Candlestick Auto-Recognition Plug-in

Overview

Video Transcript

Hello, Jeff Keller here, with Gecko Software Support. I have a new and exciting video for you here, today! We're going to be talking about the Candlestick Auto-Recognition Plug-In. A new fancy tool that goes through and actually spots the Candlestick patterns directly on your chart. Makes Buy/Sell Signals, and also, can be used with the Autopilot and generates all kinds of different formulas for you, right inside of your Track 'n Trade.

Let's go ahead and take a look, and get started. I'll be discussing specifically nuts and bolts of how this works, how you adjust it, and how you really make it your own.

So, let's dive right in! Right now I'm looking at the E-Mini S&P. I'm going to turn on my New Candlestick Plug-In. I'm going to right click on the chart, go to Chart Overlays, and from here I'm going to go to Candlestick Auto-Recognition. Once I click on that, I'm immediately going to be seeing the Buy/Sell Signal within the chart. It's actually going to be labeling these patterns and signals above and below. You'll also notice little white rectangles will actually highlight specifically which Price Bars, which Candlesticks make those patterns. What fell into that criteria.

I'm going to be going over a lot of the Preferences here, so let's go ahead and immediately switch over to our Candlestick Options. Now, to do that, you'll see a little CNDL on the bottom right of your ruler bar. Just a quick abbreviation. You can left click on that, or you can right click and select Properties, and that will actually open up all of your Candlestick Auto-Recognition tools over on the right side.

We're going to be going through and talking about the different sections, here, Hammer, Hanging-Man, Inverted Hammer, but at the same time- I need to be sure you understand the terminology I'm going to use. So, first of all let's do a quick refresher on what a Candlestick is, what parts of the Candlestick are called, and then we'll jump back, real quick.

First things first, when you are looking at a Candlestick it is an Open/High Low/Close bar. Alright? If you take a look, here over on the left for Candlestick (a), the flat line going up here across, that is actually going to be the gap from the close to the high. This white bodied rectangle in the middle, that is going to be the body or real body of your Candlestick. That is going to be created from the open to the close. Then below that, we'll have a long line, as well; to represent how low the market went within that Price Bar.

Now, in particular you're going to want to remember these terms: We're going to be referring to the shadows, the shadows are the flat lines that go above or below the real body, okay? So, the shadows are going to be the flat lines and then the real body is going to be, again, from open to close and it will either be filled in or hollow. Okay? Green or red. So, let's go ahead and switch back over to our Track 'n Trade, let's start taking a look at all of our features. Now, don't let this intimidate you. It's a lot of buttons, it's a lot of tools, but it's really simple once you know what it's looking for, okay?

First things first. Hammer, Hanging-Man, it's actually a pretty popular tool to have in here. Alright, 2.0 and 500, this 500 or second category which you will see for a Hammer, you'll see it for the Inverted Hammer and Shooting Star. You'll see it for the Evening Star and Morning Star. This number here, is specifically referring to the number of Tics. Okay? The number of moves in the market. That also will apply to Engulfing and also, the three outside Up and Down, as well.

Now, I'll go over why these numbers are so large, in just a moment. But first, let's jump up to the very first spot, which is Shadow Body Ratio. Alright, the Shadow Body for the Hammer, the Hammer looks like a hammer. It's got a handle, it's got a long arm and then it's got the little hammer head on the top. We're going to have a small body, and then we're going to have a long shadow, okay? Small body, long shadow. This specifically is saying Shadow Body Ratio. It is saying that the shadow or the long thin line, has to be at least two times bigger than the hammer itself or the body, okay? So, the body has to be at least twice as small in height as the length of the overall shadow below or above it. Okay?

Now, right here, we say the Short Max Length. We're saying, what is the smallest we would allow a hammer's short section to be in Tics? The reason this is set to 500, is because we pretty much just want to see all of them. If it falls into the criteria of a Hammer or Hanging Man and the Shadow Body Ratio is 2 to 1, we are just fine with seeing really big ones, as well. Especially if we are up on a monthly chart. What if the Price Bar really is 500 Tics long? Not very likely, but we just want to include all the different signals that we get.

Now, this first section, you can just go through and adjust. Say you want it to say that my Body to Shadow Ratio, let's make it 3 to 1. Alright? So, I want a really big shadow, small body, you know I want a really, you know, more strict Hammer, if you want to say. So, that would be say a 3 to 1 or maybe you wanted it to be a little less stringent. Maybe you'd say 1.5. So, it's got to be at least 1.5 times as long, it being the shadow vs. the body, okay? So, you can go through and adjust that.

