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  1. #1
    Active Member ehenderichs's Avatar

    Candlestick Pattern Reliability Questions !!!

    I have been reading (a lot) about candlestick patterns and came across this statement:

    From ivestopedio
    Candlestick Pattern Reliability
    Not all candlestick patterns work equally well. Their huge popularity has lowered reliability because they’ve been deconstructed by hedge funds and their algorithms. These well-funded players rely on lightning speed execution to trade against retail and traditional fund managers who execute technical analysis strategies found in popular texts.
    In other words, they use software to trap participants looking for the high odds bullish or bearish outcomes. However, reliable patterns continue to appear, allowing short- and long-term profit opportunities
    Read more: The 5 Most Powerful Candlestick Patterns (NUAN, GMCR) | Investopedia http://www.investopedia.com/articles...#ixzz4LQygHIro
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    Just wondering what you think about this statement

    Since a few weeks I have been mainly focussing on short expiry and mainly use the 1 minute timeframe chart for my analysis. My first feeling is that candlestick patterns are less reliable on these short timeframes. What do you think?

    All feedback is welcome and very much appreciated.

  2. #2
    Legendry Member Michael Hodges's Avatar
    all patterns and signals are less reliable in such short time frames. The best thing to do is use as much convergence as you can, as many confirming indications, and look only for the strongest candle signals.

  3. #3
    Legendry Member willyw's Avatar
    Initially candlestick was invented and used on long timeframe. When I started the shortest timeframe was daily and there was no short timeframe available untill 2000 when trading went online. Regardless, candlestick pattern can be applied to all timeframes but short timeframe have more noises and this reduce the reliabilty of the patterns.

  4. #4
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by willyw View Post
    Initially candlestick was invented and used on long timeframe. When I started the shortest timeframe was daily and there was no short timeframe available untill 2000 when trading went online. Regardless, candlestick pattern can be applied to all timeframes but short timeframe have more noises and this reduce the reliabilty of the patterns.
    I'm pretty sure that the smallest measure used by the creators of candlesticks was one day, they didn't have short term intraday trading in the ancient rice markets of feudal Japan.

  5. #5
    Legendry Member willyw's Avatar
    Quote Originally Posted by Michael Hodges View Post
    I'm pretty sure that the smallest measure used by the creators of candlesticks was one day, they didn't have short term intraday trading in the ancient rice markets of feudal Japan.
    Yes, you are correct, Micheal. Up to the time when I came into this industry in 1986, the smallest time frame is still one day. Short timeframe started in the 1990s when 2 of the biggest media service providers, Reuters(now Thomson Reuters) and Telerate (later was know as Dow Jones Telerate) started offering realtime charting packages. These packages are not free and are not sold but been leased out. The fees for leasing are very high during my time only corporate can afford.
    When trading went online in 2000, short timeframe became popular and known.
    Last edited by willyw; 10-04-2016 at 04:46 AM.

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