Candlestick Pattern Editor

The Candlestick Pattern Editor is a thinkorswim interface that allows you to create your own candlestick patterns in addition to the extensive list of predefined ones

What's a candlestick pattern?

A candlestick pattern is a specific configuration of chart candles of certain shapes that were sometimes seen together on charts in a certain trend development scenario: continuation or reversal. Statistical consistency and logical rationale have made candlestick patterns a popular analysis tool in the Western world -- after centuries of usage in Japanese markets.

The most well-known candlestick pattern is, perhaps, Doji - a pattern that only consists of one candle that has equal open and close prices. This pattern is believed by many to indicate a soon trend reversal.   

Where do I find these?

  1. Make sure the Charts tab is open. Click Patterns in the upper right corner of the working area. 
  2. Click Select patterns... The Select Patterns dialog window will appear.
  3. Select the Candlestick tab. You will see a list of all available candlestick patterns (both pre-defined and those previously added by you).
  4. Click Create... below the list. This will open the Candlestick Pattern Editor window. 

How do I create a candlestick pattern?

Let's say your pattern consists of seven candles*:

  • the first two are up candles and the second one closes at a higher level than the first;
  • then we have two candles whose direction and price levels do not matter to us;
  • then there is a down candle which closes below the second candle's open;
  • and, finally, there is a Doji that opens below the previous candle's low.  

Here's an algorithm of creating such a pattern:

1. In the Candlestick Pattern Editor window, you can see a big gray candle with a  icon inside of it. Click on this candle and choose Up candle from the menu. This will add the first Up candle.

2. As our second candle is also an Up candle, repeat step 1. Note how the candles are both displayed on the pattern chart and listed in the Conditions area. If you change your mind about what the candle direction should be, click on the center point of that candle on the pattern chart or just use its drop-down in the Conditions area. Either action will prompt you to specify the candle direction. If you need to delete a candle, click on its center point and choose Delete or just click  in the corresponding row of the Conditions area. 

3. Next, let's add two candles without a specified direction. Click on the gray candle and choose Mixed candles. By default, the editor will add 5 random candles: as we only need two, go to #3 in the Conditions area and change the Total to 2.  Note that you can still specify how many Up, Down, and Doji candles you need in this random set in the same row of the Conditions area.

4. Next, we will need a Down candle and a Doji candle. To do so, click on the gray candle again or use the  icon in the Conditions area header.

5. Now, let's specify the price relations between the candles. First, move your cursor over the first candle: you will see five points appear above it. The point in the middle can be used for modification of the candle direction, while four others define price levels of open, high, low, and close. Drag the close price point - to the close price point of the second candle. Release the mouse button and then click Less. You will see a line that connects the two price points with the word Greater in the middle of it. In our case, this means that the close of candle 2 is greater than the close of candle 1.

6. Specify the relation between candle 2 and candle 4 by clicking on the second candle's open and dragging it to the fourth candle's close. Choose Greater. Note that the relations can be modified or deleted by either clicking on their respective icons on the pattern chart or using the list in the Conditions area.  

7. Specify the price relation for the Doji candle: drag its low price point to the "Drop here to set as lowest" area that appears at the bottom of the pattern chart. By default, this will set this low price as the lowest in the entire pattern; however, you can make it the lowest among a number of preceding candles by specifying that number in the corresponding line of the Conditions area. Note that at any point of pattern creation you can change the order of candles by dragging-and-dropping them on the pattern chart (this will, however, dismiss all the pricing conditions previously defined for the affected candles).

8. Note that in addition to the mentioned price relations between candles, there are also "Equal", "Greater than or equal", "Less than or equal", "Not equal" , and "Near" (about equal**). Be sure to use these relations, should your pattern need one. 

9. You can also view the thinkScript code that corresponds to your pattern by moving to the thinkScript tab.

10. Customize the display of the signals to be provided by the candlestick pattern: choose an icon and a color in the corresponding controls above the pattern chart.

11. Click Save. Your pattern will be added to both Available patterns and Displayed patterns lists. 

12. Once you've finished with your pattern, click OK so the system will start looking for your pattern on chart. 

13. You can also use your custom candlestick patterns as study filters in Stock Hacker. To do so, navigate to the Stock Hacker tab and click Add study filter. Click on the default study in the filter and replace it with your candlestick pattern, which you will find in the User Defined group. 

*For illustrative purposes only.

**Here, "About equal" and "Near" define a price relation where the difference between the absolute values of two chosen points does not exceed 5% of the mean candle range of the previous 20 candles. 

The Social Sentiment feature can be enabled in the Charts Settings dialog:

  1. Click the “gear” button  above the chart. The Chart Settings dialog will open.
  2. Go to the Equities tab.
  3. Activate the Show Social Sentiment checkbox and click OK. The Social Sentiment will be displayed on a lower subgraph.

Note that Social Sentiment is not available for some symbols. You can view a watchlist of all symbols for which it is available: to do so, choose Social Sentiment in the watchlist selector.

In Social Sentiment, the mentions are displayed as a stacked area which uses the same time interval and aggregation period as the chart itself (limited to daily and hourly aggregations in a standard mode). By default, there are three parts in this area: the bottom part represents the number of negative mentions of all divisions affiliated with the company, the middle part visualizes the positive mentions count, and the top part is reserved for the neutral ones. All of these values and the total number of mentions are displayed also in the status string. The area is accompanied with the Sentiment plot which visualizes the rate of approval of the company: it is calculated as the ratio of positive mentions count to the sum of positive and negative counts (neutral mentions are excluded from the calculation).

