A Quantitative Test Of Candlestick Patterns

A Candlestick Portfolio

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Candlesticks are a popular charting tool and are frequently used by promoters using anecdotal evidence. We use candlesticks in our charts ourselves, but not as a predictive tool in our trading strategies.

Do candlesticks really work? We test quantitatively 23 different candlestick formations with strict buy and sell signals. Perhaps surprisingly, some of the formations work pretty well. There is also room for improvement.

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