PRO User Guide

Changelog

***Here you’ll find update info for CandlePro***

v2.9.5 – Feb 28, 2011:

• changed “net profit” to “profit factor” on search panel for consistency with Performance Report (thanks cadtek)
• fixed bug where old performance reports were not generating properly (thanks cadtek)
• updated User Guide to reflect all the new changes – read User Guide here

v2.9.4 – Feb 25, 2011 – modified PRO Dashboard tabs to make them bigger and easier to read, removed “Pro Dashboard v1.1″ header, changed chat room header to “Trader’s Lounge”

v2.9.3 – Feb 25, 2011 – fixed bug where search results after first page were not displaying correctly when “closed” or “>10″ was selected for age (thanks tuctuc)

v2.9.2 – Feb 23, 2011 – fixed small bug where “show all” was returning much more than 10 results at a time, resulting in slow performance (thanks Ash)

v2.9.1 – Feb 22, 2011 – fixed bug with Active Mode where it was only loading candles with netprofit > 1. Now shows all Brand New candles (thanks Roggy)

v2.9 – February 22, 2011 – we haven’t been good about updating this changelog recently, though you can still see all the updates from the “News” tab. Here are a list of the five biggest updates over the past 5 months (there have been plenty of other, smaller improvements but these are the big ones!):

• PRO analysis - was announced end of last year, which gives long term setups and analysis for the GBP/USD, AUDUSD, USDJPY and USDCHF. Available in Dashboard for PRO users. read more
• CP Performance Scoreboard - shows top signals from previous day. read more
• Backtesting! – CP Performance Reports now tests various TP and SL levels for every signal for some basic backtesting, allowing you to see which TP/SL levels have performed the best. read more
• Backtesting Net Profit in CP Search Results – read more
• Search by Net Profit in CandlePRO - read more
• Targeted Performance Reports – dropping the “breakdown by forecast strength” charts from Performance Report – and making the entire performance report targeted to your forecast strength level! This accomplishes the same thing as those charts had to be manually used to determine the RR ratios, TP/SL levels for each level and now the entire report is geared toward your forecast strength.

v2.4 - October 4th – fixed formatting on “who’s online?” of main page. This displays last LOGGED IN users who have accessed standard piphut page recently (if they sitting in a chat room, for example they won’t show up). Also increased journalling speed substantially following some code changes. more info

v2.3 – October 2nd, 2010 – fixed formatting on friend’s “follow” and member list pages. Fixed “next” and “previous” results pages to only display 10 results at a time.

v2.2 - September 30th – added “Double” and “Triple” signal detection. Doubles and signals will be notified with a small flame icon in search results. More info

v2.1 – September 27th – added “My Saved Signals” with the ability to save signals and journal about them. After 10 candles the 10-candle profit/drawdown number will automatically be updated. more info

-changed default search results page to display 10 results

-added ability to view “Next” and “Previous” results on all search pages

- Added “back to search results” nav on “View Past Signals” button and also “All new for this pair” button. Every page in CP now has a “back to search results” button

v2.0 – September 6th – Major visual overhaul to PipHut.com and CandlePro. Also added the “All new for this pair” to CP search results (to easily check for confluence among different timeframes) and temporarily removed “View past signals” from the Performance Report.

I will be updating the User Guide to reflect the new changes today. Part 3 of the Strategies article soon, I promise :).

v1.3 – August 25th – lots of changes, best to see the writeup: http://piphut.com/2010/08/candlepro-upgrades-august-25th/

v1.21 – August 24th – added a numerical percent (out of 100) to the forecast strength meter on the search results page. Thanks for the suggestion @max777

v1.2 – August 23rd – duplicate candle issue resolved. Added functionality to view BRAND NEW candles only under “age” on the scan options top nav. If you are currently in CP you may have to restart your browser and/or clear your browser’s cache for the “new candles” feature to work properly

v1.11 – August 15th – minor update to performance report: added “close price” under the “OPEN Time” for ease of use (thanks @cadtek for the suggestion)

v1.1 – August 15th – major updates to performance report page including: report caching (for improved speed), show selected signal (ease of use) and “back to search results” button (ease of use). You might need to refresh your browser or clear cache if you run into any problems.

v1.01 – August 8th, 2010 – bug fix where some bearish engulf results were showing as less profitable than they really were. Credit forexpro for finding bug.

