# Intra-day trading with Candlesticks



## aohx075 (3 December 2008)

Hi, I've been looking for some threads about using Candlesticks for intra-day trading on the FOREX market but couldn't find any so starting a new one. If there's an existing thread I'd be more than happy to be directed to it.

I was wondering if there's any scalpers using the candlestick patterns on 1min charts and how they find it.

I've been reading "Japanese Candlestick Charting Techniques" by Steve Nixon and just to test some of it's reversal patterns I was simulating the hammer/hanging man and engulfing patterns on the 1 min charts and my initial results were pretty bad! I would have lost quite a bit of money had I used those patterns. The examples/exhibits they use in the book seem to refer to monthly, weekly charts; are candlestick patterns are only useful for the long term trades and not intra-day trading?


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## Naked shorts (4 December 2008)

aohx075 said:


> Hi, I've been looking for some threads about using Candlesticks for intra-day trading on the FOREX market but couldn't find any so starting a new one. If there's an existing thread I'd be more than happy to be directed to it.
> 
> I was wondering if there's any scalpers using the candlestick patterns on 1min charts and how they find it.
> 
> I've been reading "Japanese Candlestick Charting Techniques" by Steve Nixon and just to test some of it's reversal patterns I was simulating the hammer/hanging man and engulfing patterns on the 1 min charts and my initial results were pretty bad! I would have lost quite a bit of money had I used those patterns. The examples/exhibits they use in the book seem to refer to monthly, weekly charts; are candlestick patterns are only useful for the long term trades and not intra-day trading?




I recently switched over from using a line chart to a candle stick for 1min forex. So far im finding it better. I dont pay too much attention to the patterns however (maybe i should). I take notice of the hair on the top and bottom of the candles, if i see a big bear/bull candle with decent volume, i know the next candle will be the same (but with less volume). 

So im liking it so far, and i dont think i will go back to using a line chart for 1min.

I dont take what is indicated to me as gospel however. when everything says the price should go a certain direction, it doesnt mean it will


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## Trembling Hand (4 December 2008)

Forget about matching what some dude has described as "classic" patterns to your market.

Learn the patterns of your market. The book of charts patterns is the second biggest scam in the industry, after FX leverage . Study your market not some perfectly backward fitting examples while the hundreds of others that fail have been ignored.


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## cuttlefish (4 December 2008)

I've been monitoring the 1 minute intraday candlestick charts for my options trading.  

Although I'm aware of the basics of candlesticks and see the patterns forming all the time I don't think they have much relevance at that level.

I do look for more conventional patterns as part of trying to interpret what's going on  - looking for zones of congestion, top formations/continuation patterns, trend, support/resistance areas, etc.   

I've also been trying to interpret volume using some of the VSA concepts that have been discussed on here - I've been finding that very useful.  

The other thing is watching the actual trades go through and seeing whats driving volume/price as the bars play out.  (e.g. was price in a bar driven up by retractions and then hits on the bid, sellers pushing a thin buy depth down then buying up etc. there's a million variations).

Volume is definitely a key indicator as to what is really going on - and going out to the 5 minute and 30 minute charts to check any viewpoints developed on the 1 minute charts is also helpful.

The real art, which I definitely haven't mastered but am getting some insight into, is to trade on what you see, when you see it, without being clouded by seeing what you are hoping to see, or holding off on taking action on an event in the hope that things will change. (you will probably hold off until just before things actually _are_ about to change - at which point your emotional involvement clouds the objective interpretation, making you miss the signals that would have given a re-entry/exit had you acted on the first signals).

I didn't realise I'd start to find it so interesting watching intraday price action - although I'm only at the early stages, some of the things that the more experienced people on here speak about are starting to click into place a bit lately - areas like the trading mindset,  interpretation of volume,  options theory and practice etc.

I'm not sure options are the ideal vehicle for day trading/short term trading - though options pricing varies enormously throughout any given day so why not I suppose. You also get to trade volatility as well as price which adds an interesting dimension to it.


