Candlestick Investing

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Candlestick Investing1 comment

Candlestick Investing

When it comes to investing in stocks, forex or options trading nothing beats candlestick patterns.When you become proficient atcandlestick investingand recognizing these simple yet advanced

patterns you learn to identify clear and concise areas for entry and exit that could not be identified

otherwise.

You can start with just the Top 10 Candlestick Patterns, learn those, learn to recognize them and

begin to understand the underlying meaning behind the pattern. Dont look at the pattern as a

picture but rather look to what the pattern means and why it means what it means. Only then will

you develop expert insight.

When it comes to candlestick investingthere are a few hard fast rules you can learn right now. First,

and definitely one of the most important candlesticks, is the Doji candlestick. Look for Dojis at the

top of a trend and you will often find the end of an uptrend.

Heres a shot of an up-trending stock where after a long move up doji patterns start to appear. The

key is that price had a nice run up THEN the doji appeared signaling the end of the trend.

There is one problem with the image above and that is price did not reverse. It did hesitate and pull

back a bit, but did not reverse. Did the doji fail us? No we just didnt find the right SET -UP. Lets take

a look at another set-up using the same doji pattern. Remember candlestick investingrequires a

thorough understanding of confluence. This is where we use multiple tools that point to the same

probability. Like this.

The first PROPER step in identifying a bearish reversal worth paying attention to identify either a

bearish prevailing trend or set a proper trigger. Let the doji NOTIFY you but dont trade on that

alone.Take a look
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Candlestick Investing High Odds TradingNotice here we are down trending and on strength we get a doji. Here is a more ideal place for

bearish entry. As you can see this would have been a nice trade. Applying candlestick investing

tricks to the previous chart we would have let the doji identify the potential reversal and then set aproper trigger like this

As you can seethere are many ways to profit from candlestick investing. the key is understanding what truly is a

high odds trade set-up and what is not. Use the form above to download and learn these patterns for

free.

Candlestick Pattern and EminisNo comments

Candlestick Patterns and EminisBy looking at a historical price chart, it is obvious that overall market movements are highly

significant for the value of your holdings over a particular time period. This is particularly true for the

Standard & Poors 500. Certain candlestick patterns, however, have been particularly useful in

trading this index via S&P e-minis. You can use candlestick patterns and eministogether, and an
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individual investor can ascertain a sense of market sentiment in order to optimize entry and exit

points for profitable position undertaking.

Candlestick Patterns and eminisUsing the doji with S&Pminis

What appears to be particularly successful in the S&P e-minis market is the use of what is commonly

referred to as doji candlestick formations. A doji, in essence, resembles a cross, a plus sign, or an

inverted cross. Technical candlestick analysis attempts to recognize certain chart patterns over a

certain time period to predict the probable future price movements of a particular investment. The

various types of doji formations that can occur represent particularly successful patterns for

successfully trading the S&P e-minis market. For this market, many technical analysts feel that thedoji is the most important type of candlestick formation to recognize, as it can be shown to offer a

signal of the beginning of a minor, intermediate, or major trend reversal. The inability to recognize

these patterns for the S&P e-minis market could result in an individual investor being on the wrong

side of a position.

Candlestick Patterns and EminisNot all dojis are created equalGenerally, there are four types of dojis: common, dragonfly, gravestone, and long legged. Each one

of these patterns will appear when the opening and closing prices are the same, such that there is

no candlestick body but simply wicks. The distinguishing characteristics of each doji type are their

visual appearance. In the S&P e-minis market, the formation of doji candlestick patterns is easily

recognizable. Candlestick patterns and eminis work extremely well together.

They will appear at times when there has been a previous significant movement in one direction or

another. Their appearance represents a strong indication that the market is set to pause in the

previous movement of the underlying long-term trend. After the appearance of a doji candlestick

formation, more likely than not, a reversal in price action can be observed. The larger the wick is in

this particular pattern, the more significant the signal for a price reversal is viewed by the market

participants.
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Candlestick Patterns and eminis Capitalizing upon market reversals

The appearance of these types of candlestick patterns do not guarantee that a reversal in price

action will occur, but they have been shown to be at least a highly probabilistic initial indicator of

possible reversal action. As a result, when they are used with other technical analysis tools and

indicators, they can be greatly beneficial in giving individual investors the opportunity to recognize

optimal points of entry for the undertaking of trading positions. Any tool and indicator is only as good

as the expertise and experience of the individual utilizing them. Candlestick patterns and eminis, the

fact that these patterns have been used with great success by certain individuals for centuries

warrant that they should be investigated and mastered by anyone who wants to improve his or her

S&P e-mini investment results.

