Stephen Bigalow and Candlestick Forum
Stephen Bigalow is yet another Japanese candlestick hustler. Has been pushing candlestick courses and books for over 15 years. He refuses to verify whether he even trades, or whether he even has a trading account. Japanese candlestick patterns have been thoroughly debunked by modern computer testing, and yet suckers still flock to spend $4900 to listen to this guy talk about a concept with more harmful than helpful attributes. Save your money, time and frustration by investing in yourself…learn to backtest and verify the validity of these tired old ideas.
User Review( votes)
Today’s Review is Stephen Bigalow and Candlestick Forum
Who is Stephen Bigalow and what is the Candlestick Forum? About once a month, I get a request to review a company or person this offering a specialized training course on Japanese Candlestick trading. The largest volume educator, in terms of web traffic, would be Steve Nison. He likes to call himself the godfather of western candlestick trading because he was the first to write a book back in 1991. At that time, the nation was culturally enthralled with everything Japanese. Steve had excellent timing and has had a 25 year run of selling courses, and educational materials. You can read Steve Nison’s review here, much of my Steve Nison review also applies to Stephen Bigalow as they are essentially selling the same thing. So lets now talk about Stephen Bigalow and the Candlestick Forum.
Back in the mid 1990’s, Stephen Bigalow was a student of Steve Nison. Stephen read Steve’s books and became a big believer in Japanese Candlesticks. In speaking with Steve Nison, he would describe Stephen Bigalow as, “Yet another pretender copying my original work”. In fact, over the past 25 years there have been literally hundreds of people that have published books and courses on Japanese Candlestick charting. A quick search on Amazon proves the popularity.
So who in the heck is Stephen Bigalow? He is just another educator. He has been battling Steven Nison for the candlestick audience for the past 15 years. In fact, both seem to crank out books and educational materials in some sort of perverted attempt to beat the other to the punch. And they fight over speaking engagements as well. Go to a trading seminar and they will introduce Steve Nison as the original and still the best person in the trading universe at interpreting Japanese candlesticks. Go to another trading seminar and they will introduce Steven Bigalow as the ultimate authority on candlestick investing.
To date, Stephen Bigalow has written three books on candlestick trading; (1) Profitable Candlestick Trading: Pinpointing Market Opportunities to Maximize Profits, (2) High Profit Candlestick Patterns: Turning Investor Sentiment into High Profits, and (3) Candlestick Profits: Eliminating Emotions With Candlestick Analysis.
What is Stephen Bigalow Selling?
In addition to the books that are listed above, Steven also has a forum and a day trading room (no track record of live trades) that can be subscribed at $97 per month. In addition to the books and forum, a person can also be immersed in the full Bigalow educational experience by attending a two day day event located in upstate New York. This 48 hour event comes at a price tag of $4900. The $4900 price tag also comes with a autographed copy of one of Steve’s book.
This educational event really piqued my interest. And so I emailed Steve and explained that I was interested in sending my $4900, and booking my $700 flight from San Diego, Ca, and reserving a room for two nights at $120 a night….but before I opened my wallet and sent my money, I just needed to verify a few things.
The first thing I wanted to know before I spent several thousands of dollars is the trading track record of Steve Bigalow. And so I asked him. I just wanted a one year worth of brokerage statements that verifies that he actually trades. I simply asked, Steve please show me your trades. I just want to see if over your 20 years of trading and educating if you have ever had a winning year. I don’t even want to see more than a year, just send me one year. Of course, as with the vast majority of these trading educators, when you start asking questions about trading performance…the excuses start flowing like water over Niagara Falls. In short, you wont find any proof that Steven Bigalow even has a trading account. The excuses that he uses are very similar to Steve Nison’s excuses, “oh I don’t need to prove anything to anyone anymore, my reputation speaks for itself”, or “if I show statements than I am considered to be an investment adviser”, or “you should speak with my thousands of successful students, they are all the proof that one needs”.
Where is the Proof?