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## aohx075 (4 December 2008)

Thanks for the feedback guys~ 

I guess from what you guys have been saying and my initial observation of candlestick pattern matching is that it possibly isn't the best tool to use for intra-day and scalping trades. I'll keep an open mind about this and finish the rest of this book to see if there's at least one candlestick pattern that might be useful.


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## Uncle Festivus (4 December 2008)

I pretty much only use & look for 2 candle stick patterns as in the chart - both exhaustion type formations - large move followed by flattening. 3 candles to confirm. Combined with the percentage change (day trading) and I usually get the day low or highs after such moves.


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## SoBadAtTrading (4 December 2008)

Hi,

Been experimenting using the shorter time frame (5,15,30) charts with candlesticks, moving average and s&r. From my observations, the 5 min charts aren't very reliable. It also really depends on what sort of success rate you are looking to achieve.


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## MRC & Co (5 December 2008)

As far as intraday, I would say the best candlestick use is just looking for long wicks with big volume after a trend and for a turn, no matter how minor.

Real art is milking the trend for all it's worth once the turn comes.

Oh and never buy the top, or sell the bottom, of a long green or red candle.  Dangerous game.


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## Rockon2 (10 December 2008)

Hi all.

Well my answer is yes i do !! 

Candle or bar charts using 5min is what i use to exit my trade, after going long or short..
I have made a specific set or rules for this type of trading.. I find it works well,
Mostly on index's or fx....

I enter a trade from pattern breaks, then stick to my set of rules.. works for me.


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## It's Snake Pliskin (10 December 2008)

MRC & Co said:


> Oh and never buy the top, or sell the bottom, of a long green or red candle.  Dangerous game.



MRC,
Surely this is hindsight. How can we be sure not to buy the top or bottom?


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## Trembling Hand (10 December 2008)

It's Snake Pliskin said:


> MRC,
> Surely this is hindsight. How can we be sure not to buy the top or bottom?




I think the point is don't chase strength or large extended runs.


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## tasmanian (10 December 2008)

Gday guys,

Which charting programs do you use etc for live intraday charts.I only use incredible charts which is delayed and only shows daily candles.

I would be really interested in looking at some live candlestick charts.

Any recommendations much appreciated.

cheers


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## Rockon2 (10 December 2008)

Set up a demo account at say IG markets or CMC ..

This will also help you as a trader see how our market the xjo and aud is moved around , becuase our mkt is traded aprox 22 hours of the day.


http://www.igmarkets.com.au/?QPID=171&QPPID=1


Its all about the learning....


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## MRC & Co (10 December 2008)

Trembling Hand said:


> I think the point is don't chase strength or large extended runs.




Exactly.

Wait for a pullback (even within the candle, which you won't see by the time it is printed).  Or just miss it.  Requires discipline.


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## Rockon2 (10 December 2008)

Trembling Hand said:


> I think the point is don't chase strength or large extended runs.





Correct imo..... Never chase !! .. what you must know ( before you  take a trade ) is where the current run will end.. At Support or resistance !!! thats what counts and thats where some of the best setups come from the end of a run.

Thats why using  intra day charts looking back over some days to weeks, you can clearly see (some) supps and resist where the mkt will turn.


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## MRC & Co (10 December 2008)

Rockon2 said:


> what you must know ( before you  take a trade ) is where the current run will end.. At Support or resistance !!! .




How do you know where a run will end?  That's why people scale in/out.


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## It's Snake Pliskin (11 December 2008)

Trembling Hand said:


> I think the point is don't chase strength or large extended runs.




Thanks for that TH, MRC and Rokon2!


