Two proposals About Candlestick ...

[priyanvada]

This point probably won't be of much important for long term traders but for day trader like i think it's important.

As I have observed the candle stick formation for a time period around 15 minutes happens with somewhat less noise ... most simple would be as I have shown below ...

Problem: - I don't get more detailed clue about latest price movement.i.e. which shadow was formed first upper shadow or lower shadow?

In the example given candlestick A and candle stick B are showing me bullish movement. But if we see little closely candle stick A is more bullish than Candle stick B. Since in A upper shadow was formed first then the lower shadow and then the closing price.
So the latest price happening in A is supportive to overall price happening in that time period.

So Candle stick A is more bullish than candle stick B, which is impossible to detect by seeing conventional candlestick.

On the same logic as above candlestick D is more bearish than candlestick C,which is impossible to detect by seeing conventional candlestick.

I agree that theoretically more price noise is possible which might make this irrelevant to ask which shadow was formed first.But practically I have seen that price movement happens very much similar to what I have shown in the graph.

Suggestion: -

1. For "more" bullish candlestick in which upper shadow was formed first, show both shadow with green colors.

2.For "less" bullish candlestick in which lower shadow was formed first, show both shadow with "red" colors.

3. For "more" bearish candlestick in which lower shadow was formed first, show both shadow with "red" colors.

4.For "less" bullish candlestick in which upper shadow was formed first, show both shadow with green colors.

Benefits: - this would give more support to a day trader while entering in a trend.

Any thoughts???

regards,
priyanvada

 

[priyanvada]

Second Query: -


This is regarding candlestick formation by the software.
When I see a 15 minute candlestick formation on in.quote.com what I see is that when market starts at 9.55 it logically takes this time as "zero" ... gets the price and say for 15 minute time chart it show me its first candlestick at 10.10 i.e. after 15 minutes from start which is quite okay....

But as the day moves on say at 12:00 pm I am seeing an upward trend formation but i want to confirm it with latest 15 minute candlestick ... but huh...i have to wait 10 more minutes till it is 12.10 pm to get"latest 15 minute candlestick"
... and this way i lose valuable 10 minutes to confirm a trend.

Suggest: - So what i suggest is that there is should be an option in the candlestick forming software such that at any instant if I want a 15 minutes candlestick chart then,
1.It should take my chart order time as zero.
2. And now it should walk backwards in the history and form candlestick charts as it gets the data while moving backwards.
3. Just ignore any time offset which will remain many a times when walks backwards...since the minutes will not be always perfectly divisible by 15.
Or better just make the remainder times candlestick or don't make it at all since at 2pm I have nothing much to do with what was the trend in first 15 minutes of the day.

Is it possible?

Any thoughts???

regards,
priyanvada

 

[whyLately]

Good thinking and well-expressed!

Candlesticks have this seemingly incompatible relation with the viewed timeframe that requires confirmation from the neighbouring candles. Often the confirmation is from the right hand side (next future candle). Therefore the "what timeframe do you use?", "the pattern works on all timeframes". On the odd side, there is "wait for three green candles" and my winner this post by the tape.

If you take central 2/3rd of the bullish candle A, you get the bearish candle C. This leads to two lines of thought: one, do not forget the line chart, and two, use a time frame that has a resolution of at least 25% of the pattern that you wish to see.

Am unaware if anybody has used ami's gfx functions to draw custom or embellished candles.

 

[RSI]

Easy solution for both problems is to drop down the time frame in the chart. One 15 minute candle consists of 15 one minute candles. So go to 1 minute chart and see how the price has moved there.

Another suggestion would be to use line chart itself. What is imporatant is to see the movement of the price rather than whether a "doji" is formed or "bullish engulfing candle" is formed.

I hope this helps

 

[priyanvada]

One 15 minute candle consists of 15 one minute candles.

Ohh Yes...this is a good idea!

That's why I think I have read somewhere that traders refer all 5 min ,10 min and 15min charts for the same trade...Problem with this is that
1. I am engaged in more than 1 trade things do become messy for my brain! because I have to keep a look on so many charts and keep drawing right meaning from that!
2.Each time frame has its own psychology... So to decide something on 5m chart which I have tried leads to many times a "wrong" decision...15 min chart is a "strong" indicator of current market mind or mind shift happening for an equity...

So I think my "Reverse 15 min chart" idea would solve this problem in one shot!!

What do you think?

regards,
priyanvada

 

[priyanvada]

Thanks whyLately for suggesting such a nice thread...

I think I will learn a huge from that thread!

really thanks,
priyanvada

 

[RSI]

Sorry for being blunt and honest in this post. But I can't tell you a sugar coated lie.

