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ReyesWhite
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Post 1
| Joined Apr 2013 | Status: I like to be where the actions at | 158 Posts
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The 212 Candle Pattern is something i have come across recently. I'm sure there is other people who use the same formation,
but as far as i'm aware i'm the first person to actually publicly talk about it. The candle pattern aim is to predict the next bar,
not the next 2, 3 or 5 but only the next bar. This especially works well on the Hour 4 chart or Daily.
Aim: To predict the next bar
Success Rate: After backtesting (You can do this too) you will find a high ammount of probable trades. After i tested around
100 of these patterns it was successful at predicting the next bar 70% of the time.
Most traders try and make trading systems difficult, but in fact trading can be as simple as you make it.
The Name: The name of the pattern is basically what it says on the tin. 2 Bull or Bear candles followed by an opposite candle,
then followed by 2 more Bull or Bear candles depending whether you're buying or selling. For instance, in an up trend you
want to spot two bull candles followed by a bear candle followed by two more bull candles. After seeing this formation you can
be confident that the fifth candle will be bearish.
Attached Image
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Examples of Good trades which work well. To identify the trend try to use a 50 EMA or 20 EMA to filter the signals. Also
note that we're only predicting the next bar, not the next 3,4 or 5 bars. Don't be greedy.
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BeginnerJoe
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Post 2
If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As shown by
the bad trade, you'd get flattened by the stampede.
Curve fitting historical bars that don't fight back is not much use. Magic pattens are best tested against a real money micro
account. That way you get to eliminate them quickly.
One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars. Their only interest is to
buy low, and sell high. So pattern searching could be in vain because the future bars adapts to your current action. In other
words the bars yet to appear will often be contrary to your interest.
shellsnail
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Post 3
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Post 4
Joined Aug 2012 | Status: Sentiment, trends, levels, tape | 1,674 Posts
A quick scan at weekly and monthly charts suggests that this works.
Forget about profits. Focus on expectancy.
FerruFx
Quoting BeginnerJoe
If there are 4 green bars and 1 red bar, the bulls are charging. It would be suicidal to go stand in front of them. As
shown by the bad trade, you'd get flattened by the stampede. Curve fitting historical bars that don't fight back is
not much use. Magic pattens are best tested against a real money micro account. That way you get to eliminate
them quickly. One thing worth noting is that the guy/entity taking the other side of your trade doesn't respect bars.
Their only interest is to buy low, and sell high. So pattern searching could be in vain...
To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show momentum in the
right direction (entry at previous candle break).
MT4 EAs/Indicators/Alerts coder
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BeginnerJoe
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Post 5
Quoting FerruFx
{quote} To filter bad trades, instead of an entry right at the pattern close, I would enter if the following candle show
momentum in the right direction (entry at previous candle break).
But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better than following the
pattern blindly.
CHF/JPY currently has this 12121 pattern in the daily time frame. How many here would have dared to go counter trend right
at the bottom ? Short of complete beginners, I'd say none.
BeginnerJoe
Quote
Post 6
Here could be an example of someone taken to the cleaners for doing 12121. Perhaps he would be saved if he did 12131. But
then the guy/entity on the other side of the trade might want to do silly buggers with the next bar.
Attached Image
Rtm
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Post 7
I think this would be good for renko or range bars, just finding the right setting might need to based on the pair you are
watching % daily movement, because using defaults settings will just you a lot of bars that mean nothing in relation to this
strat.
iwjw
Nov 9, 2013 12:34pm | Edited Nov 10, 2013 3:44am added candle b4 pattern start
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Post 8
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Post 9
juicyt
1 KB | 1,500 download
I will check it out but thanks all the same. Keep in mind people you should be able to trade it with a pretty tight stop and
positive (maybe 2:1) Reward to risk. Accept the losses, nothing is 100%
jt
"Even if you fall down face first, you still went forward."
shovon21
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Post 10
Interesting. Not sure about spot forex but this strategy can be used in binary option trading.
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FerruFx
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Post 11
Quoting iwjw
rtrs111
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Post 12
70% winning rate of predicting the color of the next candle would be profitable only if you would've tested for a 1:1
risk/reward ratio (including commissions). If you decide to put your stop under the wick of the signal candle, for longs for
example, enter at the signal candle (bear) close and exit at the close of the bull candle, then RR will fluctuate. You have to
backtest fixed RRs or if you prefer instead to have variable stops (under/above the wicks) and exits at the close of the candle,
then you'll have to calculate the R-multiple.
r u ready?
abokwaik
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Post 13
Hi,
I've quickly made an EA to test the 212 pattern with different options.
I hope that this will be helpful in evaluating this method and probably enhance it.
I ran a test on E/U H4 for 2013 and it was profitable. Results attached.
Regards,
Abokwaik
Attached Image (click to enlarge)
Attached File
212_pattern_EA.mq4
4 KB | 707 downloads
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iwjw
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Post 14
Quoting FerruFx
{quote} Great sharing. Thanks. However you missed the fact that the first "2" of the pattern must be 2 and only 2
... not 3-4 or whatever. That means that the candle before the pattern start must be opposite. You can see it
explained in the bad examples pictures posted by the thread starter.
update now availlable in post #8
ARTjoMS
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Post 15
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Post 16
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Post 17
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Post 18
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Post 19
FerruFx
Quoting ARTjoMS
FerruFx
Quoting iwjw
iwjw
Grill-Gite
6 KB | 418 downloads
Quoting BeginnerJoe
{quote} But by the time the momentum is certain, the move could be over. Filtering may not necessarily be better
than following the pattern blindly. CHF/JPY currently has this 12121 pattern in the daily time frame. How many here
would have dared to go counter trend right at the bottom ? Short of complete beginners, I'd say none.
I don't see where the CHY/JPY has the pattern in the daily chart. The past 6 bars are alternating red and green. No two bars in
a row there.
Grill-Gite
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Post 20
Looks like the USD/CAD has this pattern today. I don't know if this is a good trade though with the US having a bank holiday.
Seems there have been some good news for the CAD recently and the chart shows a double top.
Any thought?
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