the official closing level for the FTSE Cash at 10.15 while we are at it ?

 

[barjon]

Well, we seem to have got well off the main road of candlesticks and into the by-ways of magic numbers; space time continuum; the culinary delights of rabbit & squirrel; and Freaky Friday.

Anymore for candlesticks or are we done?

cheers

jon

 

[zambuck]

....perhaps an 'after' dinner speech after 'candlelight' dinner...!!

 

[Crap Buddist]

I think this thread should be sent over to the Massey University Research. Not the finance department, but the Psych. Department. See what they think of it. They might be interested.

God help us.

 

[SOCRATES]

Well, we seem to have got well off the main road of candlesticks and into the by-ways of magic numbers; space time continuum; the culinary delights of rabbit & squirrel; and Freaky Friday.

Anymore for candlesticks or are we done?

cheers

jon

Please don't close it Jon. The great Candle Riddle is yet to come....perhaps.

The thing is, I am currently toying about with the idea of whether to post it or not, because If I do, it will shatter many ideas currently held about the subject.

It is a huge responsibility and I am debating with myself whether it is wise to bring it into the public domain or not, as it is bound to cause severe migraine headaches in a lot of people.

Irrespective of the profile chosen to be given to me, I am a caring individual really and do not go out of my way to be mean, you understand.

It is just that it is convulsory, er..cataclysmic...to say the least.

 

[rols]

Candle in the Wind?

Please don't close it Jon. The great Candle Riddle is yet to come....perhaps./QUOTE]

Here are a few candle quotes while we are waiting...

There isn´t enough darkness in all the world to snuff out the light of one little candle.
Hindu Prince Gautama Siddharta, the founder of Buddhism, 563-483 B.C.

It is better to try to light a candle than to curse the dark
Chinese Proverb

A candle loses nothing by lighting another candle.
James Keller

Last week the candle factory burned down. Everyone just stood around and sang Happy Birthday.
Steven Wright

 

[Crap Buddist]

Please don't close it Jon. The great Candle Riddle is yet to come....perhaps.

The thing is, I am currently toying about with the idea of whether to post it or not, because If I do, it will shatter many ideas currently held about the subject.

It is a huge responsibility and I am debating with myself whether it is wise to bring it into the public domain or not, as it is bound to cause severe migraine headaches in a lot of people.

Irrespective of the profile chosen to be given to me, I am a caring individual really and do not go out of my way to be mean, you understand.

It is just that it is convulsory, er..cataclysmic...to say the least.

mmmm, what will change if it is in the public domain? Thinking on it, if you think it might do damage, it might be best to not put it out there.

If you think it may just cause headaches or disbelief in a lot of people , sort of shock, of that just isnt so.... challenging beliefs, then let it rip I'd say.

 

[Paul71]

Please don't close it Jon. The great Candle Riddle is yet to come....perhaps.

The thing is, I am currently toying about with the idea of whether to post it or not, because If I do, it will shatter many ideas currently held about the subject.

It is a huge responsibility and I am debating with myself whether it is wise to bring it into the public domain or not, as it is bound to cause severe migraine headaches in a lot of people.

Irrespective of the profile chosen to be given to me, I am a caring individual really and do not go out of my way to be mean, you understand.

It is just that it is convulsory, er..cataclysmic...to say the least.

:-0

Just say what you have to say, then it can be debated.

Just don't warp something that may be interesting and of use with arrogance and pomp.

And stop trying to con people.

 

[frugi]

The most interesting activity occurs irregularly (hence the doubling volume riddle) so choosing a regular unit of anything for display purposes is going to be a poor fit, like forcing a wave to break through a matrix of 1 litre cubic boxes. Some organic definition will be lost. But this doesn't have to matter.

What is funny about bars or candles is that one can alter their units to fit just about any plan. If one trades "hammers" and hasn't seen one for a while simply flip through a range of units until one magically appears. Yesterday's 7 minute YM chart was a beauty.