General
What is CandlePro?
CandlePro is a candlestick scanner and a whole lot more. It automatically detects new candlesticks, analyzes past candlesticks and gives you a wealth of information to help you make smarter trades. CandlePro is not a entry/exit signal program – it is a trading aide meant to supplement your trading strategy, or to help you build your own trading strategy based on candlesticks.

How do I access CandlePro?
You can access it by selecting “Pro Dashboard” from the “Pro Menu” above. You must be signed up and signed in to access the Pro Dashboard.  See “How do I sign up below” for sign up details.

What pairs does it work with?
EURUSD, GBPUSD,  USDCHF, AUDUSD, USDJPY. We will continue to add more pairs to this mix in the coming weeks and months. If you have a favorite pair that is not here please email us!

What timeframes does it scan?
15m, 30m, 1h, 4h, Daily (GMT timeframes)

Where can I sign up?
Visit the PRO sign up page.

CandlePRO Search

The engine of PipHut PRO services is CandlePRO – and the engine of CandlePRO is the search functionality. You can use it to display brand new signals, active signals (we’ll explain the difference later), closed signals. You can use it to research past signals. You can add search criteria to only show signals, for example, that have a good backtesting score. In short, you can make your searches as basic (all new signals) or as complex (active signals, 75-100% forecast strength, net profit greater than 2, etc) to match your trading style.

Now lets take a look at how to get started with CandlePRO searches.

First off, once you log in and select the PRO tab at the top of the screen you will immediately see the CandlePRO search panel. Click the thumbnail below for a larger view:

Beginner Tip: getting new signals from the CandlePRO is a snap: just click the green Go! button. You don’t even have to worry about any of the options for now – the default search options will show you all active candles, for all pairs. And, if you start changing search options and want to get back to the defaults just click the X button next to the Go! button to reset your search panel.

Pretty easy, huh?

Now, if you want to learn how to read the search results then head on over to the next tab in this User Guide, “CandlePRO Search Results”. For those of you who want to learn what all the search options mean lets go over them one-by-one:

Search Options Glossary:

Timeframe – select the chart timeframe or timeframes (select multiple by holding down your CTRL key as you click) you wish to search. The default is to search across all timeframes.

Age – This is a very important category as changing this option drastically changes the signals you are looking at, for example whether you are looking at past signals or current signals. We’ll go through each option one-by-one:

“Active” – (note: this is the default option) – this displays the most recent candles for ALL timeframes you selected. So if you select all timeframes it will show you the most recent 15m, 30m, 1h, 4h and daily signals. It will show you the daily signal for the entire day as that is the most recent daily signal. Make sense? To understand it a little better lets compare it to the “brand new” option below…

“Brand New” – shows you only the latest signals based on the minimum timeframe check. Right now the minimum timeframe in CandlePRO is 15 minutes so every 15 minutes CandlePRO is checking the charts for new signals. So if you look for “brand new” signals at 15 minutes past the hour it will only return 15m candles because only that candle closed during that timeframe check. If you look for “brand new” candles at 30m past the hour it will return 30m and 15m candles. If you look for “brand new” candles on the hour what do you think it will return? If you guessed 1h, 30m and 15m candles then you win! This option is most useful active traders who like to get in on signals right away.

“<10 candles" – CandlePRO results and backtesting is based on the 10-candle strategy, meaning that the system looks at the most you could have gained or lost on a signal for the 10 candles after signal open. So technically every signal that is still less than 10 candles old is still a valid signal and, using this option, sometimes you can find some real diamonds in the rough by getting in on a pullback (i.e. lower stop-loss, better reward/risk ratio).