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## Page (21 February 2009)

I do as well.
I found intraday trading or to analyse a timeframe, it better with a candlestick charts. It makes it pretty easy and comfortable to study about the resistances and supports.
But on the other hand if you took the day data, represented it with candlesticks of say 30 minutes interval, starting @ 10.00 AM and compare that to a chart started a 9:55 AM or 10:10 AM, you will get very dissimilar candles forming since individual H,L,C,O may drop in different time intervals. This is factual in spite of the time interval chosen.
now what to say friends


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## Bobby (21 February 2009)

Heikin-Ashi candlesticks , are they  better for short time intra-day trade decisions in volatile chop for less false signals '  



Heikin-Ashi candles are different and each candle is calculated and plotted using some information from the previous candle:

1- Close price: the close price in a Heikin-Ashi candle is the average of open, close, high and low price.
2- Open price: the open price in a Heikin-Ashi candle is the average of the open and close of the previous candle.
3- High price: the high price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the highest value.
4- Low price: the high price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the lowest value.


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## Bobby (22 February 2009)

What no response  ? guess knowledge of this form ( candlestick ) is limited :


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## nizar (22 February 2009)

Bobby said:


> What no response  ? guess knowledge of this form ( candlestick ) is limited :




Bobby, can you show us a chart using Heikin-Ashi candlesticks?
Never heard of them.


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## skc (23 February 2009)

Candle sticks were originally invented by some rice merchant/trader in Japan some hundreds of years ago. He was able to gain an edge from trading predominantly from his information system (employing heaps of people relaying price messages over long distances), which he recorded using candle sticks. There is a wikipedia entry somewhere about his story. My question is, how applicable is this scenario compared with the modern day markets, using 1-minute candles? 

It seems to me one of the key tenants of candle stick is the closing price. For short timeframe candles, there is a lot less significance in the close price. Do people really reassess their positions spot on at the end of every minute? If you were to shift your charts and plot 1 minute candles from say 10:00:30 to 10:01:30, you will get a very different looking chart. It may throw up completely different signals, but how is this intra-day chart any less valid than the one produced using 10:00:00 to 10:01:00 candles?


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## Trembling Hand (23 February 2009)

Its not all about closing price. Its about Current price. And I don't think its about 1 individual candle but where it is compared to the ones before it. So I don't think it would make much diff if your candle started at 30 sec instead of 00 secs.

But having said that one of my most helpful tools is a 1 min count down timer on my charts.

Example here,

http://tremblinghandtrader.typepad.com/trembling_hand_trader/2008/02/painting-a-pict.html


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## Bobby (23 February 2009)

nizar said:


> Bobby, can you show us a chart using Heikin-Ashi candlesticks?
> Never heard of them.




If you scroll down on this link there is an example next to normal candlesticks.

http://www.weboma.com/what-is-heikin-ashi-and-how-to-trade-with-it/


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## investorpaul (23 February 2009)

Bobby said:


> If you scroll down on this link there is an example next to normal candlesticks.
> 
> http://www.weboma.com/what-is-heikin-ashi-and-how-to-trade-with-it/




Interesting how it calculates the open, close, etc. The thing I dont like is that you lose one of the shadows, which I think are an important component of a candle stick.

I can however see why some people would like to trade with them


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## motorway (23 February 2009)

Bobby said:


> If you scroll down on this link there is an example next to normal candlesticks.
> 
> http://www.weboma.com/what-is-heikin-ashi-and-how-to-trade-with-it/




This is the most important thing to know about them



> So a Heikin-Ashi chart is slower than a candlestick chart and its signals are delayed (*like when we use moving averages on our chart and trade according to them*).







> I do as well.
> I found intraday trading or to analyse a timeframe, it better with a candlestick charts. It makes it pretty easy and comfortable to study about the resistances and supports.
> 
> But on the other hand if you took the day data, represented it with candlesticks of say 30 minutes interval, starting @ 10.00 AM and compare that to a chart started a 9:55 AM or 10:10 AM, you will get very dissimilar candles forming since individual H,L,C,O may drop in different time intervals. This is factual in spite of the time interval chosen.
> now what to say friends