So in some sense one could say a pattern-based setup is an illusion based entirely on the observer's point of view. Whether it works or not depends entirely on whether the chosen units happen to mesh with reality. Not that they actually lie. But they may miss the pertinent action, or hide it by dividing it into pieces. The conclusive bout of pro selling that marks the reversal may take 25 seconds. Whether this shows up in the "right way" on your chart and thus signifies a short will depend on your settings, unless you are watching real time and know exactly what to look for.

So to place one's belief in the power of a fixed candle pattern as a predictor would imho be foolish. But that is to miss their point. The observer using a pattern-based setup defines all the elements in his terms then waits for the market to tick them off before taking a trade. What the market is "actually" doing may not matter. The point of the setup is to create boundaries not necessarily deliver stunning insights. For us mortals who struggle with the whole "intent" concept an arbitrary pattern we can key off placed in a more discretionary context can be a useful thing indeed.

The human brain has all sorts of filters to spare us a view of reality, so why not view the market similarly, through candles.

Freaky Friday with Lindsay Lohan ... I mean yep YM up 70 points in a flash just now and we ain't even started. Should be a fun day.

Anyway, Soc, please give it to us with both barrels. I'm sure we can take it and it would spare us any more of my awful waffling.

 

[dbphoenix]

If beginners were to spend a little time following line charts in real time, the "mystery" of bar and candle charts would soon dissolve.

Db

 

[alexander]

An axiom is a fundamental truth.

Actually very far from that. In modern science an axiom is a proposition that is formally accepted without demonstration or proof in the context of a systematic body of knowledge.

Socrates, the Greek I mean, probably would disagree with this but things have changed since the time he looked at the shadows from inside the cave in Phaedo...

Alex

 

[A Dashing Blade]

Actually very far from that. In modern science an axiom is a proposition that is formally accepted without demonstration or proof in the context of a systematic body of knowledge.

True . . . .from the OED . . .

axiom. [a. F. axiome, ad. L. axioma, a. Gr. cwma that
which is thought worthy or fit, that which commends itself as
self-evident, f. ciein to hold worthy, f. cioj worthy.]
1. A proposition that commends itself to general acceptance;
a well-established or universally-conceded principle; a maxim,
rule, law.

 

[Profitaker]

Tomorrow is triple witching day, which only occurs 4 times a year, yet no one has mentioned it at all.

Everything is expected to go haywire as usual on these days, so watch it and play safe.

No Socrates, triple witching occurs in the US when index options and index futures and equity options all expire at the same time. Did that happen in the UK today ?

The change from the EDSP 20 minute averaging procedure to the 5 minute auction procedure has avoided "haywire as usual", don't you think ?

Much more study required Socrates.....

 

[chump]

it must be axiomatic that the rights of gay rabbits have been getting the shortend for far too long...how could you possibly have a fib series of
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765
and we are supposed to beieve that out of 5676 rabbits not one of them is gay ,or perhaps even dyslexic ?

 

[new_trader]

it must be axiomatic that the rights of gay rabbits have been getting the shortend for far too long...how could you possibly have a fib series of
1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765
and we are supposed to beieve that out of 5676 rabbits not one of them is gay ,or perhaps even dyslexic ?

After putting pen to paper I realise that ‘The Degrees’ led us astray, (either unwittingly or as a test) and the original FIB series did not start at 2, it started at 1. So to answer your question, there were in fact 13530 rabbits in the above series (or 03531 dyslexic ones) and yes, not one of them was gay. The series describes growth of PAIRS of rabbits!

However these numbers are completely irrelevant in regards to charting retracements because they only use the golden ratio between the numbers and arbitrarily throw in 50% because it is nice.