“Closed Only” – used mainly for research purposed, “closed only” allows you to to view past signals that are more than 10 candles old and therefor have their 10-candle profit/drawdown numbers in the search results.

“Show All” – exactly what is sounds like. Will show all candle signals. WARNING: lots of results.

Pairs – select the pair or pairs (select multiple by holding down your CTRL key as you click) you wish to search. The default is to search across all pairs.

Bearish and Bullish – these are various candlestick patterns you can search for (select multiple by holding down your CTRL key as you click). The default is to search across all candlestick patterns.

Profit Factor – provided by the backtesting feature of the performance reports, ‘profit factor’ is an industry term and equals the profit generated by profitable trades divided by the losses generated by losing trades. A value of 2 would indicate that twice as much money was made from winning trades than was lost from losing trades. Higher ‘profit factor’ values are therefor generally perceived to indicate less risk, but one must still take into account win %, reward/risk ratios, etc.

Search Results

After clicking Go! on the search panel you’ll be brought back a list of signals, and each signal will look something like this:

Here is a breakdown of what the signal results mean:

Signal Results Glossary:

Status icon – underneath the “Age” column you will see one of four icons:
Green dot – brand new signal
Yellow dot – Signal less than 10 candles old
Red dot – signal is over 10 candles old
Flame! – means that this signal is a triple or double signal. A double occurs when two of the following pairs are forecast in the same direction: EURUSD, GBPUSD or AUDUSD and the third pair has no signal. A ‘triple’ is when all pairs have the same forecast direction.

Underneath the icon you will see the signal open time – this is the same as the candle CLOSE time. Note that this is different than the candle Open time which is when the candlestick opened (useful for finding the candlestick on your own charting software which generally lists candles by open time).

Pattern -  The name of the candlestick pattern

Symbol - the symbol the candlestick appeared on

Close Price- this lists the price at which the candle closed at. Useful for matching the pattern to your own charting package  / broker feed.

Candle Open – lists the date and OPEN time of the candlestick in question. So for example if it is 2:00a, then the newest candle’s open times would be 1:00a

Chart snapshot – shows the last 4 candlesticks (including the formation). This makes it easier to see the candles at a glance and also to match up the CandlePro formation with your own charting package.

Forecast – see at a glance whether a candlestick is bullish, bearish or neutral. Always check your own charts to confirm as pairs in the middle of a range can give bad results.

Forecast Strength gauge - also know as “formation strength”, forecast strength is a 0-100 strength indicator that is based on the candle formation and placement of that formation in the recent trend. For example, if a shooting star appears at the top of an uptrend it will have a stronger forecast strength that one that appears in the middle of a range. A 100% forecast strength is not a guarantee that a signal will be profitable but rather a indication that the formation strength is excellent. In that same token a forecast strength of 0% is not a guarantee that a signal will not be profitable.

Trend gauge – this lists the technical trend for the given timeframe and is useful for quickly determining if a signal is with or against the trend. This is a technical indicator that is based on the -DI (negative Directional Indicator) and +DI(positive Direcitional Indicator) of the popular Advanced Directional Index indicator.

10-candle profit – CP will automatically display the max 10-candle profit for past candlestick signals if 10 candles have passed. 10-candle profit is the MOST profit you could have gotten out of a past candle after 10 candles have passed. This is very useful in determining where you should place your TP levels to make sure you are getting the most out of your trades. This concept is important so lets take a look at two examples:

Example #1 –  a pair rose 100 pips after 7 candles on a bullish hammer, and then fell 20 pips the next 3 candles.  The “10-candle profit” is listed as +100 pips because that is the MAX profit you could have gotten in 10 candles, even though after 10 candles the pair is only +70 pips in the profit.

Example #2 – a pair rises 10 pips after 4 candles on a bullish hammer, and then falls 15 pips the next 6 candles. The “10-candle profit” is listed as +10 pips because that is the MAX profit you could have gotten in 10 candles, even though after 10 candles the pair is -5 pips from the close price.