Now, this one you can reduce down. Looking in this chart, we're probably looking at an average a Price Bar height, of... ohh, I would say probably about 100, or so. You can always jump into your Autopilot and cheat and take a look. But, switching over here, you can actually drop this down and crease it, really whichever you would like.

Alright, going on... next one: Inverted Hammers, Shooting Star. Same story just the little bit different, okay? So, on this one we've got the Shadow Body Ratio. Again, that is 2 to 1 or you can look at it as a 2 times, okay? And then, you know, the short part of that recognition, that specific pattern. We're going to say, you know, I'll take anything that's as big as 500. I'm just fine with that, and I'll still want to see him, if it falls into the criteria of inverted Hammer, Shooting Star. If it follows along with the 2 to 1, I'll take it. Okay? So, we've got that there, as well.

Moving on, we've got the Morning/Evening Star, Morning/Evening Star is actually one of the more popular ones that I work with. Umm, you're going to be looking at the long body minimum length: 1 Tic, okay? This is the 1 Tic, meaning, anything that falls into the criteria. This pretty much days, we'll take anything that falls into Morning or Evening Star, we'll take it! Alright, we don't want to filter out too many by default, because we want to see anything that might pop up. This qualifies, as well. Again, the short body maximum length, we'll let it be as big as 500 Tics. Okay?

We just want to see if that pattern is there, and it will put it into the chart for you. Alright, dropping down, Morning/Evening, Doji Star. Again, long bodied minimum length, we're going to take everything. Piercing Line, a long body minimum length. Again, 1 and 1 for the smallest we would Tic, okay? Which means we are pretty much taking absolutely everything. We're not filtering out any patterns that we might find.

Let's go ahead and drop down for a bit. The same will apply here, for long body, we already know about the short and the maximum of 500 Tics. Let's just keep on going down, for now, until we get into the lower sections for the Preferences on your Candlestick.

Alright, first thing we have, here, is Highlight, okay? The Highlight is actually referring to what I was talking to you before about the little white grey dotted rectangles in the chart. Where it actually highlights it, specifically which Price Bars, which Candlesticks made that pattern. If you want to see it, if you don't, it's this option right here, next to Highlight. As you click that on or off, it will actually remove or add the actual rectangle around those patterns inside the chart window.

Next up, we've got an option to show text. If you take a look at this, and you know Candles off the top of your head, (I know I don't) but if you do and you don't need to have it label: Harami, Engulfing, Hammer, you can turn it off. Okay? You just know that those arrows, they're my Candlesticks, I look at it, and I immediately know exactly what it is. Umm, but, that is just going to be for showing your text, turning it on and off.

Alright, now, let's get into a little bit more of the nuts and bolts, of it, so to speak. We have options here for Invert Arrows, 1 Buy for each Sell. Show Moving Averages. Alright, let's start with Invert Arrow, it is exactly how it sounds. We are literally going to reverse the Buy/Sell Arrows that we receive. Now, this normally will occur if you have arrows that just aren't matching up. It's not necessarily going to happen every time, but here, would be an example: Here on the 60 minute chart, just for what we have here, a down and an up. If you notice that on a specific time frame, you see a pattern of seeing quite frankly, opposite direction for the arrows, then use that to your advantage. If you notice that you know, for the history of this chart, this specific time frame or these specific markets, I seem to get a nice reversal. That's almost like I really wish it were in reverse. Do it! Click Invert Arrows, and then you know, play it forward.

Now, at this point, take a look at the chart, we've got the 60 minute ES, and now we've got a Buy right at the base, right you know, when this trend is starting. Then we get a Sell, right up here near the peak, right at the top of this. It sure looks like it, but almost looks like a Triple Top. Umm, yeah, so, that's a Triple Top formation. We get it right at the head, there. That's not a bad place to be, considering the drop that followed, right after. So, Revert Arrows literally just means, I want to switch everything over.

Now, let's go back over to my daily, and let's take a look at the next option for the CNDL, or Candlestick. That's going to be 1 Buy for each Sell. 1 Buy for each Sell means that, every single time I get a Buy or Sell Signal, don't make another one pointing the same direction, at all. Until I get a new signal, to either go in reverse, Sell or at the opposite: Buy. Don't make it again. Let me show you this, one more time. Take a look: 1 Sell, 1 Buy, 1 Sell. So, 1 Buy for each Sell. If I turn this off, we can actually get multiple Signals in a row, pointing the same direction.