Unless and until you understand how to look at price, you will not make any progress. Be it 15 minute candle, 5 minute candle or hourly candle. This is one of the mistakes which every beginner commits. Instead of looking at price, they stare at candle and try to decipher price movement from those candles. Remember it is the price that forms candles and not vice versa. You may find 15 minute candle working today, tomorrow it may be 30 minute candle chart, day after tomorrow to your horror you will discover that it is neither 15 minute nor 30 minute, but 5 minute chart that is working. How long will you keep on changing timeframe of the chart?

And let me tell you one more blunt truth. Every beginer tries to decipher price movement from indicators such as RSI, MACD, Stochastics and there are dime a dozens of them. I do not blame either you or any one in particular. But so much of misinformation is floating in net that I am not at all surprised that a newbie thinks that it is the indicators that will dictate the price movements. So instead of concentrating on price movements, newbie concentrates of indicators. There are thousands of insane methods of trading with indicators. One indicator crossing another or one indicator confirming a particular level or breaking a particular level. Believe me, you will go nuts if you start to concentrate on indicators.

Best chart is that chart which contains price, time and volume and bare minimum numbers of trendlines/demandlines/supplylines/levellines/support and resistance lines, which ever is relevant to that particular chart apart from price time and volume. If you are viewing daily or higher timeframe chart, you can add open interest graph as well for better understanding. Price moves in waves (not those idiot (err elliott) waves) from level to level. Understand this aspect. It is very difficult to understand this aspect. It may take lot of time and test your patience to the hilt. But do not be disappointed. Sweet success will make you to forget the hard work put by you over time. You will improve your trading a lot.

 

[priyanvada]

It seems you are giving names to all the modern methods ...
I agree the price volume support resistance basics you are insisting here...
I agree that they should be never ever ignored/overlooked by a amateur trader like me...

But still what is wrong in candle-sticks if they are helping?..
What is wrong in candlesticks if they are giving me more sense of the situation which is happening??... why should I not take a clue from them? but just stick with the basics and practice trading from that only???

I think there is nothing wrong in indicators ... nothing wrong in MACD ... Nothing wrong in market news... All are clues ... the more I can digest during market timing the more correct my decision will be...

If I practice with them with "understanding" over a period of time, I will know what 70% surely works all the time but 30% not ... And what works 30% of the time but 70% of the time not...

...Right now I think I should be open to learning all that candlesticks have to say...all that indicators try to point out ... I may and will make mistakes ... but this is the better way to grow as a trader I think....

....Since It is my attitude till now about everything in life ... So will be my my approach while trading...since I am an absolute amateur I may be wrong ...

...You are "the master" ... So please guide what do you think the best way to grow up as a trader??

Thanks and regards,
priyanvada

 

[RSI]

A few clarifications

1. Clearly, by any means, I am not a master trader. I am one of those who has taken lots of hits by following what you are trying to do now. That is why I warned you about indicators well in advance, even without any invitation/solicitation of opinion in that regard.

2. I never said that you should not study candlesticks or indicators. What usually happens as one goes on and on studying these kind of stuffs is that one ignores or looses focus on the main aspects highlighted by me in my earlir post and still dangerously one will try to view the aspects highlighted by me in the light of indicators. Please understand that if the price of XYZ stock is supported at Rs.ABC, then it is because demand exists at that price level which is sufficient to absorb the supply and not because MACD crossed over zero line or RSI turned above 30 or because a "doji" candle has formed there. What happens is as a newbie learns to concentrate on these indicators and candlesticks, he forgets the supply-demand aspect and he tries to trade whenever RSI crosses over 30 or whenever a doji candle is formed.

3. It takes a lot of time and effort to unlearn these indicator junk stuff, if one accumulates it over a period of time. Still worse, some never realise that it is junk.

4. Please note that all these candlestick stuff is the derivative of price. All these indicators are the derivatives of either price or volume or time or any combination of these datas.

5. Just ponder for a moment as to why exchanges all over the world are releasing only three types of data in realtime (i.e. price, volume and time)? Why none of the exchange releases data as to whether RSI crossed 20 or 30 or MACD crossed zero line or not? Think.

6. Last but not least, you cannot trade effectively on the basis of candlestick formations alone. I hope you know that.

I sincerely hope this helps
Regards
R. S. Iyer

 

[RSI]

Aha. One more aspect which I wanted to point out to you long before but I forgot. It is your first post in this thread that attracted/prompted me to make posts in this thread. Go through your first post in this thread.

You seems to have realised that how the price has travelled (i.e. whether from down to up or vice versa) is more important rather than the candlestick itself. You have drawn line chart highlighting this aspect. I thought that you have realised that it is futile to view whether a particular candle as a doji candle or bullish engulfing candle and that is why you have drawn line chart showing various implications of price movements eventhough when it comes to candlestick formation, all of them are shown as one and same, eventhough in reality what happened has vastly different implication. You seem to have made good progress by realising that aspect. This is one aspect which most newbies never realise. That is why I suggested you to shift to lower timeframe (i.e. 1 minute timeframe) to see how the price has moved in the 15 minute period you wanted to see. But your later posts indeed disappointed me.