Drawdown - the amount of pips the price moved AGAINST the forecast direction before reaching the 10-candle profit level. This does not take into consideration any candles that occur after the 10-candle profit level is reached. This information is very useful in determining where to put your stop-loss levels. Lets take a look at the above two examples again:

Example #1 –  the pair initially moved to -30 after 3 candles before moving to +100 pips after 7 candles. The drawdown is -30 pips because that is the amount price moved AGAINST the forecast direction before reaching the 10-candle profit level.

Example #2 - the pair initially moved to -30 after 2 candles before moving to +10 pips after 4 candles. The drawdown is -30 pips because that is the amount price moved AGAINST the forecast direction before reaching the 10-candle profit level. If the price dropped 200 pips after the 4th candle the drawdown would still be -30 because the 10-candle profit was hit on the 4th candle (that is why it is always good to use stop-losses!)

Backtester Profit Factor high – the highest profit factor found during the signal’s backtesting (from the performance reports). ‘Profit factor’ is an industry term and equals the profit generated by profitable trades divided by the losses generated by losing trades. A value of 2 would indicate that twice as much money was made from winning trades than was lost from losing trades. If the high profit factor was greater than two than the flame icons are shown. Higher ‘profit factor’ values are therefor generally perceived to indicate less risk, but one must still take into account win %, reward/risk ratios, etc.

Button: View Performance Report – this brings you to the Performance Report, which we will discuss on the next tab.

Button: All New for this Pair – allows you to quickly view all the active candles for that particular pair. For example lets say you are looking at a 30m Bearish Engulfing signal on the EUR/USD charts and you want to quickly see how the 1h, 4h and daily candles are looking – simply click this button!

Button: View Past Signals – great for research purposes, this button will instantly allow you to view all the past (closed) signals similar to the signal you are looking at. So with that same example from above, clicking this button will allow you to instantly view all the closed 30m Bearish Engulfing signals on the EUR/USD charts!

Now lets take a look at arguably one of the most powerful advancements in the field of candlestick trading: Performance Reports

Performance Reports
The Performance Report is where the magic happens, and is arguably one of the most powerful recent advancements in the field of candlestick analysis.

From a 30,000 foot view, the Performance Report is a detailed historical analysis of each candlestick signal that CandlePRO finds. It works by searching through its vast database (over 70,000 candlesticks) to find all the previous signals that appeared on the charts in a similar fashion to the candlestick you selected.

So lets say for example you select a 4h Bullish Engufling candle on the AUD/USD charts. You find a signal that has a 80% forecast strength and you click the performance report button on the search results page. The Performance Report will search through all 70,000+ signals in its database to find signals that were also a 1h Bullish Engulfing on the AUD/USD and that had a forecast strength similar to 80% (in this case 76-100%), and the compute the entire performance report based off of that data!

Why is this important?
This is like the difference between using a manual screwdriver to build your house or using a high powered drill. Yes, both of them will get the job done, but if you pay a little extra for the drill you will be done about 2 years quicker. In the same token everyone knows about candlesticks – the problem before CandlePRO was knowing how to trade them and which ones to trade. Performance Report solves that.

Here is what that performance report might look like:

Now lets take a look at what each one of these means (left to right, top to bottom).

Performance Report Glossary:

# of previous signals analyzed – This displays the number of signals that were analyzed to crunch the results for the Performance Report (50 is the maximum). CandlePRO searches its databased of 70,000+ signals to compare the signal to other signals of similar pattern, pair, timeframe and forecast strength.

Chart snapshot – shows the last 4 candlesticks (including the formation). This makes it easier to see the candles at a glance and also to match up the CandlePro formation with your own charting package.

