Trading based on candles

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Sai Pratap
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There are many candle patterns like tweezers, engulfing candles etc. If we can automate EA to identify these patterns on higher time frames, can give good risk reward trades.

Advantages : 

1. Can use for scalping also with lower time frames.

2. No chance of blowing off the account as the risk is limited.

3. Risk reward can go upto 1:10 depending in the time frame and candle pattern.

4. Possibility of extending targets with trailing SL/ till next opposite signal candle.

I guess this is not difficult to implement in the EA.

I just gave an example with tweezer bottoms and top in the below screenshot. Like this we can catch many trades with candle patterns.

If we can club this with TDI, Identify with open on cumulative signal, the results will be wonderful.

If this idea gets thru, will add some more suggestions on how we can improve this technique or what options are required while building the code. Thanks.

Image 1195

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Price Action tools

Hello. 

Please add some price action tools like Support and Resistance or Breakout or etc... 

MA + Engulfing bar on XAUUSD

I have an idea that works on Xauusd 5Min TF

EMAs 8, 21 or 21,50

engulfing bar

1.buy rule

We consider buying signal only if we are in uptrend. Once we touch the 8Ema or 21Ema, we wait until we have a confirmation or engulfing, we enter buy position.

2. Sell rule

We have to be in downtrend

Same rules apply to sell

Stop loss above the engulfing + 5-15 pip

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Sai Pratap
Quote from Hannes Waser

Sai, the application of these looks quite nice! :)

Do you have experience how reliable one can scan and exploit the patterns?

Nice and interesting one. But the number of entries may be limited. I never used such idea. I use only candles.

We can know the efficiency only with a backtest. 

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ali yıldırım

The problem with candlestick patterns is that they're like a rorschach test, you can see patterns within patterns since candlestick patterns almost include all possible conditions that 3 to 5 candles can look like. The worst thing about them is, it's around %50 percent chance that a pattern is true.

This is my scan of the last week at 15min chart. This is a slightly cleaner view and even in this you can see bullish and bearish patterns are inside of each other so the direction is still unclear most of the time.

And check this one.

Direction is very clear at this one. With one big problem: It's wrong.

Please don't be mad if I'm getting cocky. I really hate these candlestick patterns. There are too many of them! Way too many to give an actual edge. Whenever I looked for them I felt like Russell Crowe at A Beautiful Mind.

How about just adding Auto Support & Resistance Zones with Auto Trendlines instead?

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Sai Pratap
Quote from ali yıldırım

The problem with candlestick patterns is that they're like a rorschach test, you can see patterns within patterns since candlestick patterns almost include all possible conditions that 3 to 5 candles can look like. The worst thing about them is, it's around %50 percent chance that a pattern is true.

This is my scan of the last week at 15min chart. This is a slightly cleaner view and even in this you can see bullish and bearish patterns are inside of each other so the direction is still unclear most of the time.

And check this one.

Direction is very clear at this one. With one big problem: It's wrong.

Please don't be mad if I'm getting cocky. I really hate these candlestick patterns. There are too many of them! Way too many to give an actual edge. Whenever I looked for them I felt like Russell Crowe at A Beautiful Mind.

How about just adding Auto Support & Resistance Zones with Auto Trendlines instead?

Guess u have not gone thru my suggestion properly.

"If we can club this with TDI, Identify with open on cumulative signal, the results will be wonderful."

So we will obviously be taking help of the other signals.

Also, we are going to use higher time frames for better accurate signals. If u use 15 min TF, obviously u will end up being mad :P.

Personally I use price action, support & resistance, Candles and take the manual trades. And they rarely gave a bad hint because that I use higher TF (4Hr, 1D or more)

Support and resistance lines are already under suggestions. U may plz vote.

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Sai Pratap
Quote from Sai Pratap

These pages are covering most of the widely used candle stick patterns. Let us start with these. If any more required, I will work out on formula and can be added later sir. 

Would be wonderful if these can be indicated on chart while trading.

Thanks a lot.


https://help.tc2000.com/m/69445/l/800589-bullish-candlestick-patterns-formulas-table

https://help.tc2000.com/m/69445/l/800590-bearish-candlestick-patterns-formulas-table

@Andrey sir, we may need to have a correction parameter like +/- 5-20 points, while incorporating the formulae.

Because not every time, we may be able fit the candles 100% as per the formulae. So it is better we have a correction parameter so that it would helpful for backtesting as well as fitting to the nearest.

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Andrey Khatimlianskyi
Quote from Sai Pratap

@Andrey sir, we may need to have a correction parameter like +/- 5-20 points, while incorporating the formulae.

Because not every time, we may be able fit the candles 100% as per the formulae. So it is better we have a correction parameter so that it would helpful for backtesting as well as fitting to the nearest.

Yes, of course. Patterns may vary and shouldn't be described by exact candle sizes.

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Andrey Khatimlianskyi

@Cedric, I've merged your topic with current one.

We already have MA filter, so all you need for your strategy is engulfing bar.

Please, describe it here.

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Sai Pratap

Already there r suggestions for this. May go thru them and provide ur votes.

Also U can use third party indicators for support and resistance.

https://communitypowerea.userecho.com/en/communities/1/topics/223-trading-based-on-candles

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babak raufi
Quote from Sai Pratap

Already there r suggestions for this. May go thru them and provide ur votes.

Also U can use third party indicators for support and resistance.

https://communitypowerea.userecho.com/en/communities/1/topics/223-trading-based-on-candles

Good. I vote to the post.
Thanks. 

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Hannes Waser

Did anyone try to integrate price action patterns via the new indi-signal interface in 2.49? 

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james

The very first EA I commissioned used a simpler method of candlestick analysis, and I got some interesting results -

The EA was told to look for Big Candles in any direction, but with limits on the ratios between the OHLC


E.g. if the wicks were too extreme in relation to the bar it didn't open, but if they were small enough it would open a reversal trade. It was actually a lot simpler than I wanted it, but I imagine added to the plethora of other filters in CP it could get some interesting results


There's no drawdown because it uses small stop losses (10.5% WR)

The inputs to get the attached results were:


EURUSD M15 

01.01.2008 - 10.08.2022 so 14 years' data

This was only using fixed lots so growth with margin % would be exponential


(Previous candle):
Min Candle body: 10pips

Max Candle body: 20pips

Max Candle Wick (either end): 5pips


Open opposite direction of previous candle movement

SL: 2pips

TP: 20pips

There's one thing I will say I'm not sure about - the spread. Anything more than a spread of 2 and it doesn't work. Hopefully I'm right in thinking in MT4 (didn't know I should have commissioned for MT5) this global spread setting means 0.2pips, which as far as I know isn't unreasonable for EURUSD trading? Any comments welcome

Perhaps add settings related to wick sizes / wick to body ratios in Big Candle settings?

And as Sai is suggesting, more methods of analysing previous candles, which I've suggested before


Thanks!

James