 

[timsk]

If beginners were to spend a little time following line charts in real time, the "mystery" of bar and candle charts would soon dissolve.
Db

Interesting idea dbp. I've never done it, but I don't doubt you're right. Equally, I imagine that the same would apply to P&F charts - for the same reasons. I guess your point about line charts is that although they are plotted against a time axis, they only provide one fixed price point (the close) as opposed to the close and OHL of the candlestick. As a talk show host might say of a verbose guest, the candlestick exudes 'too much information!' Needless to say, more information isn't, necessarily, a good thing.

One of the beauties of P&F charts is that the 'O's and 'X's carry equal weight. A given 'O' doesn't carry any extra significance over the next 'O', just as a given 'X' doesn't carry any extra significance over the next 'X'. All 'O's are equal and all 'X's are equal; an Orwellian utopia. By contrast, the relative complexity of individual candle 'patterns' and what they are supposed to mean can, sometimes, obscure the true message of price movement. This occurs when traders get fixated on what price is supposed to do, say, following a hammer, doji or whatever - rather than scratching beneath the surface to see what's actually going on. Line charts and P&F charts are simpler representations of price movement in as much as they may not reveal some of the subtleties, but they do convey the most important basics. As sexy and seductive as candlesticks are, they can mask what is really going on and fool the novice, the cocky, the arrogant and ill disciplined trader into positions that they later regret. This is less likely to happen with line and P&F charts. To conclude, I suggest that candlestick charts are a more 'risky' form of charting than line or P&F charts and, as such, are inappropriate for the novice trader. Given the infamous statistics about winners and losers in the the trading game, there is a strong argument to suggest that candlesticks are best utilized only by very experienced and consistently profitable traders.
Tim.

 

[jacinto]

If beginners were to spend a little time following line charts in real time, the "mystery" of bar and candle charts would soon dissolve.

Db

I actually did this wednesday to validate a setup, and thursday and friday to confirm my plan to stay flat. and didnt do it all the time and not all day, but at key levels and key times to understand if my plan was correct or not.

it was definitely a good lesson, and appears to have become a new tool for me to validate my trading plan for the day.

j

Edit: actually, i remember I did this some time ago with a slight difference. I kept my bar charts, but setup a 1 period moving average on closes only. it is an excellent approximation, and allows to see both effects: bars and lines forming on real time.

 

[dbphoenix]

I actually did this wednesday to validate a setup, and thursday and friday to confirm my plan to stay flat. and didnt do it all the time and not all day, but at key levels and key times to understand if my plan was correct or not.

it was definitely a good lesson, and appears to have become a new tool for me to validate my trading plan for the day.

j

Edit: actually, i remember I did this some time ago with a slight difference. I kept my bar charts, but setup a 1 period moving average on closes only. it is an excellent approximation, and allows to see both effects: bars and lines forming on real time.

I neglected to mention that the line chart should be a one-tick chart (I've done this for so long that I forget it's not obvious). This enables the trader to get "inside" the bar and see the interplay.

Db

 

[chump]

times a bit more than simply an emotional twitching mechanism....

you could describe a persons lifespan as shown below....how that is managed given we use time to measure our lifespan abitrarily means we cannot avoid the use of time within ours plans for managing the financial aspects of same. Afterall you don't make X% return on funds invested ..you make X% (in Y time) ....I don't want to go into financial planning 101 in depth..suffice to say that we use productivity earlier in the curve to subsidise the lack of it at later stages. ...and intrinsically we can't do that without consideration of time as per our lifespan.
Applying that to how we use charts ...time is simply a measuring stick to reflect the speed with which changes in price occur ..so X becomes 2X you could choose to simply say ..Ok it's doubled ..but relating that to our financial planning needs it is meaningless unless you can then say that it occurred at a certain speed (time) ...eg 100% pa...
I wouldn't argue that the results shown may often induce emotional responses from people viewing same.

The chart isn't meant to be more than a broad generalisation of what happens to the average Joe so rocket scientists put your equipment back on the shelf.

 

[charliechan]

havent read all the thread, but do candles work?

sometimes.

you have to take these indications of +/- pressure in context of market levels. whats the pain factor?

personally i wouldnt use them blind