Formation –  the name of the candlestick pattern (e.g. Bullish Doji)

Pair – the symbol the candlestick appeared on (e.g. EURUSD)

Timeframe – the chart period the signal appeared on (e.g. 30m charts)

OPEN time – lists the date and OPEN time of the candlestick in question. So for example if it is 2:00a, then the newest candle’s open times would be 1:00a. Most charting packages list candles by the open time.

Close Price- this lists the price at which the candle closed at.

Forecast – see at a glance whether a candlestick is bullish, bearish or neutral. Always check your own charts to confirm as pairs in the middle of a range can give bad results.

Strength - also know as “formation strength”, forecast strength is a 0-100 strength indicator that is based on the candle formation and placement of that formation in the recent trend. For example, if a shooting star appears at the top of an uptrend it will have a stronger forecast strength that one that appears in the middle of a range. A 100% forecast strength is not a guarantee that a signal will be profitable but rather a indication that the formation strength is excellent. In that same token a forecast strength of 0% is not a guarantee that a signal will not be profitable.

Button: Back to Search Results – brings you back to your search results (or saved signals if you are at your journal).

Button: Save this Signal – Allows you to save and journal about the signal for your reference. You can view your saved signals at anytime by clicking the “My Saved Signals” icon in the upper left of CandlePRO (above the search panel).

10-Candle Strategy Performance Summary

Average reward/risk – Useful for determing the overall reliability of past signals, as it basically looks out how much past signals have moved in the forecasted direction. Specifically, this is found by dividing the average profit by the average drawdown (average profit / average drawdown).

Median reward/risk – same as the reward/risk above, but this looks at the median RR, not the average RR. The median is the middle number in a series, not the average, so it can help to weed out extremes on either end of a series that can distort an average. For example if I have the numbers { 1,1,3,50 } then my median is 3 and my average is 22.5 and it can be argued that the median (3) is a much more realistic representation of that data set.

Average Profit – Useful for determing the overall profitability of past signals and for determining where to put your take profit levels. This is found by adding up all the 10-candle profits for the past signal analyzed and diving by the total number of signals analyzed.

Median Profit – same as the average profit above, but this looks at the median instead of the average. The median is the middle number in a series, not the average, so it can help to weed out extremes on either end of a series that can distort an average. For example if I have the numbers { 1,1,3,50 } then my median is 3 and my average is 22.5 and it can be argued that the median (3) is a much more realistic representation of that data set.

Average drawdown – Useful for determing the overall drawdown of past signals and for determining where to put your stop-loss levels. This is found by adding up all the drawdown amounts for the past signal analyzed and diving by the total number of signals analyzed.

Median Drawdown – same as the average drawdown above, but this looks at the median instead of the average. The median is the middle number in a series, not the average, so it can help to weed out extremes on either end of a series that can distort an average. For example if I have the numbers { 1,1,3,50 } then my median is 3 and my average is 22.5 and it can be argued that the median (3) is a much more realistic representation of that data set.

Max 10-candle Profit – Out of all the past signals analyzed this is the highest 10-candle profit found, and therefor is the MAX profit one could have gained in the 10 candles following the signals. This is useful for determining where to place take profits.

RSI gauge – Relative Strength Index, or RSI, is a popular oscillator tool that seeks to alert you to when the market is oversold or overbought. We use the standard 14 periods for this indicator on a 0-100 scale (0 is oversold, 100 is overbought). Generally a reading above 70 is overbought and below 30 is oversold, with extremes meaning a change in direction could be imminent.

ATR (in pips) gauge – Average True Range, or ATR, shows the average range of the pair/timeframe over the past 14 periods. Many traders use this data to help them set appropiate stop-losses and avoid getting whip-sawed out of a trade by normal market back-and-forth action.

ADX Trend – this lists the technical trend for the given timeframe and is useful for quickly determining if a signal is with or against the trend. This is a technical indicator that is based on the -DI (negative Directional Indicator) and +DI(positive Direcitional Indicator) of the popular Advanced Directional Index indicator.

