PipHut University

Course #2 - CandlePRO

Strategy, Backtesting, Alert Setup

Welcome to PipHut University's second official course: CandlePRO, 10-Candle Strategy, Strategy Creation with Backtesting and Alert Setup. Dig in, and if you have any questions please ask them in the comments below so others can see!

Lesson: CandlePRO's "10 Candle Strategy"

This video covers the strategy that drives CandlePRO's Backtesting Engine, called the "10-Candle Strategy". It is a must-watch if you who want to fully utilize the power of CandlePRO in your trading, or are interested in trading candlesticks in general.



Below is a transcript of the video!

10-Candle Introduction

In this video we are going to cover the main trading strategy of CandlePRO, simply called the “10-candle strategy.” The 10-Candle Strategy is used for ALL of CandlePRO’s backtesting and signals, so if you are looking to follow CandlePRO, then this video is a MUST-WATCH for you.
All of this information has been available on our website for years, but this is the first time we have put it all together for you in one, simple video tutorial, and we are pretty excited about it. The goal of this video is simple: to help you better understand how CandlePRO works, so you can better utilize it in your own trading.

Before we dive into the exact details of the 10-candle strategy, we first need to briefly cover how CandlePRO detects and values candlestick patterns so that we can understand how the backtesting engine works.

How does it work?

First, CandlePRO continuously and automatically scans 25 distinct charts - five major pairs across five different timeframes- for 14 high-probability setups. This happens 24 hours a day, every day the markets are open whether you are sitting in front of your computer or not.
It’s kind of like having a team of analysts working around the clock just for you.
Detection

Once a pattern is detected, CandlePRO’s analysis engine kicks into action, determining the signal’s “formation strength” on a 0-100 scale by looking at the shape and quality of the pattern, as well as taking into account the position of the signal within the previous price action. After all, a shooting star that occurs at the top of a range is better than one that occurs in the middle of a range.
After the formation strength is determined and assigned the pattern is turned over to CandlePRO’s powerful backtesting engine, to run through the 10-candle strategy.

How does backtesting work?

First, we search through up to 10 years of past signals to find patterns of similar formation strength that occurred on the same pair and timeframe as the signal that you are looking at. It then intelligently begins testing different trade inputs to determine the most profitable TP, SL and entry levels for that particular signal, using the “10-Candle Strategy”.

So what exactly is the 10-candle strategy?

The 10-candle strategy, as the best strategies usually do, has very simple rules once you know them:

  1. First, each signal has a “trade window” of 10 candles, no matter when the trade is triggered.
    1. So, for example, a signal on the 1h charts has a trade window of 10 hours (which is ten, one-hour candles). For a signal on the daily charts, this means a trade window of – you guessed it – 10 days, which is ten, one day candles.
    2. Trades are closed out after the 10-candle trade window whether the TP or SL was hit or not – there is no flexibility in the trade window.
    3. Finally if you are waiting for a pullback and the trade is not triggered after 10 candles then no trade is taken.

Let’s take a look at a couple examples.

In this first trade example we enter immediately after the signal – which is the same as a pullback value of zero. After candle #5, 5 hours later, our TP is hit. Pretty straight forward.

Now let’s look at a little more complex example, this time with a pullback value. Using pullback values is easy, and a great way to get a better price and to give yourself more time to enter. You can also use pullback values to set entry levels with your broker so you don’t need to be in front of the computer when the trade happens. Most brokers even allow order “expiration” times so you can automate the 10-candle trade window.
Let’s say a bearish doji occurs on the 1h Australian Dollar / US Dollar chart, with a pullback value of 50 pips. After 5 candles the price finally hits our pullback entry and our trade is triggered.

Five candles later, which is 10 candles total from the signal time, price has moved in our direction but neither the TP or SL was hit. The CandlePRO “10-candle” strategy will “close” out this trade for the small gain and count it as a win. If it had been in the negative after 10 candles then the backtesting engine would count it as a loss.

Notice how the trade was only active for the last 5 candles? Remember – in backtesting no trade is kept open after 10 candles from the signal time.
It’s also important to note that CandlePRO ignores all subsequent signals. Meaning if you go long on a bullish hammer and then three candles later you see a bearish engulfing, CandlePRO completely ignores that later signal in its backtesting, so if you are looking to follow CandlePRO then you should too.
Another way of thinking about it is that each signal is its own stand-alone signal, good for 10 candles no matter what.

Backtesting Tips

It’s also very important for you to know how to test your own TP/SL/Entry values. From your PRO dashboard, you can easily enter your own data and push it through the backtesting engine (which again always use the 10-candle strategy) to see the results.

The pullback feature appeals to many traders because it allows you to set entries when a signal appears, meaning you don’t have to be sitting in front of a computer if and when the trade is triggered.