Not only will Steve not verify any of his personal trading, but you will find absolutely zero reference to any trading performance on his websites. I find it amazing that this guy has spent the past 15 years selling books, seminars, dvd’s, subscriptions, etc. And nobody has taken the time to ask, “Do you trade Steve?”. How could anyone just wire this guy $4900 and get on a plane to upstate New York on nothing more than his word? How could anyone risk their hard earned savings on some Japanese scribbles? If a person spotted a Long Legged DoJi, or a Gravestone Doji, or a Hammer, then why not go the extra 5 minutes and simply back test these simple patterns for authenticity. Amazing that people believe this nonsense. Its like making investment decisions based upon the daily horoscope.
Candlesticks Are Random
Steve likes to offer a free .pdf download of his “12 Signals to Master any Market”. You can get a copy of it here. These are the exact same patterns that Steve Nison is offering in his free download. I challenge Steven Bigalow to show me how these patterns are predictable. For instance, one of Steve’s favorite patterns is the Bullish Harami which is ridiculously easy to program and test. Which I did, it has absolutely no predictive value. In fact, after testing the pattern on every stock in the NYSE over the lifetime of available data….it shows a win rate of 49%. No better than buying on any random day, and then selling at the close. How is this predictive? And this is the problem that I have with all of these Japanese candlestick salesman, not a single one exists that can make show a profit from these mystical Japanese interpretations.
I also find it frustrating that people love to put these candlesticks on charts without doing even the minimal amount of research and testing whether Japanese candlesticks have any value.
Its the Newbies
I think that part of the reason that Japanese candlesticks have been able to cling to relevancy is because all of the platform providers include them as an alternative to a standard bar chart. So what typically happens is that the newbie trader starts putting up his first bar charts and then accidentally bumps into candlestick charts. They put it on the screen and it looks interesting. And since it is included in the charting package, then it must be important. Why would esignal, tradestation, ninjatrader, put this on the platform unless it held some sort of value. A value that they do not understand. And since it has the word “Japanese” then it must be extra valuable, like their car. And so this person goes onto Google and searches for Japanese candlestick chart. Once they hit that search button, then they are introduced to the wonderful world of Steven Bigalow and Steve Nison, both fighting over market share, and to lure the next sucker into paying $3,000 for a load of crap.
A Personal Note To Steven Bigalow
Steven, you have been pushing this candlestick nonsense for over 15 years. You know what I think? I think you are a complete and total sham. I would love for you to shut me up! Open the kimono and show the trading world your personal trading. Isn’t it time? We have been watching you and Steve Nison lecture us on how these Japanese candlestick charts are the holy grail to trading. And that wealth is only an education course away. That your mystical interpretations of these ancient symbols will unlock all the wealth that the financial markets hold.
Well that’s it for today. Hopefully I don’t have to spend another day researching and writing a review about yet another salesman offering the latest and greatest interpretation of Japanese candlesticks. I am sure that many readers are going to totally disagree with me on this candlesticks stuff. But I would encourage everyone to grab their back testing platform and run the numbers. Candlesticks are ridiculously easy to program and back test. Science and math are absolutes and they don’t lie. Candlestick patterns are just mystical mumbo jumbo, no more or less predictive than reading a daily horoscope.
My understanding of TA and candlesticks, is that it works as self-fulfilled prophecy. When many traders look at pattern that look bullish, they scream “Buy, buy, buy” and the stock naturally goes up. If it would be a sustainable run – it’s another story. So, to work technical pattern should be simple, visible and known to everybody. That’s how it works.
I hope I can get it educated answer.
If a person bought 980 shares of a APA.
The stock is down to 15 50.. the person bought the shares at 17.60
This is a loss of $2,049.
Should the person get back in at the lower level and start trading again.
At the lower level. To hopefully regain more shares.
Or should the person wait until the stock price reaches backup to 17.60 per share.
Hope I could get an opinion from somebody on this question thanks .
Hello. I really need help. Because of my job, every day I have to find many company phone numbers which is a long and boring process. I tried several phone number extractors but most the provided numbers are not valid.
Does anyone have a solution?
If anyone has used companyurlfinder.com , please explain about his experience.
Hi, what is the best domain finder to detect company websites?
