Hi KT, welcome to T2W
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In answer to the question, no they don't. Nothing "works" in the sense that if you blindly follow every signal generated you will make money and enjoy a high strike rate. The other problem is how you define "works". Depending on your trade management, a set up could work beautifully or fail miserably.
Candles are a tool just like anything else, and just like all the other tools we use, they don't actually exist. You call them into being by choosing to display price in a certain way, but If you choose to display price in a different way, your candle will disappear. Price is the only real thing on your chart.
Take the beloved daily pin bar for example. Change to an hourly timeframe, and your pin vanishes to be replaced by a series of candles moving in one direction then reversing to finish near where the day started. You do not even have to change timeframes. Say your broker is IG - your daily pin will be the record of price starting at midnight and finishing at midnight. However, if you use a New York-based broker, you might well find that instead of seeing a candle that ends at midnight GMT, you will have a candle that closes at 5 pm Eastern (although given how the markets work, in this particular case the look will tend to be very similar).
Candles are just a visual representation of how price behaved over a given period, but this can of course be useful. Going back to the pin bar, assume a bullish pin - that is to say, open and close near the top of the bar, with a long tail or lower shadow. This tells us that price opened high, moved down strongly, and then reversed sharply. It's important to consider orderflow and so on, which is a bit much to go into here, but obviously you can see that there was strong selling pressure which was subsequently overwhelmed by buying pressure. This could suggest a reversal. It could also suggest a good, logical place to put your stop - after all, if the bottom of the pin is broken, you could reasonably say that the latest support level has been invalidated.
Now this might or might not be enough to trade on. Remember though, the market is not saying "There's a bullish pin - time to buy!". So what you could do is look at supporting factors.
For example, does the pin occur at an area of significance, such as support / resistance / pivot zone? If so, this could be a good factor, as (using our example above) support indicates an area where buying overwhelms selling. Applying this in a practical sense, we can perhaps say the following:
1. Price is approaching an area where we know buying has been strong in the past.
2. Price has tested this area, and we have a visual confirmation that the area has held (the pin).
So in this case it could be the area that has the real significance, and the pin bar is our confirmation or "trigger" for entering the trade.
Maybe you want to adopt a more conservative approach. So you look for further supporting factors. For example, you might want to trade in the direction of the prevailing trend. So you take the pin, but only if it is a pullback in an overall uptrend.
Or you might decide, following your research, that round numbers have significance. So if the pin occurs at a round number, testing the area below it, you could view this as additional confirmation.
You could refine things still further - for example, you could require that the pin closes above the round number. You could require that the pin is large relative to recent bars, reasoning that a small pin might not actually be giving you much information.
So now you might have a good looking set up based on a significant area and a good trigger candle. Nexy you might decide to look around and see if you can see reasons why the trade might "fail".
Assume the candle closes below the round number instead of above, and you believe that the round number is an area of significance. Surely you want to be trading away from it and not into it? So no trade - unless possibly you just want a quick trade up to the round number, taking full profit when it gets there.
Or assume that there is a resistance area close above your pin. Would you take the trade knowing that you are going to potentially run into trouble almost immediately?
You can also chuck in the endless variety of indicators, fibs, MAs and so on if you want. I don't use anything of that nature so can't comment on them, but anyway hopefully you get the idea.
So now you've got your set up and entry. Congratulations! You've got maybe 3% - 5% (if that) of what it takes to trade successfully.
How will you manage your trade? What do you do when price hits the first touble area? Do you exit, move to breakeven, let it ride? Does your decision depend upon the strength of your set up, the strength of the resistance area, what you had for breakfast?
If you work that out, maybe you've got another 5%.
Now you need to work on money management, discipline, patience and the whole psychological side of trading. That's the missing 90%.
You're approaching things in a good way - learning, investigating and doing your own testing. That way you can have some idea of expectancy before you put your capital at risk. But a successful set up is likely to be a combination of factors.
So, do candles work? It depends on what you mean by "work". A daily pin bar, with a little QC, has about a 90% chance of getting to the first trouble area as I define it. Someone else might hit only 50% of the time, but secure a much bigger profit when they do. It all depends on your approach.
But for most people most of the time the answer is no, they don't work - on their own. Think about a car - you want it to get you from A to B. If it does, the car "works".
So you take just the wheels and off you go. Except you don't, you get cross, and you say "Wheels are f****** useless". So you stop using wheels and get an engine instead.
Again you go nowhere. "F*** engines too!"
Now you try rear-view mirrors and a cup holder. Eventually you decide that the whole concept of cars is useless and you abandon the idea of getting from A to B.
You need to assemble the components first of all. If you still get nowhere, then maybe you need to learn how to drive.
Even then, you have to use your tools in the appropriate way. Is a Rolls crap because it's useless off-road? Is a Defender crap because it's not very comfortable on the motorway? No, they're among the best, but a bad driver will still total them or get them stuck in a field.
I use candles all the time - I'm actually in a trade as I write this, based on a daily pin (AUD/USD, about halfway to my target). But you have to remember that they're just something to consider when you're deciding whether or not to trade.
Don't forget - nothing on your chart is real apart from price. Candles, fibs, MACD, the trend, support and resistance - these are all fictions, or at best highly subjective. S / R and pivot zones are the basis of how I trade, but they only exist (for the most part anyway) because I believe that they do, and trade accordingly. I could believe in a support area, trade and make money. You could equally believe it doesn't exist, trade and make even more money, because your completely different interpretation could be as good as or better than mine.
Hope some of this ramble is helpful, if you want to ask anything or shoot down what I've written, please feel free
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