[stpips89]

Really good pin bar on the daily GBPUSD chart below, I'm in this trade, very obvious easy price action setup...

[gianno]

Originally Posted by BlowFish »

Without 'context' I'd bet it's about 50/50. Of course you could easily make that 30/70 or 70/30 by adjusting stops and targets (R:R).

There are many more variables than a simple entry pattern that determine 'win rate'.

Thanks. In the meantime I did a lot of backtests and found out that candlesticks are a total waste of time.

[BlowFish]

That must have been some impressive testing to make such a definitive conclusion. And yet, clearly other people trade profitably using candlesticks, weird eh? If you have a search brownsfan posted daily to a thread where traders posted results of real trades. He posted pretty much daily and was profitable week in week out trading.....candlesticks. I guess that will be of little interest if you have determined they are 'waste of time'. Good luck finding something that is not.

[TheNegotiator]

Lol. Every method is a waste of time if you don't know how to use it properly right? I think you could devise automated strategies to be profitable off candlesticks alone, but without market context, money management/position sizing and probably market diversification are likely to be key to its success. With trade selection using experience and context, I think you can greatly increase the odds of the strategy.

[steve46]

Check out Gregory Morris Book "Candlestick Charting Explained"

Morris did a statistical study of candlestick patterns that may help those interested in using
candles.

Best Regards
Steve

[wrbtrader]

Yeah, without market context...don't bother learning, applying nor testing Japanese Candlestick patterns. It's a wast of time & energy unless your intentions is to show that Japanese Candlestick patterns don't work.

In contrast, using them with market context, Japanese Candlestick patterns are profitable. Next, throw in some trade experience, money management, position size management and many other important variables of a trading plan...Japanese Candlestick patterns are an excellent trade method.

However, I do not recommend trying to go the automated candlestick pattern trading route. They were not designed to be used as such and you'll limit your ability to properly learn how to trade them.

[TheNegotiator]

Originally Posted by wrbtrader »

However, I do not recommend trying to go the automated candlestick pattern trading route. They were not designed to be used as such and you'll limit your ability to properly learn how to trade them.

I think this one requires further explanation wrb. My view is if you don't understand it, don't automate it. But if you do understand how to use candlesticks, what specific reason makes them poorly suited to being used in an automated system? They are just data points. OHLC. I'm sure context can be modelled to some extent and certainly money management factored in. Maybe it just depends on the type of strategy you are trying to automate.

[Dutchie]

Originally Posted by stpips89 »

Really good pin bar on the daily GBPUSD chart below, I'm in this trade, very obvious easy price action setup...

You also could have entered a long at the indicated point where a bear candle gets taken out by the next bar. The appropriate place for a stoploss would be a few ticks under the bear candle.This technique can easily be used on new pivot highs/lows knowing that a (new) move up/down will show (at least) a second move up/down after the correction.

(I usually switch to a 4 times lower TF for sharper entries and smaller potential losses.)

The lenght of this second move has a high probability of being at least 100% of the preceding one (for Elliotticians: a.k.a. a Wave 3).


Cheers,

Peter