Does anyone here know any comprehensive database of company emails? I’m really tired of searching them in the net.
you say ‘candlestick nonsense’?? really. come on…. they are useful to any trader. they depict sentiment in the market extremely well. much better than bar charts IMO.
now most good candle teachers will say DO NOT USE CANDLES on their own ! they need confirmation to proceed with a trade. if just using candles alone, (ie without further indicators) that confirmation comes in the following candle going in the direction of what the pattern says ( confirming sentiment held or not). so for a bearing engulfing candle, the next candle needs to close lower in the direction to confirm the signal. if using an indicator as well, it has to match up for a trade, like an overbought/sold oscillator, or trendline break, or moving avg break etc. all good teachers of cnadlestick analysis teach this. not to blindly follow the pattern. of course not all work. take that trade and exit out if it doesnt work.
to dismiss Bigelow just b/c he hasnt provided YOU his personal trading a/c doesn’t dismiss the whole edict of candlestick analysis !!! ( nor does it mean he doesnt trade either ?!!). come on, that’s totally NOT reasonable! the Japanese rice traders were onto something.
to Bigelow’s credit, he does NOT just use candles for trades. he uses further triggers to enter the trade. any analysis of his videos for free can see that.
he waits for a candle pattern to show mkt sentiment, then looks at stochasitcis (?) to be in right position of overbought or oversold, then also waits for signal to pass above his “T-line” which is an 8 EMA. also uses the 50 SMA as a support/resistance barrier too to help entries or stop losses.
dont think your being totally fair here. $4900 is a hell of a lot of money, god knows what you get for that. i dont agree with that. that sounds like a money grabber. but for $97 per month to listen to him daily and see his mkt analysis, learn his patterns and trading technique seems reasonable. if you dont like it in a month or 2, no great loss, just leave the forum.
BTW – im not a forum member, but believe in candles. they help my trading immensely. and yes i think they are a little more suited to daily trading. not so much intraday. they give a clear mkt sentiment of the traders in a a visual way thts hard to dispute.. dont tell me the Japanese traders were wrong and didnt make a dime off of it ! they did. and they are useful. $4900 no thnx, but some good books yes, or a month to try a forum, then ok.
Emmet did you at least even try his forum for a month ?? if not, why not. ?? you should try it out if you really are going to give a constructive informed review and analysis shouldn’t you ?
Vince Rowe (a guy who had a trading podcast years ago) said some of his listeners let Bigalow manage some money and the results were horrible.
People have done systematic tests on candlestick patterns and there’s very, little statistical evidence that they’re profitable. The few patterns that are profitable don’t have a high enough probability to make really outsized returns, either.
I am trying to find a phone number / email address that I can contact Stephen Bigalow to cancel my subscription but the 866 251 4015 number will not work from Canada and I am unable to find any other contact number..
Can anyone help me, please?
Candlesticks work best when trading daily, weekly charts. I studied candles at Nison University for some years. To trade solely from a candle structure is doomed and so will your account be.
I was at a Nison seminar yrs ago and after some debate Steve Nison eventually admitted to myself and Ziad M****** that they have no edge on the shorter time period.
I knew this entire article was FAKE news when the anonymous writer (first red flag) said candle sticks aren’t important lol. Ok, then I guess they are used on the charts for looks every where hahahhahaa. Omg, seriously, why do people try to steer others away from successful trades? People are fully capable of doing their own research and if he wasn’t a good trader, he would have never been employed where he was (I’ll let the readers research what legit firm he traded with for years). Anyways, haters gonna hate. Also, the inventor of candlesticks was (by today’s standards) wealthier than Buffet. Next, the writer will write on how Buffet doesn’t have money lol. That’s about the logic of this article
Dang Shewolf. Let me know how you really feel.
We all have opinions. And I respect yours. Thanks for taking the time to comment.
Shewolf won’t reply because she/he is trying to trade FX using candles..LOL. FX brokers can manipulate the price and the formation of the candle structure giving traders the perfect manipulated candle to trade from and loose.
Newcomers to trading are drawn to candlestick patterns because they contain a seductive allure: simply wait until an obvious, easy-to-spot candlestick pattern appears on a chart and make money.