So notice, Harami, right here, pointing down to Sell. Right after it, we get a 3 inside down. We actually get another Signal pointing down. So, 2 shorts, in a row. Over here: Engulfing, followed immediately by 3 outside up. Three White Soldiers, Harami, Engulfing, Engulfing. So, it actually will give you several signals in a row and will not necessarily just wait for 1 Buy, 1 Sell, 1 Buy, 1 Sell. So, that's actually really interesting, as well.

One of the most important things about the Candlestick Auto-Recognition, is going to be your Moving averages. Candlestick Recognition is almost always based off an overall trending market or direction; and to spot those trends or overall direction, we put in a Moving Average. The Moving Average is on by default, at all times, okay? Right now you don't see it in the chart, but we specifically choose whether to look for long or short Candlestick patterns, based on a moving average. Let me show you what that looks like: right here you see, Show Me Moving Averages. Take a look, alright, we're going to click that on. We've got one White one, Light Green, 14, and 28, both simple moving averages, inside your chart. Now, what this does, is it sets an overall trend, overall bias for which direction of Candlestick Patterns we're going to look for. So, every single time the Moving Averages crosses over. We're going to look for the opposite direction of signals. To give you an example right here, we have, actually right at this exact point right here, we have a crossover of the Moving Averages. Just before that, we get a Sell Signal. Once the green and white have crossed over, green above white, we are only looking for Bullish or you know, long Price Bar Patterns. Also, right here, we spot one and we get an arrow pointing up, we get a Buy Signal.

Then over here, take a look: Right here we get another crossover of the Moving Average. We get a change in that overall trend. As soon as that happens, from then on, we are looking for Bearish or short patterns from the Candlestick. Right here, we almost immediately get one. The Engulfing, because it's a short, right after that, okay? So, moving averages are very important, they will determine your overall trend, your overall bias. Because there are a lot of Candlestick Patterns to spot. If we didn't have an overall trend, it doesn't as well with the Candlesticks and they were always based to be working with an overall trend and bias. So, the Moving Average is handy, okay?

You can fine tune and adjust it, as well. Personally, I like Exponential, it just works for me, That's my style, that's what I like, I like Exponential. Um, so, that's what I put in. As you can see, it actually moved our Sell Signal way up, got us a Buy Signal, here. Um, not to make me right out of the- - actually I hadn't tried that until we just did this. But, uh, that's up to you. Exponential is just something I like, and it happened to make me look really smart, just now!

Alright, so, we've gone over all the regular preferences for the Candlestick, let's go over something a little more fancier, a little bit more entertaining. So to speak. Anyone with the Autopilot, Autopilot is the little picture of the pilot's head up here in the top right. The Candlestick Auto-Recognition Plug-In can be used with the Autopilot. Okay? It makes Buy/Sell Signals, the Autopilot can use it. Also, we can choose to have it set up in the Candlesticks section.

Now, this Candlestick Plug-In is the very first to get a new feature that no other Indicator has. That is the ability to Q-Calc each individual section of the Candlestick Preferences.

I'm going to go ahead and drag open this Preferences Tab, and take a look here on this side. Every single section has it's own Quick Calculator, or Q-Calc option. Now, for anyone that's unfamiliar with the Autopilot: It's a back-testing system that goes through and back-tests creates a trading strategy based on the arrows on the screen and it gives you results for the trades. If everything goes well and according to plan, you tell it to start trading, you tell it to go to sleep and it trades for you. While you sleep or while you go to work, or while you go to the park or beach, hopefully if it goes well enough, in those trading.

So, really nice to have. Over here in the Preferences you can literally Q-Calc every section of the Candlestick Plug-In. So, right now our Hammers, 2 to 1 with the max length of 500. Let's Q-Calc it, we left click on Q-Calc. Starts chugging along, going through all the different possibilities, options. It will be using the Candlestick Entry and Exit, based on the Autopilot window. Once it's finished, you'll actually go through and show us what trade results would I have got, if I had traded this specific Hammer Setting for the last two months, 3 months, 6 months, over the last year, the whole history of the contract, if I'm looking at this daily. It'll actually go through and Q-Calc it, and you can click on every single one. It's fantastic! We've never done that before, and it's really handy! I don't like clicking through Options one at a time, especially with decimals, alright?

So, new Candlesticks, very fun, exciting, we definitely hope that you like it! We are more than happy to give it to you, if you would like to start up a free trial, let us know! We'll be more than happy to do that for you! Have a great day, everyone! I will talk to you next time.