Trend Strength – Again using the 14-period Average Directional Index, this time extrapolated onto a 0-100 scale, this gauge shows us the relative strength of a trend. A higher rating indicates a stronger trend while a weak reading (closer to 0) indicates a weak or non-existent trend.

CandlePRO Backtester – Backtester is such a powerful tool that we had to give it its own tab in this User Guide. Click over to the next tab to learn the inner workings of Backtester.

Backtester

If you are looking for real hard data on candlesticks, if you really want to see through them to benefit your trading then Backtesting is for you. In our opinion there is little else that is as important as backtesting. Past results, while of course not indicative or any guarantee of future results, are what we thrive on as technical traders.

Every technical indicator, even candlesticks, are past data – what Backtester does that is so vitally important is it goes through each past signal (remember how the performance report searches through 70,000+ signals to find up to 50 signals to crunch data?) from the performance report and says “What if we used a TP of X pips and a SL of Y pips?”

It does that ten times, selects the best SL and then does that ten more times to find the best TP level. It then sorts the results by Profit Factor (profit factor = gross winnings / gross loss) and presents them to you in a table like this on the performance report:

Lets go through each column together.

Backtester Glossary:

Read Strategy Summary – this is a plain-text version of the data in the table. Each strategy summary is different so mouse over each one.

TP – this is the take-profit level used in the backtesting (e.g. “20″ means 20 pips from the signal’s candlestick close)

SL – this is the stop-loss level used in the backtesting (e.g. “30″ means 30 pips from the signal’s candlestick close)

Total Wins – out of all the previous signals backtested this is the total # of wins based on the given TP and SL levels.

Total losses – out of all the previous signals backtested this is the total # of lossed based on the given TP and SL levels.

Consec. Wins – “Consecutive Wins” is the # of consecutive wins the given strategy had during backtesting. Many traders use this as a measure of reliability.

Consec. Losses – “Consecutive Losses” is the # of consecutive losses the given strategy had during backtesting. Many traders use this as a measure of reliability and also as a measure of how much they could potentially lose following a given strategy.

Win % – Total # of Wins divided by Total # of signals backtested (Wins/Trades).

Profit Factor – an industry term and equals the profit generated by profitable trades divided by the losses generated by losing trades. A value of 2 would indicate that twice as much money was made from winning trades than was lost from losing trades. Higher ‘profit factor’ values are therefor generally perceived to indicate less risk, but one must still take into account win %, reward/risk ratios, etc.

Net Profit – Gross # of pips won – gross # of pips lost (net profit = win pips – loss pips).

Now there are certain inherent limitations to this sort of backtesting. For example past results are no guarantee of any future results, and there is no way we can anticipate what kind of spread your broker is going to impose on your trading. In short, remember that no backtesting is perfect and all the warnings about forex trading still apply – just be smart!

That being said it is still pretty powerful stuff and some examples of how you can use this data are obvious: for example looking for good reward/risk setups with a Profit Factor of 2.0. Or simply using the data to guide your TP and SL levels.

But we’ve found many traders use this data in creative ways, like using very high Win % (90%+) to scalp or even using very unprofitable signals and trading in the opposite direction!

Trade Journal

To save any signal to your trade journal simply click the “Save this Signal” button from any performance report, enter any notes you want and click “Save.”

Here is what the “Save this signal” button looks like:

To view your saved signals simply click the “My Saved Signals icon in the top left of the CandlePro nav:

This will bring up a list of all your saved signals:

PRO TIP:Perhaps the best thing about this, besides making it easier to keep track of your strategies and formations you are watching, is that when you review your trades the 10-candle profit and loss numbers will automatically be filled in according to the 10-candle strategy! This way you can see exactly where your TP and SL needed to be versus where you placed them, making your future trades smarter!

Live Chat

One of the best things of being a PipHut PRO member is your access to Live Chat where you can talk with other serious currency traders 24 hours a day. Here are some screenshots of that chat room:

Chat tends to be the most busy during the London session, with anywhere between 5-40 active traders at any given time.