There are two problems with this:
1. Any knowledge that has a low (or no) barrier to entry of obtaining, is knowledge that has already been disseminated amongst all market participants, and any original edge has been arbitraged out. So it may well be that the person who first started trading candlestick patterns traded them successfully, because he was able to leverage a unique insight. That is not the case today. All the information about candlesticks is available for free at the touch of button. Everybody knows about candlesticks and everybody is looking at the same charts. Low barriers to entry = low margin value. This goes for any freely-available, turnkey solution that you may wish to apply to markets.
2. If certain patterns did have a demonstrable statistical edge in predicting a market move, there would be nobody willing to take the other side of those trades.
This isn’t simply my opinion; there has been much statistical back-testing of candlesticks, and very few patterns have any predictive quality. Most have the predictive power of a coin toss. I would direct you to the work of Thomas Bulkowski in this regard, who tested over 100 patterns across 4 millions bars.
When you say, “I guess candlesticks are used on charts everywhere for their looks” you are actually correct. That is indeed why candlesticks are used: because they represent a simple pictorial of price action across a certain time period in a way that easy to assimilate. Consumer-level charting packages push candlesticks because they know that their user base likes them. But this is not the same as being able to successfully use candlestick patterns to make money trading.
Great post, Henry. Should be required reading here and on other trading forums. It’s not just true of candlesticks, but other chart patterns, indicators, “pure price action trading” and other forms of TA.
Your comments refer to a time when there were no computers and candles did carry some information handy to The Dojima Rice Exchange, established in the late 1600’s. Notsure if you have noticed but its now 2018 and there lays the difference in markets and methods to trade them.
brought a $12 package explaining basic candle stick patterns,
and they have taken a unauthorised payment of £72.67
DO NOT LET THESE PEOPLE GET YOUR CREDIT CARD DETAILS !!!
i swear i had unusbbed and still this guy finds me ..possibly/thru S&C ..
It sure would improve your presentations if you would talk slower, mark on the drawing what you are saying. No question then as what you are saying and where you are at.
Bigalow is now offering a life time membership for around $675.
I have discontinued Bigalow’s trade room, my account goes back up.
If you want to chat, to socialize , join his room.
If you want to learn how to trade, make money, you might be disappointed.
To supplement my previous comment: some of the members are good traders, very willing to share knowledge. As far as candle sticks patterns that Mr. Bigalow preached, they don’t work most of the time. I attributed this to algorithm computerized trading. You need to put a tight stop to control the risk reward and position sizing. He is very wealthy based on the photos of his mansion, swimming pool, a fleet of collectible antique cars, his vacation home by the lake that he posted on his chat room. I think he takes this room as a hobby, a pastime. He offers big discount on his chat room from time to time. You can also negotiate a discount from him, he is so rich that I don’t think he minds. His comment on stocks are limited to the following statements: stay long as long as it is above the t line (8 ema); buy when it opens positive; if you like it buy it; I won’t be afraid to buy now; it can be bought; or there is nothing there. Very amusing, sociable, friendly atmosphere.
“He is very wealthy based on the photos of his mansion, swimming pool, a fleet of collectible antique cars, his vacation home by the lake that he posted on his chat room.”
Here is a picture I am posting on this chat room of my latest girlfriend right after her photo shoot for sports illustrated.
How could anyone believe anything one of the these con artist TR operator says is beyond me.
But lets say he is rich. Maybe he inherited his wealth. The real question is can he make money trading the way he teaches and from what I have seen he has not shown any ability to do that.
I will tell you another story and some might know who this is. But there was another well known trader and then I saw him in a gofundme ad to pay for some medical bills. These people make their money selling to subscribers not trading.
I snapped a few quick picks of my toilet plus one of my staff who cleans up afterwards for me.
Forget Lamborghinis and houses. That picture is the ultimate trader porn!
..i have been in his room for 2 years, on and off. It is my opinion the trade room is a very friendly, sociable , entertaining room. So, if you know trading, this is a room to join, not to learn how to trade, but to socialize and chat.
$907 annually or $97 a month to be in the room. I’m sure there are cheaper ways to chat.
My thoughts exactly. Just form a free trading group on SKYPE with fellow traders. I do not think anyone is joining a paid TR to socialize and chat. Maybe I am wrong. One way to tell is see how many long term members there are. My experience is these TR have tons of members and 95% are new members and then they drop out after a few months.