Candlestick patterns and eminisare a common marriage among top futures traders. Where you

have volume you have candlestick patterns that print highly predictable trade set-ups. Use these to

your advantage for larger low risk profits.

Candlestick patterns have become the single most accurate means of identifying the ever

obscure current state of price action . By virtue of open, close, high, low and those relative

to the previous bar candlestick charts are the best way for a trader to identify excellent

trade opportunities. Here is an example of the amount of data that can be gleaned from just

one spot in time on candlestick charts
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Candlestick PatternsRealize that a candlestick pattern is simply a means of reading data on the chart. Whether

you trade forex, stocks, options or futures it is a superior tool for technical analysis. Once

you become familiar with the basic candlestick patternsyou will quickly assimilate their

meaning and easily interpret them.

The patterns are basically intuitive and the learning curve is small. There comes a point

where you will recognize market sentiment without even identifying a specific candlestick
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pattern. No matter what system style or technique you may implement the fact is you will be

that much more effective by making candlestick charts your tool of choice.

The alternatives or archaic to say the least, and downright ugly once you get used to using

Japanese candlesticks. Candlestick charts are the most widely used for of charting for good

reason. With a little practice and help, it is actually the most intuitive process forunderstanding current and future price action.

Using candlestick patterns always increases accuracy. The reason to increase accuracy is

to increase profits. If you can get more accurate you can become more profitable.

Heres a thought What if you could glance at price action and get a feel for price direction

instantly?

The fundamental difference between Japanese candlestick patterns and any other form of

charting is simply that the candlesticks allow for immediate recognition of price direction and

strength if only for the short term.

If youre looking at a daily chart this can be more long term but relative to the time frame

youre monitoring the assessment is generally short term based. We can look for additional

patterns and other technical analysis to keep us in a more long term trading scenario.

Candlestick PatternsCandlestick patterns are far and away the most intuitive, accurate means of determining

price strength in any direction. Whether you trade stocks, options, forex or futures

candlestick patterns should be the cornerstone of your toolbox for reading and determining

any market forecast.

Amazingly heres a great link aboutcandlestick patternsgreat content for learning the

basics of the candlestick patterns. If you want to learn more advanced stuff download my

manual!

Candlestick Patterns and Pivots

Candlestick pattern trading techniques are used by astute traders and investors in every type of

market. They represent tools that allow individuals to recognize opportunities presented more

efficiently than a simple examination of the data as represented by a historical bar chart.

The most professional and successful investors recognize that candlesticks offer more graphic

presentations to allow for a rapid response to market developments.
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Candlestick Patterns and Pivots The value of pivotpointsThe use of candlestick trading techniques in conjunction with other technical analysis indicators,

such as pivot points, only helps to improve investing results. Pivot points are judiciously used by

traders in order to identify strategic support the resistance levels. Pivot points represent importantsupport and resistance trading areas, where the likelihood of a reversal in price movement is

greatest, offering the opportunity for an investor to take on a position with a high probability of

success.

Pivot points have traditionally been used both when trading a range, or looking for a breakout. When

used for range trading, pivot points identify levels where reversals will occur. Breakout traders, on

the other hand, recognize these key levels as the point where trading activity needs to penetrate in

order to signal a true breakout has occurred.

Candlestick Patterns and Pivots Using pivot points to calculate entries and exits

Upon the identification of the primary, secondary, and tertiary support and resistance levels through

pivot point calculations, one has determined the various support and resistance levels for which an

investor should consider trade entry or exit.

Only upon prices reaching a certain pivot point level should the individual trader determine the

proper position to undertake, regardless if it is long or short. Overall, trading below a pivot point

level is considered a bearish indicator, while trading above is considered bullish.

Candlestick Patterns and Pivots Including pivot points with yourcandlestick analysisBoth Candlestick Patterns and Pivots, in and of themselves, have been used successfully by

investors for a very long time. When used in conjunction, they complement each other and offer the

astute trader far improved results. Developing a trading plan based upon candlesticks alone is adifficult process and offers the possibility of unsuccessful investments. As such, the more successful

traders use candlestick pattern formations in conjunction with other techniques, such as pivot points,

in order to make trading decisions.

When certain candlestick formations have occurred and their indication can be confirmed by a

subsequent pivot point analysis, (Candlestick Patterns and Pivots) the probability of a successful

trade greatly increases. How an individual decides to use these two techniques in a strategy plan

you develop will be greatly dependent upon the type of trading you envision undertaking, especially

in the context of short-term versus long-term positions.Success in any endeavor is highly contingent

upon the proper preparation of the participant. Through careful research and study of historical data,

you can clearly ascertain that candlestick patterns and pivot point analysis can successfully produceprofitable trading opportunities.

