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Accuracy of Candlesticks on a 1 min vs. 3 min vs. a 144 tick

 
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NateBrooks



Joined: 10 Mar 2006
Posts: 1
Location: Austin, Texas

PostPosted: Fri Mar 10, 2006 6:31 pm    Post subject: Accuracy of Candlesticks on a 1 min vs. 3 min vs. a 144 tick Reply with quote

I have been reading the candlestick signals on a 50 tick, 1 min, 144 tick, 3 min and 5 min charts while I have been trading. Does anyone know which of these signals are more reliable in these time frames? Can I rely on the signal and if so, which one should I use? Any suggestions would be appreciated. Thanks.
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S2



Joined: 17 Oct 2005
Posts: 79
Location: Portland, OR

PostPosted: Sat Mar 11, 2006 1:53 am    Post subject: Reply with quote

Candlesticks are purported to be valid through all time frames in reflecting investor sentiment over the time frame being observed. Personally I use 1-day and 1-minute and find this to be true; my experieince with 3-minute anf 5-minute also support this.

I would say use the candles for the time frame you trade in; learn the signals and what they indicate and verify for yourself. When dealing with the mass psychology of the markets no single system will be "right" all the time, including candles; when used with other indicators you are familiar and comfortable with they can give you and edge toward profitablity.

good trades to you

S2
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S2



Joined: 17 Oct 2005
Posts: 79
Location: Portland, OR

PostPosted: Sat Mar 11, 2006 10:50 pm    Post subject: Reply with quote

Nate,

NateBrooks wrote:

With respect to candlesticks, have you noticed any connections such as being a leading indicator is some cases such as .... if you see a trend reversal on the one minute and then it starts to go down as an example...will a two minute chart show a bearish symbol pattern such as engulfing pattern and a three minute show something like a longer engulfing pattern.

I was wondering about any type of connection like this OR have you just found it better to use a 1 minute chart and just execute off of the 1 min for your enter and exit points?

I am trading the mini Dow, mini Russell, mini S&P and will be adding the Forex within the next 45 days.


Regarding candles across different time frames; you should not see something bullish on one time frame and something bearish on a different adjacent time frame. A 3-minute candle is the compilation of 3 1-minute candles at the same time period. The Open for the 3-minute will be the same as the open of the first 1-minute, the close of the 3-minute will be the close of the third 1-minute; the high for the 3-minute will be the highest high of the 3 1-minutes and the 3-minute low will be the lowest low of the three 1-minute.

So, let's say you have a bullish engulfment on the 1 minute (the first 2 candles of the time period) and the third minute is a gap up bullish candle, on a 3-minute chart those candles would make a long white candle with a lower shadow, possibly a hammer which is also a bullish signal. With the same first 2 candles if the third candle opened near the close of the second (engulfing candle) then closed near the open of the first candle (engulfed) then you would have a doji (indecsion) on a 3-minute chart, which would be the same thing the bearish third candle would tell you after a bullish engulfment.

One thing you might try, so that you can get a feel for them, and to make a comparison, is to use your charting software to create 2 side by side chart of the same symbol but in different time frames and walk backwards in time. You will see the same reversal points, you probably will not see the exact same patterns but you will see bullish patterns at the same points on both charts and the same for bearish patterns.

As I said originally use the time period you trade off of; some people us 3s, some use 5 or 10s, some use 30 or 60s. I use 1-day charts to decide what I want to trade and 1-minute to actually decide when to make the trade; this is for both entries and exits, unless I'm stopped out.
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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Mon Mar 13, 2006 7:01 pm    Post subject: Reply with quote

Whilst S2 may be correct for adjacent time frames that are close together in a relative sense (1min to 3min for example) as the time periods get further apart you do get conflict. Just ask FOREX traders who can look any where from 1 min to 1 month and every bit in between.
What I generally do is operate two closely allied frames of reference and trade when they are in sync. For example day trading I use 1 and 5 min signals with their associated oscillators/indicators to trade the most probable trend and swing.
If I decide to swing trade you would look more at the daily signal as the direction to trade and perhaps use the 1min/5min to get a good entry. The weekly and daily then come into play for longer term holding.
If trading FOREX then other time frames come into play that suit my style-30min/15min/5min for example
There is money to be made with any combination. The trick is to get the right balance between signal strength (which gets stronger the longer the time frame used) and your greed/fear motivator that determines when you enter and exit. Everyone says get rid of the emotion but we are human and it is better to know your enemies than ignore them
Your friends are the charts (candles indicators oscillators...) so keep them close and become familiar
Your enemies (feer and greed) should be kept even closer and as you become even closer with them you can recognise when you are trading your friends with your heart or your head.
Good luck
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