I’ve been trading the Bigalow system for several months now with 10 -12% profits per month. It’s not only candlesticks but moving averages, price patterns, and a system for entries and exits. It took three months for me to fully understand and implement the system. I didn’t pay any $4900 fee, just the $97 monthly to get access to his trading forum. The 100+ trading community there help each other find good trading set ups. This system is well suited to my style of trading, but there are many other roads to successful trading
You make a living judging others’ hard work. You don’t trade, don’t show studies, don’t produce a thing. That’s fine by me–someone has to do it. But how then do you come by the expertise to judge a man at the top of his profession for not giving you his “tax returns?” To you, $4900 plus travel is a fortune; to a trader with a large trading account, advanced education is simply the price of doing business (and tax deductible at that).
I believe that your real argument is with technical analysis, not Steve Bigalow or the Candlestick Forum. Candlestick signals and patterns do not work in a vacuum–they blend with moving averages, volume selling and buying, trend lines and numerous technical indicators. Everyone knows that, Mr. Moore; I’m surprised you don’t. Maybe you should research your subject a bit before attacking people who simply trade differently than your “statistical analysis.”
You, Mr. Moore, are a true believer in fundamentals. You profess a strong belief in statistical analysis but it’s really old school fundamentals. You speak for P/E ratios, jobs reports and quarterly earnings and they have their place, at times.
Please answer me this: did the Dow cross 20,000 on fundamentals, on statistical analysis? If you answer “YES,” then you should consider judging your own perspective on the stock market. And, on a personal note, your remarks about the Japanese could be construed as being a bit racist. Just an FYI from an old attorney.
Thanks for taking the time to comment.
Much of what I write is meant touch a nerve. To get people to think critically. To ask the tough questions to not only the vendor but also to themselves.
Mr, Emmett Moore.
I believe that trading is an art and being a good trader just doesn’t cut it, in a business/profession where there’s around 95% failure you have to be the best, have a lot of guts, take planned risk/losses and the psychology to back it up with. Trading stocks is a lifestyle, a journey and Stephen Bigalow, Ari Kiev, Dr Alex Elder, Jessie Livermore, Warren Buffet, John Paulson, Mark Douglas etc.., are lamp posts that guide you, it’s up to you to take it, leave it, or pay for it. In the end you are the one who makes or looses money. You can’t be Pablo Picasso and neither can I.
I have traded for a while (Options and E-mini Futures). I have always used Candlestick charts and read the books early in my trading career. I have found, over many years of analyzing charts, that the Candlestick Patterns that Stephen Bigalow speaks of do appear over a multitude of timeframes, and consistently produce solid results when one understands the time frame they are trading in. In other words, while one may not be able to determine just how far a move will occur, one can learn how to capture a small chunk of a move with relative consistency.
Why I believe he has the right to charge what he charges:
As a subject matter expert, whether you like him or not, he knows the information forward and backward. He put in the time to study and explain his knowledge thoroughly. Each trader is responsible for how he or she applies the information. I have found that it is just one piece of what is required to execute a well-thougthout trading program. Indicators & S/R levels when combined with Candlestick Patterns can be pretty powerful if you put in the time. If you put in the time researching trading sites to debunk, you don’t have the time to trade either.
When I was in the military, we would often bring in subject-matter-experts to teach certain aspects of our job because these people were experts in a particular niche. I didn’t care if they new nothing else about my job, and I really don’t care if he trades; some people are not interested in that – ever tried to help a family member who just didn’t have the interest? (even though a part of me is saying “just stick with it!”)
The good news is that you don’t need to go to the seminar if you buy one of his used books and put in the time studying and applying the material!
And for those who bitch about cost for his personal time, $4900 is not a lot of money for 48 hours of one-on-one training, especially if it may improve your trading. People often reinvest their profits towards improving their own investing education.
Finally, you mentioned that computer programs debunked this long ago. I have also heard that algorithms have been created to counter this. I am still seeing and trading the patterns that are out there, so perhaps you should spend some more time looking at your screen, or at the very least, provide some more information about the program that debunked this. After all, not proving a trading track record is the exact same thing as failing to properly cite the source of this so-called debunking study
Thought I would give my opinion as I have studied candlesticks for a while and have at times found it incredibly accurate but other times mystifying that it is so completely useless.