Problem with all linear ( clock time ) representations

That is why non linear that do not cause such distortion are so important

hekin-ashi  is linear and a moving average as well


A non linear method
will create discrete intervals of Volume or price movements

and not fixed intervals of a non optimised time movement

ultimately the flow of transactions = tape reading

examples

range bars
volume bars
renko
Point and figure



> You know it’s true – some days are more important than others. Yet, the charts on which most traders rely make it difficult to see.  That’s because time-based charts add a fixed amount for each period.  For example, a daily chart adds the same amount of horizontal space every day.  It doesn’t matter whether there was a lot of news or no news, whether it was a volatile day or a dull day – the chart adds the same amount of data.  That’s true of all time-based charts, whether they’re one-minute, daily or monthly charts.




motorway


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## motorway (23 February 2009)

The top or bottom has a fixed location on the tape 

Yet on time based charts it depends on the time interval

BHP lower boxes are waiting why they are filling with volume
nothing changes until it does

The bottom does not move
or change relation with anything
it just IS.


motorway


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## Bobby (23 February 2009)

Gee' so interesting  those posts from TH & Motorway .

Stuff trading off time based charts , they do have linear distortion , also the traps shown by TH as one minute bar is forming ! 60 seconds is a long time .

Could just trade price  (SPI ) watching live tick & looking at the XFL screen to see what color is winning ( red or green ) ,


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## acetrader (1 March 2009)

aohx075 said:


> Hi, I've been looking for some threads about using Candlesticks for intra-day trading on the FOREX market but couldn't find any so starting a new one. If there's an existing thread I'd be more than happy to be directed to it.
> 
> I was wondering if there's any scalpers using the candlestick patterns on 1min charts and how they find it.
> 
> I've been reading "Japanese Candlestick Charting Techniques" by Steve Nixon and just to test some of it's reversal patterns I was simulating the hammer/hanging man and engulfing patterns on the 1 min charts and my initial results were pretty bad! I would have lost quite a bit of money had I used those patterns. The examples/exhibits they use in the book seem to refer to monthly, weekly charts; are candlestick patterns are only useful for the long term trades and not intra-day trading?




Forget those patterns of candlestick. They were for the dumbest student of the ancient rice trading guru in Japan.

What the guru really wanted to teach his students is using the candlesticks to detect the market flow. But some of his students can hardly grasp the essence of guru's theory. Just before his dying, the guru decide to write some codes which are easy to remember and hope that can help his dumbest students survive longer. 

Then many years later, his codes or so called "candlestick patterns" were spread out. Some traders with same dumbility worship these codes and believe they have some magic power. Some traders study those codes carefully for years and finally realise whta the guru really said and made tons of money out of market.

Hope this help! good luck!


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## Naked shorts (1 March 2009)

Trembling Hand said:


> Its not all about closing price. Its about Current price. And I don't think its about 1 individual candle but where it is compared to the ones before it. So I don't think it would make much diff if your candle started at 30 sec instead of 00 secs.
> 
> But having said that one of my most helpful tools is a 1 min count down timer on my charts.
> 
> ...




TH, Where do you get that indicator from?


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## motorway (1 March 2009)

acetrader said:


> Forget those patterns of candlestick. They were for the dumbest student of the ancient rice trading guru in Japan.
> 
> What the guru really wanted to teach his students is using the candlesticks to detect the market flow. But some of his students can hardly grasp the essence of guru's theory. Just before his dying, the guru decide to write some codes which are easy to remember and hope that can help his dumbest students survive longer.
> 
> ...




It reminds me of Tai Chi Chuan
some Know all the names
like they now the names of Railway stations

STATIC

and they are often as ineffective

others are like the moving train
they never really stop at the stations

DYNAMIC and effective

Process Vs States

motorway


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## Trembling Hand (1 March 2009)

Naked shorts said:


> TH, Where do you get that indicator from?




You using NT?

If it's not in their standard indicators it was off their support forum.


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## Naked shorts (1 March 2009)

Trembling Hand said:


> You using NT?
> 
> If it's not in their standard indicators it was off their support forum.




ahok, I have found it now. For the others that might be interested, the NT name is "bar timer".


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## acetrader (1 March 2009)

motorway said:


> It reminds me of Tai Chi Chuan




You are a genius, I practice Taekwondo actually. :nunchux:


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