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August 2011 Stocks and Commodities Traders Tips

Top 10 Candles That Work
(instead of Automated Techniques For Intraday Traders) :

AIQ Version:

Original article by Thomas N. Bulkowski
AIQ Code by Richard Denning

In AIQ the Fibonacci time zones that are discussed in the article “Automated Techniques For Intraday Traders” by Andrew Coles, can be implemented with the Fibonacci time zone chart tool and no additional programming is required.

For this month I provide code for the “Three Black Crows” candle pattern that is discussed in Thomas N. Bulkowski’s June 2011 article, “Top 10 Candles That Work”. The code can be found at the web sites noted below.

Coding candlestick patterns requires quite a bit of interpretation since these patterns are described in relative terms like a “tall” candle or “closes in the lower portion of the bar”. Depending on the interpretation given to these relative terms, we get different results. In my code I provide inputs that allow for some of the adjustments. The Three Black Crows pattern has the following rules:

  • Three tall candles in a row
  • Pattern occurs in an uptrend and first candle is the highest high
  • The last two candles must open in the real body range of the prior candle
  • All three must close near the low
  • The last two candles must have lows that are lower than the prior low

Tall means that the bars high low range is greater than the 10 day average range that occurs just prior to the start of the pattern. An uptrend is defined as a linear regression slope of the closes greater than zero. “Closing near the low” is based on how many candle zones are input which are then used to divide the range of the bar into zones. “Closing near the low” means that the close must fall in the lowest zone. In addition the author suggests testing in a bull market. Bull market here is defined as the 200 bar moving average of the SP500 index is greater than it was 10 bars ago. A bear market occurs whenever it is not a bull market. I tested the pattern by entering at the close on the day the pattern is complete and then exiting at the close six days later. This gives a test with five overnights and five full bars held after the pattern completes. I used the Russell 3000 list of stocks and tested from 1/15/1970 to 6/13/11. In Table 1, I show the comparative results of both bull, bear and combined bull and bear. It appears that this pattern works in both bull and bear markets but there may not be enough signals to build a trading system from just this pattern alone.

Table 1 – Metrics for the Three Black Crow candle pattern for the test period 1/15/1970 to 6/13/2011 using the Russell 3000 list of stocks.

EDS Code for Automated Techniques For Intraday Traders:
(right click and choose Save As)

Automated Techniques For Intraday Traders

Traders Studio Version :

Original article by Andrew Coles, PhD
Traders Studio Code by Richard Denning

The TradersStudio code for the Fib and Lucas indicators (color studies) from Andrew Coles’s article, “Automated Techniques for Intraday Traders”, is available at the web sites listed below. I have also provided several functions and the framework for session code for use in developing an intraday system using these time series.

In Figure 1, I show a color study on a five minute chart of the ES futures contract for 9/19/2008. I started the time series at the 9:50 AM bar which was a low pivot. The white bars are the Fibonacci time series and the yellow bars are the Lucas time series with both series starting at the 9:50 AM low pivot. The terminal window shows the bars since the starting point.

Figure 1: Color study for the ES 5 minute chart with white bars for the Fibonacci series and yellow bars for the Lucas series.

Traders Studio Code for Automated Techniques For Intraday Traders:
(right click and choose Save As)














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