The stacked area is customizable: you can turn off and on some of its parts, change their colors, and also edit the list of divisions for which it will be plotted. To do so, right-click anywhere on the subgraph and choose Customize... or just double-click anywhere on the stacked area. In the dialog window, de-select components and/or company divisions that are of little importance to you at the moment; click OK. The stacked area will be updated according to your preferences. Note that the list of divisions can be also customized instantly from a menu that opens when you right-click anywhere on the Social Sentiment subgraph.

1. Symbol Selector and Other Header Controls

The first thing you do in Charts is specify the symbol for which the price plot will be displayed. To do so, type in the symbol name in the Symbol Selector box. You can also look through all the available symbols to pick the desirable one: click on the gray triangle and search through the categories in the dialog that pops up. In Charts, you can view and analyze price plots of any kind of symbols: stock, options, futures, and forex. Note: in addition to the Symbol Selector, the header contains other useful controls, such as Clipboard, symbol description, chart sharing, Edit Studies and Strategies, Chart Settings, Quick Time Frames, Style, Drawings, Studies, and Patterns.

2. Chart Time Frame

Once you pick up a symbol, you will see its price plot on the main subgraph. By default, the 1 year 1 day time frame is used (which means that the chart displays one year worh of data, candles aggregated on a daily basis). To change this time frame, сlick on the Time Frame button above the chart, next to the gear button, and specify the desirable aggregation period and time interval. You can also pick a time frame from your Favorites. To learn more about time frames, refer to the Chart Aggregation section. To learn how you can customize the list of your favorite time frames, refer to the Favorite Time Frames article.

3. Chart Type and Chart Mode

By default, the chart uses the Candle char type; however, you are free to change it to another chart type, e.g., Bar, Line, etc. To do so, click Style in the header, move your cursor over the Chart type menu item, and select the preferred chart type. Chart types  are characteristic of the price plot in the Standard mode, however, you may choose and advanced mode, e.g., Monkey Bars or Seasonality. More information on the chart modes and types can be found in the Chart Modes and Chart Types sections.

4. Volume and Lower Subgraphs

Below the main subgraph, you’ll find additional subgraphs. By default, the only visible additional subgraph is Volume, which displays the volume histogram and volume-based studies. When you add a study designed to be displayed on an individual subgraph (neither main, nor volume), e.g., ADX, a new subgraph will be added below the volume, such subgraphs are called Lower subgraphs. All subgraphs have the main area (where the price, volume, and study values are plotted), two axes (time axis and value axis), and a status string (a string above the main area, which displays important time, price, volume, and study values based on where your cursor is). The parameters of the axes can be customized in the corresponding tabs (Price Axis, Time Axis) of the Chart Settings menu. Note: this menu controls the representation of every minor feature in Charts, so we’ve dedicated an entire manual section to this menu.

5. Additional Controls

Below the lowest subgraph, there are additional controls:

  • Cursor type. This icon brings up the menu that will prompt you to select the desired cursor shape.
  • Right Expansion. This icon brings up a menu that will help you customize chart’s expansion area: an additional chart area that appears when required by a certain component (a study, a corporate action, or listed options to be displayed).
  • Scrollbar. Simply enough, it lets you scroll the time axis. A single click on either arrow will scroll your chart one candle (bar) to the left or to the right. 
  • Zoom In / Zoom Out. These icons help you set up the desirable scale. Note that you can also zoom in on a specified chart area simply by selecting it with the pointer (see Active Tool below) or scrolling up while holding the Ctrl button. You can also click Ctrl+ and Ctrl- to zoom in and zoom out.
  • Active Tool. By default, your active tool is the pointer (which enables you to zoom in on desirable areas by selecting them, activate and modify drawings, etc). This control, however, lets you choose another tool, e.g., a pan, which enables you to re-position your viewing area by dragging-and-dropping, or a Drawing tool.
  • Drawing Set Selector. This control will enable you to perform operations with your drawing sets.

6. Chart Grid

Like several other thinkorswim interfaces, Charts can be used in a grid, i.e., you can open multiple Charts instances in a single layout. Each instance is independent from others and displayed in an individual grid cell. To create a chart grid:

1. Click on the Grid button  above the header. The Grid menu will appear.

2. Hover your mouse across the layout editor to specify the configuration of your chart grid. It needs to be rectangular and its maximum size depends on your screen resolution.

3. Click when the desirable grid is highlighted. For example, doing so when a 3x3 grid is highlighted will display nine chart cells. You can use each chart cell the same way you would use the full-size interface, however, adding too many cells will optimize the display: the volume will be overlapped to the main subgraph, lower subgraphs will be turned off, axes will be hidden, etc. This might also affect visibility of studies and drawings.

4. If you need to maximize any of the cells, i.e., view a Charts instance in full size, click its Show actions button  and choose Maximize cell; alternatively, you can double-click the symbol description. Double-clicking the symbol description again will restore the original configuration.

5. You can save your grid for further use. To do so, click on the Grid button and choose Save grid as... in the menu. Specify the grid name and click Save. This will save all your charts in the grid with all studies, patterns, and drawing sets added to them. You can manage your saved grids in the same menu.