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--- In equismetastock@xxxxxxxxxxxxxxx, pumrysh <no_reply@xxx> wrote:
>
> All,
>
> Recently ran across a trading system which used candlestick doji's as
> a marker for trend reversals. As I am not a student of candlesticks,
I
> would like to know if anyone else has any advice/experience using
such
> a system?
>
> Thanks,
>
> Preston
>
Doji's reveal that for the day, their was no dominant crowd that
prevailed over the other; both bulls and bears battled it out leaving
the close very close to the open.
They increase uncertainty that the previous dominant group can continue
to hold the trend.
However, with that said, how accurate are they? Not very. Any system
based primarily on Doji's is a system doomed to failure. Why? All
single candlestick patterns have the limitation that they are only 1
day worth of data. Any system that claims to be able to predict trend
reversals on simply one day worth of data (aka a Doji formed today), is
a system doomed to failure over the long run.
Crowd psychology is complex, a manic depressive if you will. Trying to
determine the emotions of the crowd as it changes over time requires
much more than any single day signal like a Doji candlestick.
If I were to rank how I would use a Doji candlestick to help predict a
change in trend, the ranking, as compared to other indicators, would go
something like:
1 - Volume
2 - ADX -DI +DI
3 - ROC
3 - MACD
4 - Stochastic
5 - Chart Pattern (Double Top, Head and Shoulders, Double bottom,
Inverse Head and Shoulders, etc.)
6 - Money Flow
7 - Multi-day candlestick patterns
8 - single day candlestick patterns
9 - Price
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