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Candlestick

 

Let us now discuss about the indicators used in forex trading.

The first indicator that I want to discuss is the candlestick. You might wonder: why candlestick anyway? It's not just one indicator ... just chart type ... yes indeed. Candlestick is one type of chart that is usually available in all trading platforms. Type chart on this one I think is an indicator that "must" be understood by the trader. Due to the understanding of the candlestick, a trader would be very helpful in understanding the movement of the chart. In fact, even if a trader says he's trading without indicators aka naked chart, usually does he still based on the candlestick ...

 

Candlestick actually provide information similar to bar charts, but with a more interesting and informative. Candlestick chart is the most easily interpreted, since each has to give information about the power of buy-sell, as well as the price of his open-closed state.

 

Let us consider the structure of a candlestick.

 

candlestick1.jpg

 

Candlestick was formed from the data of open, high, low and close:

 

If within a period of time close above open, then the transparent or white candlestick is formed

If close below open, then the black candlestick is formed

White or black part of the candlestick is called the body or bodies

Vertical line above or below the body illustrates the range of high / low and is called the shadow or some call it a shadow or tails: D

The peak of shadow or shadows or tails of the high value

The base of the shadow or the shadow or under the tail is low value

 

Well, so, from a candlestick, we can know: the high-low-closed, will also know the power of buy-sell, the volume of transactions within the period (time frame) in question and from there to know the tendency of trends that happen;)

 

In general there are 2 types of candlestick, that is black and white, each with long and short.

 

candlestick.jpg

 

Candlestick white body that had shown that prices closed with a value above the open so that the general trends occur trend rise. And vice versa ...

 

Next, we need to know as well as various kinds of candlestick and trends that will arise in the movement chart:)

 

Some type of candlestick who need to know include:

 

Spinning tops

 

 

 

If spinning top this happens, it means that there are not many buyers or sellers are in action, so that tends to happen a reversal or trend turned, at least temporarily.

 

Marubozu

 

 

The longer the body of the candlestick, the stronger the buy-sell pressure that occur ...

 

Let us examine the relationship between type candlestick with a trend on the chart below:

 

Doji

 

Actually, variations of shape candlestick many more. we will know the trends that will occur with the emergence of each form of candlestick charts diligently observe and pay attention to trends trends related to the emergence of forms of candlestick which seemed on the chart.

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  • 1 year later...
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  • 3 months later...

i have checked some candle pattern formulas and sone does not work,

 

there come a message "formula error" or after Test formula comes a message "value false"

 

These formulas doesnt work:

 

Engulfing

(O1>C1)AND(C>O)AND(C>=O1)AND(C1>=O)AND((C-L)/(.001+(H-L))>0.6)AND(ABS(O1-C1)<ABS(C-O)*.5)

*Sort in ascending order*

 

 

Hammer/Dragonfly Doji

(H-L)>(3*abs(O-C))AND((C-L)/(.001+(H-L))>0.8)AND(O-L)/((.001+(H-L))>0.8)

*Sort in ascending order*

 

 

Harami Cross

ABS(C1-O1)>(H1-L1)*0.50 AND

C1<O1 AND

H<O1 AND

L>C1 AND

(((C+O)/2)-L) > (H-L)*0.40 AND

(((C+O)/2)-L) < (H-L)*0.60 AND

ABS(C-O) < (H-L)*0.20

*Sort in ascending order*

 

 

Dark Cloud Cover

ABS(C1-O1)>(H1-L1)*0.50 AND

C1>O1 AND

O>H1 AND

C<((C1+O1)/2) AND

C>O1

 

 

ABS(C1-O1)>(H-L)*0.50 AND

C1>O1 AND

C<O AND

H<C1 AND

L>O1

 

I think most of the formulas does not work. I found the formulas on the link on your prior post

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  • 5 months later...

candlestick is one of good indicator to help trader make decision in trading. especially for trader who usually use high time frame as prefered chart. but because the material is many, impossible to trader learn and memorize it in short term time. patient is needed in order to master it and use it in real trading.

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  • 1 year later...

candlestick is one of good indicator to help trader make decision in trading. especially for trader who usually use high time frame as prefered chart. but because the material is many, impossible to trader learn and memorize it in short term time. patient is needed in order to master it and use it in real trading.

For technical traders i mean a trader who prefer to use technical analysis over fundamental analysis will prefer this as one of their technique. Candlestick also help us to see the real time movement of the market. It said by some of their followers that candlestick  can be use for determine the next after news trend.

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Candlestick without doubt change the way we trade in forex, especially with technical analysis and this strategy proven to be an accurate one with the ratio up to 70%. We can use candlestick chart to identify the market trend and to be an indicator when we want to take an opening position and the closing position(if we prefer cut the profit/loss manually).

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  • 3 weeks later...

I don't know where do you get that but i think it is quite accurate and also still there are a lot of traders around the world which still use this strategy despite what candlestick strategy lack. Candlestick analysis is a strategy which has been passed the test of time since its invention and its rediscovery and also applied not just in forex but in stock too.

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I don't know where do you get that but i think it is quite accurate and also still there are a lot of traders around the world which still use this strategy despite what candlestick strategy lack. Candlestick analysis is a strategy which has been passed the test of time since its invention and its rediscovery and also applied not just in forex but in stock too.

It is an old strategy which has been proven by time isn't it? Since Edo Period to the Modern FX market. Candlestick also has overall good rate for making technial prediction, i don't really get the whole part how this work, i mean like when to use it but in calmer period you still can depend on candlestick, since that is a good and better strategy compared to the newest one.

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  • 1 month later...

Candlestick is just a tool for trader, because no matter what the trading candlestick is only indicator and the latest decision would be you as trader to decide when to open a position and to close it. Candlestick developed in japan but not for forex first, it is for rice trading or commodity trading.

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  • 2 months later...

Sure it is just a tool but this tool also applied in other high risk business, such as commodity based trading, localized trading even in the well known Stock. Yes, it developed by a well known japanese rice trader :D, so it is for commodity trading first but the effect on forex is not a joke and many traders whose depend on technical indicators love it.

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This is why many traders love it because it has many variations, from the simple formation to the complex and more advanced formation. As for the result mostly traders who depend on candlestick to analyze the market said its rate up to 70%. I don't know if that is true but seeing they keep sticking with candlestick formations, it seems true.

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  • 1 month later...

This is why many traders love it because it has many variations, from the simple formation to the complex and more advanced formation. As for the result mostly traders who depend on candlestick to analyze the market said its rate up to 70%. I don't know if that is true but seeing they keep sticking with candlestick formations, it seems true.

I don't know how much rate is (or if forget to know about that). Candlestick is pretty good stuff, i in few times use it as an indicator that i should take a position right now or wait for a few minutes. Overall a good formations could give us further details of how the market would transform next.

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