When it comes toCandlestick Patterns and Pivotslook to patterns like a morning star doji passing

thru a daily or weekly pivot for a very high odds l;ow risk trade. Look for overextended bullish price

action and a nice doji at pivot resistance far a nice entry short and a potential large move down your

ability to combine the right Candlestick Patterns and Pivots together at the right time on the chart is
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very powerful. Looking to build a good trading strategy start with Candlestick Patterns and Pivots

and you will not be wasting your time I promise.

Candlestick StarThere are six basic candlestick starpatterns that a trader needs to be aware of. These are Evening

Doji Star, Evening Star, Morning Doji Star, Morning Star, Shooting Star and Stars in general. Each

one has its own definition and means something different than its brother.

Pay Attention because the candlestick star is your friend!

Evening star doji

Candlestick Star Evening Doji Star This usually appears in a three candle pattern. It signals areversal of trend. It shows that the second candle starts higher than the previous days close and

trends up but drops back down, before closing, to the days opening price.

Evening star

Candlestick Star Evening Star The first two candles are long, white bodies followed by a star.

The star is the first hint of a top. The third candle confirms a top and completes the three-candle

pattern of the evening star. The third candle is a black body that moves sharply into the first periods

white real body. An evening star should have a gap between the first and second bodies and then

another gap between the second and third.

Morning star doji

Candlestick Star Morning Doji Star This is a three candle bullish reversal pattern. The first candle

is a long black candle followed by a gap and doji where the market opened lower than the previous
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days close. The final candle is a white body candle that closes above the mid point of the first

candle.

Morning star

Candlestick Star Morning Star It is comprised of a tall, black body followed by a small body that

gaps lower. The third day is a white body that moves well within the first candles black body. This

pattern is a signal that the bulls have taken control. This indicates that the bears are in control with

the downward trend. When the morning star appears, it means the sellers or bears are losing the

battle to continue to drive the price lower.

Shooting star

Candlestick Star Shooting Star This is a one day or one candle pattern that usually appears in an

upward trend. It opens higher, trades higher and then closes close to the open. This pattern is also

called the Inverted Hammer. As with all stars, the color of the body is not important. A gap for this

star is not always necessary.

Stars

Stars A candle that gaps away from the previous candlestick. The previous candle can be either

white or black. Depending on the color of the previous candle the star candle gaps up or down and

gives the appearance of being isolated from the previous candle.
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Continuation Candlestick PatternsThere are basically 12 types of Continuation Candlestick Patterns.

Upside Tasuki

Continuation Candlestick Patterns#1 Upside Tasuki Gap A white candle after it gaps up from a

prior white candles (Bullish). If this gap is not filled, it means the bullish trend has maintained control

and if it is filled it means the bullish trend has likely reached the end.

Downside Tasuki

Continuation Candlestick Patterns #2 Downside Tasuki Gap This is found during a downward

trend. A black candle will form after it gaps down from its previous black candle. If the gap does not

fill, it means the bears have maintained and resumed control and if the gap is filled it means the

bearish trend has come to a likely end.

On Neck Line

Continuation Candlestick Patterns #3 On Neck Line This is a bearish pattern that indicates the

pattern does not quite reach the previous days close it only reaches its low. These occur during a

down tend.
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In Neck Line

Continuation Candlestick Patterns #4 In Neck Line This is exactly like the on neck line except for

the fact that is closes at or slightly above the previous days close. This does not necessarily signal a

change in trend and it is recommended that confirmation be made before making decisions based

on this candlestick.

Thrusting

Continuation Candlestick Patterns #5 Thrusting Another pattern that is exactly like the on neck

line except that it closes very close but slightly below the mid point of the previous days real body.

The body of the thrusting candle is usually bigger than the bodies of the on neck and in neck lines.

Falling Three

Continuation Candlestick Patterns #6 Falling Three Method A five candle signal that uses one

large black candle, three small black or white candles, and another large black candle. The three

small candles are usually white given the fact that the beginning candle is black. It is the upward

trend of the small candles that are important and their placement.
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Rising Three

Continuation Candlestick Patterns #7 Rising Three Method This is the opposite of the Falling

Three Method. It contains five candles in all beginning and ending with large white candles. The

three small bodied candles progressively get lower and lower on the body of the first candle. It

signifies a resting point for the market.