I dont rely at all on them any more generally but every now and again when combined with other knowledge and indicators comes in handy.
Firstly I am no expert on candlesticks, but I do use doji’s and gaps a lot in my trading and they work well for me.
I use them in conjunction with my fundamental analysis and big picture trend analysis, to pick times to enter or exit trends (i.e. trends that have a fundamental reason to exist).
Is Gaps a candlestick thing? I think of Candlestick analysis being like Morning star, Hammer, Dragonfly, Dark cloud, Engulfing Bar and etc.
Even though I do not look at any of the Traditional Candlestick patterns, I do use the bars. I just like them.
Well, I understand the concerns but trading off the T-line (8 EMA), as Bigalow advocates, does work, BUT you have to be well into a steep trend and not trying to get in too early. Just my thoughts.
Did you find this review helpful? Yes No
i followed him for for a month and found his trades during that time frame to be crap.
There is enough info on the Internet for you to Learn about C-Sticks.
Why you should stay away from these Figalow & Misan Folks, is they
Curve Fit their Charts , and show u CHERRY PICKED TRADES.
Avoid them at all cost , as Its EASY to Show some Cherry trades that
worked in the PAST , but the same pattern can FAIL in the FUTURE.
THIS APPLIES TO ALL SO CALLED GURUUUUUS TOO
Whats Most important (my Friend) is SUPPORT and Resistance ,
which THESE FELLAS have Little Clue.
Support : is Where Prices will Hold and Go HIGHER from There
Resistance: is Where Prices will Hold and GO LOWER from There
NEXT , be Able To recognize Demand and Supply which is
Related to VOLUME
(However Markets can Move Way Higher or Lower , because
of some UnforSeen News Events , so Volume is useless
on News , as Volume is LOW & Prices become
LIMIT UP OR LIMIT DOWN (Futures Market as Example )
There you have It. (4) Things , that can make a Successful Trade
Markets Trend Less Than 25 % and Range 75 % of the Time
so the candleSticks can assist the Trader on Reversal PATTERNS ONLY , if the Market
has Been Trendiing and Appears TIRED or is Losing STEAM.
I HAVE Seen Engulfing Patterns Work and Not Work , because
I Missed Not Reading Where Support or Resistance was , and
Entered TOO LATE, Only To See the market RETRACE & Stop Me Out.
KEEP IN MIND:
Support leads To Demand (More Buyers than Sellers)
Resistance Leads To Supply (More Sellers Than Buyers)
An ImBalance Between Buyers & Sellers Creates Demand & Supply
Trading is an ART in Being Able To Read where The D & S come into play
and C-Sticks can give us a Clue, as we Work with this Tool.
. Your Success
Hm, my first comment didn’t get through – so here’s another try. Thanks for the review – and the backtesting. Did you just scan for the “bullish harami” pattern (long candle followed by a small white candle, “inside day”) or did you take the other rules from Bigalow/Nison into account? (the position in the trend, stochastics, next day’s trading) Because it’s obvious that a candlestick formation alone is worthless for trading purposes and you have to have some more confirmations.
I’m just curious because at first glance those candlestick trading systems look quite convincing and by visually checking a few dozen charts they seem to work fairly well. But of course I haven’t run those extensive backtests.
Thanks for that interesting review! Finally somebody who critically looks at this candlestick chart thing. But I do have a question regarding the backtesting of the “bullish harami” you mentioned – did you just look at every “harami-like” formation (long body followed by a smaller body nested inside) or did you also took into account the other rules of the trading system, esp. where in a trend the candlestick formation occured, what/where the stochastics and the “T-line” were and what happend on the day after a signal occured (so if that signal was voided or not)? Because just an isolated candlestick formation alone certainly doesn’t have any value – I can easily see that on any chart without any intensive backtesting. 🙂 (And even Bigalow and Nison don’t advice to trade on a candlestick signal alone.)
Oh man, I am stretched so thin right now. But this is a great opportunity for you to do some individual research and perhaps write up a blog post for us? I would certainly appreciate it.
