The trader doesn’t realize the reason why the pin bar didn’t cause a reversal wasn’t because of it not having any confluence with technical levels or not having the correct characteristics i.e a long wick, it was because the action which caused the pin to form was not the same as the action which caused the bullish pin to form. He’ll think its his fault the pin didn’t result in a reversal and will rationalize the reason why it didn’t work was because of the pin bar not having confluence with other technical levels. When the pin doesn’t end up causing a reversal, instead of blaming it on the understanding he has been given regarding pin bars, he blames it on a fault in his analysis of the market. Now when the trader see’s the bearish pin bar above form he would expect the market to reverses as that is what he has been told pin bars do upon appearing in the market. When traders see the bullish pin bar above they would say it worked because it caused a reversal, which is what pin bars are supposed to do. Retail traders would have looked at the bullish pin bar above and said the reason why the price climbed higher after the pin formed was because of the pin bar itself, they believe the pin is what caused the up-move because they have been told a wick shows a rejection taking place in the market. With candlestick patterns used in so many strategies it’s obvious lots of traders believe them to hold some kind of edge in the market. I do think the majority of retail traders believe candlestick patterns to work, it only takes one look at any of the popular forex trading forums to see there are hundreds of trading strategies all based on using candlestick patterns to trade the market.
In today’s article we’re going to look at candlestick patterns again only this time I want to see whether candlestick patterns overall work in the market.īy work I mean do they actually have any kind of edge or are they simply meaningless.ĭo Retail Traders Believe Candlestick Patterns Work ?
A few weeks ago I released an article where I talk about the reasons why most candlestick patterns are useless and why pin bars along with engulfing candles are the only two patterns you need to have knowledge on.
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