Side by Side White Lines

Continuation Candlestick Patterns #8 Side By Side White Lines This occurs during an up trend

and the first white candle usually gaps considerably above the previous white candle. The second

white candle opens at the previous days open and closes slightly below the previous days close. It

signifies a pause or stalemate in the activity trend.

Separating Lines

Continuation Candlestick Patterns #9 Separating Lines This pattern is defined as lines that move

in opposite directions. It appears when the market is experiencing an upward trend and suddenly

there is a pullback and the price drops. The following session opens the same as it did the previous

day and continues on an upward trend.
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Mat Hold

Continuation Candlestick Patterns #10 Mat Hold Another five candle pattern that occurs when

the third day body dips into the body of the first day after an up gap on the second day. It is a

stronger continuation pattern than your Rising Three Method however, the price remains in the

upper range of the white candle.

Three line strike

Continuation Candlestick Patterns #11 Three Line Strike This signal is also called the Fooling

Three Soldiers. It is a four line pattern that appears during a confirmed trend and signifies a resting

period for the market. It ends as a three white soldier pattern.

Upside Gap 3

Continuation Candlestick Patterns #12 Upside Gap Three Method This is another three candle

pattern similar to the Upside Tasuki gap and occurring in a strong trend. If the trend is an upward

trend it appears between two white candles. The final day opens in the top white body and closes in

the lower white body. This, the final candle, fills the gap between the two white bodies.
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Continuation Candlestick Patterns ConclusionWhen it comes toContinuation Candlestick Patternsthese are all you need to know. Continuation

Candlestick Patterns can be your best friend. Some of the lowest risk trades you will find will bt he

result of observing a trend as it fails to fail but instead continues into a wave 2 or 3 impulse wave

and these Continuation Candlestick Patterns will prove to be your key to pinpointing these profitable

set-ups.

Forex Candlesticks

The use of Japanese candlesticks for trading stocks and commodities is quite common. In the

foreign exchange market, however, many investors wrongly believe that as this market is, in

essence, a 24 hour interbank trading market, one cannot truly determine opening and closing prices

in order to produce candlestick charts. As such, candlesticks can actually become a hidden

advantage for an investor with the proper perspective.

The 24 market is irrelevant to Forex candlesticksThe fact that currencies are traded around-the-clock is irrelevant. For an FX investor who wants to

use candlesticks, one would simply need to create an artificial market session relevant to the

currency pairs under consideration for trading purposes. The data is available and the technology

exists such that an individual can carve out the relevant time period necessary in order to produce

opening, high, low, and closing prices. Based on this time period, an investor will be able to produce

candlestick charts and recognize the patterns and signals that are generated within the created

market.

In fact, because of this ability, the investor is able to create a market that is truly relevant to the

currencies. As a result, the trader can produce a session based upon the overlapping activity of the

two currencies when both markets are open in the respective countries involved. It is at this time the

greatest activity is occurring and consequently, the most relevant price data information for

investment decisions should be taken under consideration. Trading in Europe as regards to the

Japanese yen and American dollar exchange rates, which would be very light in the first place,

would also mask the true market trends.Forex candlesticksare just as relevant as any stock price

chart. You can achieve the same accuracy and reliability as you do with stocks.
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Using the Forex candlesticks pattern to identify price activityOnce the relevant market trading periods are isolated and the charts are produced, the candlestick

patterns recognized will be more relevant in order for the trader to identify the forces in place driving

price activity. The use of candlestick charts is an extremely popular technique used in most markets

as a forecasting tool. Most patterns are easily recognizable and can be learned by anyone in a

relatively short period of time. The individual patterns and formations that arise represent the

psychological character of the market. They reflect upon the emotions of the traders and have been

shown to clearly be able to predict the probability of whether prices will rise, fall, or reverse their

direction.

Candlesticks do give Forex traders an edge

Given the misconceptions concerning the foreign exchange market, forex candlesticksas an

indicator are underutilized, and therefore, offer astute individuals the possibility to have an

advantage over counterparts concerning the recognition of pending bearish and bullish price

movements.

As with all analytical indicators, the effectiveness of the use of forex candlesticks in the investmentactivity of foreign exchange markets will be dependent upon the experience and skills of the

individual trader. They represent a powerful tool for successful investing in foreign exchange,

especially when used in conjunction with other investment research techniques. For over 300 years,

investors have used candlestick chart formations for their benefit. There is no reason why a foreign

exchange trader cannot do the same. In fact, given the misconceptions and myths commonly

associated with the Forex markets, candlesticks actually do represent a hidden weapon.

