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Which is the most efficient "Simple Candlestick Pattern" on Trading BTC?

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Toofasteddie
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During the last few weeks, I have been assessing the performance of the most "famous" simple candlestick patterns in an attempt to evaluate their efficiency as a trading tool indicator.

In total, I have checked 6 Candlestick set-ups, 3 Bullish and 3 Bearish. You can read each one of my analysis clicking on the name of the pattern below:

(Source of the images)

All of them used to indicate a reversal on the trend but not always their occurrence give as a result the expected output. If you are planning to base your trade on some of these patterns, I am really sure you most liquely will be "liquidated" if you don't plan a good risk management strategy.
Be sure to identify the entry and the proper Stop Loss level, ALWAYS.
Personally, I do not feel comfortable while setting stop losses on the trading board of the Centralized Exchange, actually, I always have the impression that if I do so, I am also "discovering" my play-cards to the "big brother" algorithm of the exchange. It happened to me a few times, I set my stop loss and I discovered that suddenly a nice candle-shadow has reached it, screwing out my strategy. So, what I usually do if I have the time to, instead of setting the stop loss order, I am visually observing from time to time the price action, keeping in my mind my "virtual" stop loss and triggering manually if I have the chance.

Anyway, back to the subject of the post, trading is always two-ways task, Longing or Shorting. The majority of the people, myself included, used to trade while uptrends, I think that this is due because the FOMO effect, people used to Jump on a long green candle more often than selling on a Red one. Thoughts aside, as I said, trading can be much profitable both ways and the ability of detecting a reversal on the uptrend is, in my opinion, 60% of technical-Knowledge/Lessons-learnt and 40% of intuition.

Simple Candlesticks for LONGS:

I have chosen only three of them, the ones which procured more signals in the past:

My review covered the 4h and 1h timeframes and the results of the 4h assessment are:

On the 4h timeframe, Engulfing and Hammer candlestick presented good percentage of success output in their signals, both of them getting 66.7%, however Recurrence is higher on the engulfing, meaning that, according to the historical data, a Bullish Engulfing appears every 13 days in average within the 4h Chart.

Regarding the 1h timeframe we get the following:

Again, Bullish engulfing presents the higher performance, 83.3% while also the Inverted Hammer shows a fair results. Recurrence is definitely appointing the "BULLISH ENGULFING" as the most efficient and useful Bullish Simple Candlestick since it tends to appear every 3.8 days in average which is really important for Day-trading.

Simple Candlesticks for SHORTS:

Exactly the opposite to the bullish patterns, they are called:

On the 4h-chart:

Spectacular performance of the Bearish Engulfing" concerning its output and recurrence.

On the 1h-chart:

Bearish Engulfing and "Hanging Man" candlesticks shows good performance as a signals but only the first used to appear sustainably more often for day-trading.

SUMMARY:

  • The most successful simple candlestick pattern is the BULLISH ENGULFING on the 1 Hour chart

  • ENGULFING's in both, longs and shorts trades, are the most efficient and also the more recurrent.

  • Patterns to avoid or not advisable to be used: HANGING MAN and INVERTED HAMMER on the 4h chart, SHOOTING STAR on the hourly.

  • It could be a good strategy to base the trading plan on Engulfing patterns, always planning in advance the stop losses.

Till here the "study". Hope you have enjoy it.

Other Related Posts:

I'm sharing only my quick trading Ideas here, not financial advice at all ;-)

@toofasteddie

Disclaimer: This is just my personal point of view, please, do your own assessment and act consequently. Neither this post nor myself is responsible of any of your profit/losses obtained as a result of this information.