I wouldn’t consider me a complete novice trader since I first startet trading in the late 90’s but had to stop it after a few years due to personal reasons. But I only recently discovered the candlestick thingies so I’m a novice to candlesticks – and I had the chance to view some of the training courses from Bigalow and Nison a friend once got (but never really used). It indeed sounds promising and a bit too good to be true what those guys are telling there (and, yes, their „shady salesmen“ attitude puts me off too). So I was checking quite a few charts and thought that those candlestick signals, if followed correctly, MAY work. Then I found your site and now I’m in doubt again. 🙂
So my question is if your backtesting was just looking at isolated candlestick signals and calculating the win or loss the next day(s) or if you followed all the other elements of Nison’s or Bigalow’s strategies? Especially looking at risk/reward, support/resistance, entry/exit strategies etc. Because apart from all the isolated candlestick signals which aren’t tradable because stochastics etc. aren’t right or which are voided (and therefore to be ignored) the next trading day there are a lot of signals which have to be ignored because they aren’t worth the risk. So a bit of „common sense“ seems to be necessary too before trading candlesticks.
Will keep you updated if I got some positive or negative results after further exploring that candlestick strategies. (But I certainly won’t trade after them – just observing.)
Sorry for the double post yesterday btw.
As a pure “newbie”, may I ask a question? I first encountered the “candlestick method” (as opposed to the “bar”). About a year ago. It made sense to me (easy to understand, etc). Therefore, I don’t understand the beef you have with candlesticks. Could you explain a bit, what’s wrong with them. I’d appreciate it.
By the way, I’m glad I found your site. You seem like an honest guy. Which is quite remarkable in itself. Thanks, again.
I believe that Emmett’s beef is that with candlesticks is that Bigalow and Nison sell their courses by saying that understanding candlestick patterns will give the trader an advantage in his or her trading. Statistically there is no advantage to these candlestick patterns. They work just as often as they don’t. Personally I like candlesticks and the knowledge of how to read them helps me understand what was going on in that trading period but I never base a trading decision solely in what candlesticks are saying. The best rules to follow are trade only good quality stocks and trade with the major trend to gives yourself the best chance of having a successful trade.
Thanks. By the way, what about the moving averages? Mr Bigalow is very “Big” on the moving averages, especially the 8 exp.
I used to really believe in candlesticks, as I could clearly see the candlestick patterns form, and then easily view the price action after the candlestick pattern had formed. However, once I started to apply a more scientific method to my own personal trading, in the form of statistical analysis, I discovered that candlestick patterns are random. That doesnt mean that you should not use them. It simply means that you should learn how to program the patterns, and then test the patterns on prior data.
Sometimes we think we see Jesus clearly in our morning toast. Or the Virgin Mary through a reflection. But the truth is that when we are predisposed, we are likely to see whatever we are looking for.
Testing and science is sometimes harsh to the psyche.
Thank you. However, as a rank “newbie” I’m not exactly sure how to “test” properly. By the way, I’m trading on a simulator…which is a damn good thing considering that for the last 6 months this market has been taking me to the cleaners and back home again.
Great review Emmett!
Candlesticks are the perfect tool for shady trade system salesmen because they give an incredible number of false positives. In other words, in back testing you can say, “See, this downtrend stopped on this doji and reversed, so you would’ve made 600% buying call options.” But even in the examples that the two Steves give, you can often see multiple dojis that went nowhere, and many of those are accompanied by divergences on the MACD. I suppose the 8 EMA might save you, but if so, why bother with the candlesticks to begin with?
BTW, as a previous commentator points out, any thorough statistical analysis of Fibonacci shows that the variance in the targets falls within the realm of random expectation, proving that this medium ain’t speaking to the dead either.
And as you point out, “Show me the money!!” No record = no go.
Love your work!
Amazing how these people get away this nonsense. You have the Fibonacci queen from John Carter’s simpler options site who sells 12 hour mentorships for 10k. Of course she doesn’t trade live with real money on this site. Even Steve Bigalow raised an eyebrow.
Nice two reviews on candlesticks.
I guess you can say slicker the site, less real value it has.
It has becoming more and more obvious that one can be real trader or just PR stunt selling useless “ideas”. Great traders are not very good in marketing; because they spend all the time trading and finding new ideas.