Active traders may prefer a pullback of “zero”, meaning that you enter at market price immediately after the signal appears. It all depends on your trading style.

This ability to test your own TP/SL and Entry levels means you can actually find BETTER results than our backtesting engine. The backtester intelligently attempts to find the best results but that does not mean that it always does. Testing your own values also allows you to tailor the signals to your own trading style, for example lowering the SL to lower risk, lowering the TP to increase the win %, or increasing the pullback value to increase the amount of time you have to act on a signal.

The key is taking the time to explore and discover the power of CandlePRO – if you do that it will soon become a staple of your trading plan.

Thanks for watching and, as always, if you have questions feel free to email us at support@piphut.com!

Happy pipping!

Lesson: CandlePRO Walk-Through

This video takes you on a walk-through of CandlePRO with Chief Strategist, and covers topics such as how to research, backtest, and create alerts inside of CandlePRO!



Below is a transcript of the video!

Introduction

Hi, this is Mark Norris, Chief Strategist here at PipHut.com. In this video I’m going to give you a quick walk through of CandlePRO version 4.2, including: how to access CandlePRO, how to research and create a candletick trading strategies, how to setup up your alerts based off those strategies, and then of course viewing and using those signals in the PRO Dashboard.

Setting Up An Alert

The first thing you should do is create a CandlePRO alert.

We can do this by going to the CandlePRO Signals and Settings page, found in the PRO drop down menu. You can also get here by selecting the “Create / Manage Alerts” link on the CandlePRO tab of PRO Dashboard.

Once on the Alerts page, the first thing we want to do is name our strategy. We’ll keep this example simple and call it “Daily Signals”. For this example we simply wish to setup an alert whenever a new candlestick signal appears on the daily charts, for any pair.

After we’ve named our strategy, we can begin selecting its criteria. Let’s select the daily timeframe, all pairs, all profit factor and strength levels, and all patterns.

Once we have our criteria down we can simply “save” the alert, “activate” it – and that’s it! We have successfully setup a CandlePRO strategy that will alert us every time a new signal appears on the daily charts.

Trading An Alert

Now that we know how to create and activate an alert, let’s walk through how to trade the candlestick signals. First off let’s delete the Daily alert we just created.

And we’ll enter a name for our strategy – let’s create a strategy for Euro Dollar, 1-hour charts only using high strength signals.

Now, for this strategy we only want the 1h timeframe and the Euro dollar pair but now, lets weed out some of the weaker signals by selecting Net profit “over 2.0” and Strength “greater than 75%”.

We’ll select all patterns using Control-A but this time instead of saving the alert right away lets run this alert through the backtesting engine by selecting “Strategy Backtest”.

This brings up the Take Profit and Stop loss report, which is conveniently categorized into different sections for pullback trading, reward/risk ratio trading, scalping, false signals and then just a list of all the backtesting results.

I generally prefer the signals with a pullback value as I can’t always be in front of the computer, and it looks like we have a viable result right here at the top – with a TP of 63, SL of 32 and a pullback value of 22. Over the past 50 signals that would have net 11 wins and 3 losses (meaning 14 out of 50 trades were actually triggered), with 6 consective wins, 1 consecutive loss and an almost 80% win rate – which is huge, with a profit factor of 9.55 and a net profit of 359 pips over the past 14 trades.

Not bad. But, because I’m curious, lets see if we can tweak our entry levels for our trading style. If we go into ‘test your own tp/sl’ here, we can actually enter our own TP/SL values into the backtesting engine.

Our preferred result from the backtesting table was a take profit of 63, a stop loss of 32 and a pullback value of 22, so lets test the spread effect first of all and see if changing the entry level a few pips drastically effects our results.

Lets experiment with some values here.

It’s a good sign that all of our testing showed relatively similar results – if our testing showed drastically worse results it could indicate that our underlying strategy is weak or too broad.

Now, that we’ve decided our our TP/SL and pullback values for our alert lets save the alert, enter our notes, and activate it.

We are now good to go and we’ll start receiving alerts as soon as they are detected!

What to do when you receive an alert - PRO Dashboard

Once you receive an alert, the first place to head is your PRO Dashboard. Select the CandlePRO tab - this is your snapshot into what is currently happening inside of CandlePRO.

For each signal, you get an easy to understand forecast arrow, a chart snapshot, general candlestick information and the high profit factor. To view the TP/SL Backtesting information simply click the “TP/SL” button.

The first thing you’ll see when this pops up, is the trading results from the TP/SL/Entry with the highest profit factor during backtesting for this type of signal. The chart here shows the equity curve of this particular strategy during backtesting. In this case, the particular candlestick for this particular pair and timeframe has net more than 1800 pips since mid-2008.

Additional Backtesting Results

Testing your own TP, SL and Pullback levels for this type of signal is easy too – just enter your desired values and “Backtest it!” Notice that once again you are able to see the backtesting equity curve for the TP, SL and Pullback levels you specified.

