A publication of

intalus.com

Powered by

SKYS

CRA

PER.

Joh

n H

anco

ck C

ente

r, C

hica

go.

One

of

Chi

cago

’s t

alle

st b

uild

ings

on

the

scal

e of

34

4 m

etre

s hi

gh.

TR�DINGTIPS. Issue

07

How to find the best risk/ reward opportunities based on candlestick patterns.

SCAN FOR CANDLE PATTERNS.

Philipp is the Senior Quant Analyst at Intalus. He was born in Austria

and studied electrical engineering before joining a large German bank

where he developed fully automated trading strategies for the

proprietary trading department. His book about designing successful

trading strategies has been among the top sellers in Germany for the

last two years. Currently at Intalus, he is responsible for the in-house

training of institutional traders and the development of custom-made

algorithmic trading strategies.

You may contact Philipp at

philipp.kahler@intalus.com

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

SCAN FOR CANDLE PATTERNS.

by Philipp Kahler

SHARE THIS TRADING TIP! MORE TRADING TIPS

SCAN FOR CANDLE PATTERNS.How to find best performing stocks and the best risk/reward

opportunities by identifying promising candlestick patterns

Candlestick patterns have been known for more than 400 years.

These patterns are not bullet-proof profit opportunities. However, they

can be viewed as high-probability trading alerts. Think about a simple

bullish engulfing pattern. You can see a graphic example of this

pattern in the chart below. You can see two bars marked with red

arrows below. The first one marks the new market low. The second

candle is a white candle (bullish) that engulfs the body of the black

down-candle. Why is this information useful?

You have to think about market psychology to understand this pattern.

What were the market participants thinking as the market made a

new low – bearish, most likely. What has happened the day after? Did

market participants suddenly change their views into bullish when the

price action took out the high of the previous day? Where they forced

to close short positions?

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

Fig. 1: Bullish Engulfing Pattern often show trend reversals.

SHARE THIS TRADING TIP! MORE TRADING TIPS

This pattern is basically a visualization of the pain that short traders

must endure when the trend is reversing. Traders might try their luck

on the bullish side after reversal as a psychological reaction to the loss

on the short position. This is exactly what happened in the graph

above. The bullish engulfing tends to be a good indicator for changing

market sentiment, albeit temporary.

Have a look at the chart below. It shows all bullish engulfing patterns

on Dow Jones Industrial over the last year. This simple pattern was

quite good indicator of turning points on many occasions.

How to chart this graph on your own and see a turning point indicator

based on the bullish engulfing pattern within the favorites list?

Very simple:

01 Open a chart for your underlying;

02 Drag and drop the “candle pattern” indicator onto the chart;

03 Go to the properties section on the right;

04 Identify and select a candlestick pattern you want to use;

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

Watch video to see how you can

do this in Tradesignal®.

Fig. 2: Turning Point Indication at a chart of Dow Jones Industrial Average during 2013.

SHARE THIS TRADING TIP! MORE TRADING TIPS

SCAN FOR CANDLE PATTERNS.

It is often useful to get automatic alerts based on candlestick patterns

across a universe of underlings. You can implement this by using

market scanner. It will enable you to find all bullish engulfing patterns

(or whatever candlestick pattern you desire) within a few seconds:

01 Go to the symbol lists and select a list to scan ;

02 Right click and select “open in market scanner”;

03 Click done.

04 Drag and drop the candlestick pattern indicator onto this list;

05 Select bullish engulfing on the properties page;

06 Run the scan.

HINT.

You can do the same with the “candle patterns” indicator instead of

using the “candle pattern” indicator. It has the same effect, however,

the “patterns” indicator provides all possible candlestick patterns,

whereas the “pattern” indicator only applies one single pattern to your

chart.

Take care, take profit,

Philipp Kahler

Senior Quantitative Analyst at Intalus

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

SHARE THIS TRADING TIP! MORE TRADING TIPS

© 2013 Intalus – www.intalus.com

Distribution allowed under a Creative Commons Attribution-Noncommercial license:

http://creativecommons.org/licenses/by-nc/3.0/

Tradesignal® is a registered trademark of Tradesignal GmbH.

Unauthorized use or misuse is specifically prohibited.

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

SCAN FOR THE BEST.

How to find the best performers

out of hundreds of stocks in

seconds.

SPEED UP YOUR DECISIONS.

How to creat your own equity

basket.

AUTO-ADJUST

POSITION SIZE.

How to create and trade an

optimal portfolio.

HIGHLY EFFICIENT

SHORTING.

How to identify and profit well

from a short trade.

RULE-BASED TRENDLINES.

How to use point & figure trend

lines in candlestick charts.

PROFIT FROM

GAP TRADING.

A simple, but effective strategy.

MORE KNOW-HOW AND VIDEOS HERE

PROFIT FROM THESE TRADING TIPS AND VIDEOS TOO.

A publication of

SCAN FORTHE BEST.

How to find the best performers out of hundreds of stocks in seconds.

intalus.com

Powered by

TR�DINGTIPS. Issue

01

A publication of

How to create your own equity basket.

intalus.com

Powered by

SPEED UP YOURDECISIONS.

TR�DINGTIPS. Issue

02

A publication of

How to create and trade an optimal portfolio.

intalus.com

Powered by

CONTROL YOUR RISK.AUTO-ADJUST POSITION SIZE.

TR�DINGTIPS. Issue

03

A publication of

How to identify and profit well from a short trade.

intalus.com

Powered by

HIGHLYEFFICIENTSHORTING.

TR�DINGTIPS. Issue

04

A publication of

How to use point & figure trend lines in candlestick charts.

intalus.com

Powered by

RULE-BASEDTRENDLINES IMPROVEDISCIPLINE.

TR�DINGTIPS. Issue

05

A publication of

A simple, but effective strategy.

intalus.com

Powered by

PROFIT FROM GAP TRADING.

TR�DINGTIPS. Issue

06

www.intalus.com/tradingtips

SHARE THIS TRADING TIP! MORE TRADING TIPS

Trad

esig

nal®

is a

reg

iste

red

trad

emar

k of

Tra

desi

gnal

Gm

bH. U

naut

horiz

ed u

se o

r m

isus

e is

spe

cific

ally

pro

hibi

ted.

TR�DING TIPS. Issue 07SCAN FOR CANDLE PATTERNS.

FIND THE BEST CANDLE PATTERN NOW.Start improving your returns or even just making your day easier. Scan for the best buy and sell

opportunities based on candlesticks. Find out how you can trade more efficiently.

OOPS – YOU AREN’T ALREADY A TRADESIGNAL® USER?

CLICK HERE b AND START TESTING THE SOFTWARE RIGHT NOW. ORDER YOUR COPY TODAY.

SHARE THIS TRADING TIP! MORE TRADING TIPS

FREE TRIAL

A publication ofPowered by

That is why we have produced these Trading Tips.If you have enjoyed them please help us and share them with your friends.

ANALYSING AND TRADING MARKETS SHOULD BE PLEASURABLE, NOT A CAUSE OF PAIN.

intalus.com

SH�RETHIS!

SHARE THIS TRADING TIP!