Speaking of candles and bars. I personally use OHLC bars, because main flaw on candles is color. When on uptrend average trader sees red candle it goes to back of his brain yelling “sell; sell; sell”. It would be better to use the in one color only-
Since you like backtesting stuff; why not add some other conditions.
For example, why don’t test Engulfing Bullish candle or Hammer only when candle is below lower Bollinger band, or maybe 1-4 % above lower Bollinger band? And maybe put in MACD that is rising? Just an idea.
I want to say that candles can be useful when combined with other stuff. Alone, they have lost their power, if there ever was any. Heck; I would bet that there is some algo that chases those patterns on high volume, and than destroys pundits who are blind followers.
The candlesticks review really did not need to be written. I think that most folks already understand that they are marginally useful. However, I wanted to get something written on Bigelow and Nison because they are sort of the gatekeepers for newbie traders. A lot of newbies stumble into candles and waste a lot of resources attempting to implement them.
For the more experienced traders, I wanted to write the review in hopes that I could spur the more experienced guys into taking another look at backtesting some of these long held belief systems.
In my opinion, not only are the Guru’s open game for scrutiny, but also the pseudoscience known as technical analysis. Modern computer technology is cheap and easy, we can quickly test these old ideas, move forward and focus on things that actually validate.
Here is what works Emmett. Context, structure, what is refer to as Supply and Demand in context and analyzing structure, price action, candlestick patterns and also the idea that in the long run a 50% or greater winning ratio is unsustainable. For that reason traders need to find a way to make money even when their winning ratio is 25 to 35%. It is precisely for this reason that risk management is so eminent and been ready to allow your winners to run aiming at 5 to 1 or greater risk to reward in some trades.
I think what we agree on is:
1. Candlestick pattern recognition has relevancy
2. They need to be a “part” of a larger trading program that includes indicators, the type of security traded, time of year, accounting for economic / earnings reports, etc, to stack the odds in your favor. Exit criteria is based on experience/risk tolerance.
3. If an average trader wants to become a good trader, they need to conduct the back-testing themselves. Not only to determine what works best for them, but also, to determine the timeframe that works best for their schedule if they work a job where they are unable to see the market.
You pretty much called yourself an average trader because you stated every red candle sparks emotion, which is fine, but there is a reason why many successful traders use them. Red candles are an excellent signal for options and futures trades like myself.
Enough with the back testing! LOL We’ve turned back testing into a religion. Back testing is only as good as the test set up . . . and I’d say 99% of people are unable to run a proper, scientific back test. “Back testing capability” is just another software gimmick sold to hopeful traders. Quite brilliant really.
I think people have forgotten what candles actually do. They were never meant to be magic indicators. They show you internal price action and have to be used within a context. Simply running a backtest on a pin bar, for example, without any context whatsoever, is a waste of electricity and only serves to confuse people about the value of a pin bar.
For example, I’m looking at a Daily chart of CAD/CHF. Just picked totally at random. I count 15 pin bars since January 2017 (today is 4 June 17). 11 of those would have resulted in theoretical gains of 100 PIPS or more. But pin bars pop up all over the place and there are some very close “pin-bar-looking” bars on the chart. Maybe you’d find more than 15. You might say there are 20. So . . . there we go. Pin bars are only accurate around 50% of the time. Right?
Well . . . not so fast. What’s different about the winning 11? It is that each is at a major “support/resistance level” . . . a horizontal line that I quickly drew where price made a turn in the past. So, it’s probably more accurate to say that I counted 11 turns worth 100 PIPS or more and a pin bar just happened to be there. There were several other turns without pin bars.
The pin bar is merely a manifestation of price action on a lower time frame. (Price opens low, goes high, hits a resistance level, gets reversed, closes low.) In these 11 cases, trades on that day saw price hit what they could all see was resistance and then they exited . . . or went short. No magic. The pin bar is an After Action Report of what traders did.
There is nothing magic about candles. They are neither inherently good or bad. But they can show you a brilliant picture of what is happening during the day in question.
Technical analysis is bull crap.It does not work most of the time and in the long run you lose money! Nobody earns a living trading with technical analysis.They make money by selling technical analysis methods that do not work long term.