In Candlestickers rating system the High reliability patterns are mostly comprised of between 3 to 5 candles in a pattern. The algorythm in function Pattern() first test's for patterns comprised of 5 candles, then 4 ... down to 1. Patterns comprised of 2 or 3 candles have been detected quite often by "Candle Patterns" Custom Indicator. In Note 1 of the preamble to my program I stated that "While testing, the indicator has not encountered patterns comprised of 4 or 5 candles...".
You say "For instance I ran EUR/USD on 15 minute chart for an entire year looking only for High Reliability patterns, and it found 1 for an entire year. ONE. " Results do vary from broker to broker and from real and demo charts but I found the following on EURUSD,M15 during the last three weeks on Trading Server: UWC-Demo.com of Broker: United World Capital Ltd at www.uwcfx.com (in Inputs opposite variable "MaxBarsToScanForPatterns" set value to "55000" (or greater)).
2009.06.18 09:00 Medium Bullish Engulfing
2009.06.19 16:45 High Bearish Dark Cloud Cover
2009.06.23 10:45 High Bearish Dark Cloud Cover
2009.06.23 14:45 High Bearish Dark Cloud Cover (and the market climbed a further 130 traditional pips)
2009.06.24 03:45 Medium Bullish Harami
2009.06.25 09:45 High Bearish Dark Cloud Cover
2009.07.03 22:45 High Piercing Line
2009.07.10 20:15 High Bearish Dark Cloud Cover
As Steve Nison in his book "Japanes Candlestick Charting Techniques" pointed out "Candlestick charts are flexible, because candlestick charts can be used alone or in combination with other technical analysis techniques. A significant advantage attributed to candlestick charting techniques is that these techniques can be used in addition to, not instead of, other technical tools".
Some patterns are more suitable for certain instruments, the "FTSE" futures will be populated with lots of "Doji's" with only one or two yielding good results, yet a "Doji" with small legs appears on the "DJIA" and causes a stampede in the opposite direction to the current trend.
I tested the profitability of individual patterns without much success, however in combination of reversal patterns hitting a moving average then the picture looks rosier, also a "White Marubozu" or "Long White Candle" followed by a "Black Marubozu" or "Long Black Candle", independant of other indicators, is usually a good reversal sign, also single candle patterns like "Spinning Top's" and "High Wave's".
The values for Candle comparisons "iVeryNear" and "iVerySmallBody" were estimated and after scrutiny are working. The patterns are heavily reliant on sizes for the candle body and shadows (tails) and by inspection represent the different sizes "Marubozu", "Candle" and "Small Candle".
Thanks so much for the thoughtful and informative response.
First of all let me apologize, when I said it only found one in a year that was misleading, what actually happened was there was only one trade made in a year, which was partly my fault as I found out afterwards.
So to set the record straight, what I did was to set a print function to print out the candle pattern to the journal, then I went a scan for all patterns for both bull and bear.
For EUR/USD for the time period of 7/1/2008 - 7/1/2009 there were just over 7600 buy/sell signals thats an average of over 25 signals a day if my math is right, which is awesome for sure. If we could isolate just 5 or 6 of those per day that could generate 25 pips each thats over 3600 pips a month. Thats a pretty good living right there.
HR signals did not fair as well, with only 96 signals total both bull and bear for the year.
So I guess the answer will need to be as you described, adding other indicators. I was really hoping for this to be a price action EA that would use only candlesticks and maybe some pivots or fibo levels to create a true live action setting.
Most every indicator out there lags to some degree because they are made up of mostly moving averages. The only true non-lagging indicator is price itself. If we can look at price alone and make a determination by what we see in the candles we can be on the leading side of nearly every move we make in the market. Of course not all will be winners, but by working with price alone, you're at the beginning of the move, not waiting till some indicator tells you there's movement, and oh by the way, it was 3 bars ago.
Anyway, this was the reason I chose Candle Patterns to work with because it's the only thing I've seen that actually works directly with price in a meaningful way. Yes it's an indicator, but it tells us directly whats happening with price, not an average of price.
Anyway, thanks for the help Teddy, I appreciate you taking the time, if I discover the Holy Grail I'll send you 20% :)
Have a good one!