If you ever forget what a particular candlestick pattern means then we have you covered in our “Candlestick Info” area.

On the top of the CandlePRO area here you can also select a preset view, such as just a certain pair or timeframe. OR you can select one of your custom strategies. On the right side of each custom strategy in this drop down list you can also view how long since the last signal was generated for that alert.
Finally you can also select a preset strategy filter such as the “double” or “triples” confluence feature of CandlePRO!

That’s it!

You now know how to create and activate basic CandlePRO strategies, and trade them using the PRO Dashboard. In the next video we will cover some of the more advanced CandlePRO topics including researching close CandlePRO signals and common candlestick trading tips and strategies.

Thanks for watching and if you have any questions at all you can contact our helpful support staff by email support@piphut.com. As always our goal here at PipHut is to see you succeed!

Take care and Happy Pipping!

CandlePRO - 10 Candle Strategy

Test your knowledge of CandlePRO’s easy and powerful “10 Candle Strategy”…

Join the Discussion!

  1. kuma
    May 13, 2014 at 13:33 Reply

    You have developed a new strategy to trade currencies.It seems to be a very good one.I like to test it and experience the the strategy. Let us have more stuff to realise the how the strategy work. Thank you

    • Profile photo of PipHut Team
      PipHut Team
      May 13, 2014 at 14:27 Reply

      Hi @kuma, thanks for your interest in CandlePRO v5! Right now it is in BETA testing with PRO members, when we “go live” with it we’ll make some big announcements. Are you a free signal subscriber?

      • Maria
        December 14, 2015 at 10:15 Reply

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    • Hellen
      December 14, 2015 at 10:48 Reply

      I agree China has an Ace up their sleeve, their now minnig their own gold why would they need to import buy more gold. I read an article where they are storing massive amounts of fresh water in the gigantic tanks and food supplies WHY? I think there’s going to be some turmoil in the near future. They keep poking the hornets nest in every country and soon they will get stung. Do you see big deflation in the near future with PM?

  2. Profile photo of str8
    str8
    October 3, 2014 at 16:59 Reply

    Are all setups based on candles formation – doji, harami, star formation and so on?

    • Profile photo of PipHut Team
      PipHut Team
      October 4, 2014 at 00:22 Reply

      Hi @str8 – yes, CandlePRO is based on candlestick formations such as doji, hammer, star, etc.

      • Yasmin
        December 14, 2015 at 10:14 Reply

        heyyyyyyyyyyyyyyy Did they send me one of these? Oh crap that’s what I get for being behind on my mail. Although they did ask me my opionin about the candle & I did send it, but nothing like this I remember. BUMMER!

  3. Timmi
    July 26, 2015 at 07:19 Reply

    The video is not playing in my browsers (chrome and firefox).
    What adware/spyware needs to be unblocked, in order for it to work?
    (I use Ghostery and uBlock)
    Alternatively, might you have a link where this can be watched on Vimeo or Youtube?
    Thank you.

    • Profile photo of PipHut Team
      PipHut Team
      July 29, 2015 at 20:35 Reply

      Hi Timmi, we don’t have any advertising on our site so I would advise simply unblocking the piphut.com domain (probably uBlock but perhaps both) to ensure that the video plays.

      • Salman
        December 14, 2015 at 10:18 Reply

        Hi Dali, need your advice, a lot of plopee are saying the economy is recovering and the recession has ended. Nevertheless, the job losses are still increasing.Bloomberg reports today:However, U.S. stocks fell, pulling the Dow Jones Industrial Average down from an 11-month high, on speculation a six-month rally has outpaced prospects for profit growth. European and Asian shares also dropped as the dollar and Treasuries gained, while oil, copper and gold retreated.there’s a large crowd expecting a pullback after such a strong spike. People are saying that the market is vulnerable now and we’ve gotten beyond the idea that the economy is less bad. People want to see evidence of whether companies can actually start to grow.Is this the right time to buy equity?Your insights on this matter would be much appreciated. Thank you.

        • Chris
          May 2, 2016 at 18:39 Reply

          A piece of erduotiin unlike any other!

  4. Timmi
    July 30, 2015 at 15:48 Reply

    One of my pet peeves is sales people who talk before they think.

    • Timmi
      July 30, 2015 at 15:53 Reply

      …and this report is from microblock (uBlock).
      I just want to know what you use to drive the video.
      If you don’t know, please ask your web programmers.
      thank you.

      • Timmi
        July 30, 2015 at 15:55 Reply

        oops, my bad.
        the report wasn’t finished compiling.

        • Ismael
          December 14, 2015 at 09:48 Reply

          They were just as described. They came in pacgkaed well. They were a little smaller than expected. Only wish they had different aromas.

  5. Rosalind
    November 13, 2016 at 00:14 Reply

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