Japanese CandlesticksIf you want to become a successful trader you need to learn the art of applying Japanese

candlesticks to your trades. When you combine individual Japanese candlestickstogether you get

what are commonly called candlestick patterns. These patterns provide clues as to the direction

price might take next.

When it comes to making attempts to predict where price may move to next we need as much

information about price as we can possibly get. We need pertinent information that is important to

right now and in the future. This is where Japanese candlesticks combine to form predictable

patterns that foretell what is likely to happen at least for the short term.

For example. Here we have a series of candlesticks that form a morning star doji. Without getting

into any technical indicators that may support a bullish forecast lets look at the Japanese

candlesticks together and the morning star doji pattern that they form. This pattern consists of a

bearish move down, followed by a doji star indicating an end of the prevailing trend down, then a

bullish candlestick up that penetrates to at least the half way point of the candlestick prior to the doji

star

Japanese Candlesticks Example


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Japanese Candlesticks Are SuperiorThis is whyJapanese candlesticksare superior to any other form of charting for stocks forex or any

instrument. You initially see the bearish strength. Then you get a doji star that tells you that the

bearish trend is weakening. The very next day price reverses and rallys past at least the 50% mark

of the first candlestick in the pattern.

This is just one example of why Japanese candlesticks are the first choice among the top traders in

the world. When you really get into the advanced patterns you will be amazed at the accuracy

provided be this superior analysis. To get started learning at least the most useful Japanese

candlestick patterns visit my page titles Top 10 Candlestick Patterns here you can start on the

path to understanding the meaning behind the patterns and how they work.

Always keep in mind that Japanese Candlesticks are going to be more valuable to you once youunderstand them intuitively. The good news is that these patterns are intuitive from the start so the

learning curve is brief. The key is the underlying meaning in the pattern, understand the meaning not

just the pattern and you are off to the races.

Top 10 Candlestick PatternsNo comments

Top 10 Candlestick PatternsThere are hundreds, if not thousands, of candlestick patterns that have been identified and used by

investors to enhance trading performance. Candlestick indicators are best used in conjunction with

other analytical tools in order to produce optimum performance. Here are the top 10 candlestick

patterns which should be considered by all traders for their investment activities are the following:

The top 10 candlestick patternsare the patterns that are found most often and have proven to be the

mot reliable.

The top 10 candlestick patterns #1 Dark Cloud Cover: This is a two-day formation

which arises when the candlestick formed on the first day has a long white body followed by anopposite colored candlestick, which opened at a new high only to close below is the midpoint of the

previous days trading. This pattern is considered a bearish reversal signal.
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The top 10 candlestick patterns #2 Doji: When the opening and closing price are

essentially the same, the candlestick formed resembles a plus sign, cross, or inverted cross and is

referred to as Doji. It represents indecision on the part of the market, and is interpreted by traders

that a turning point is imminent.

The top 10 candlestick patterns #3 Engulfing Pattern: This is a two-day pattern

where the first days body is smaller than the subsequent candlestick, and they are both of opposite

colors. This pattern is considered bearish when it appears at the end of an uptrend and bullish when

it occurs in a down trending market.

The top 10 candlestick patterns #4 Evening Star: Commonly regarded as a bearish

reversal pattern, this three-day pattern consists of a long white body, followed by a smaller gap up

candlestick, with the third and final day closing below the midpoint of the first day.

As you can see the top 10 candlestick patterns are easy to recognize and understand. Try and look

at the patterns and understand them as opposed to memorizing them. Meaning try to understand

why price is likely to follow the pattern. If you want a fasttrack into candlestick pattern trading, study

theses top 10 candlestick patterns and you will be well on your way to applying the most effective

candlestick patterns to your trading.

For example the morning star doji price is coming down Price gaps down a little and then

demonstrates a slowing of this falling trend The next day it gaps up and shows strngth. This is

bullish

Top 10 Candlestick Patterns

The top 10 candlestick patterns #5Hammer: When trading occurs significantly belowthe open, but ends well above the low and closes as its high, the candlestick formed has only one

tail below its body. When this formation occurs during a downtrend, it often signals a reversal.
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The top 10 candlestick patterns #6 Hanging Man: Identical to the Hammer, this

candlestick pattern occurs during an uptrend, and signals a continuation of the price movement.

The top 10 candlestick patterns #7 Harami: This is a simple two day candlestick

pattern that has a relatively small body on the second day that is completely surpassed on both

sides by the previous days candlestick and is always of the opposite color. It usually occurs during a

minor correction in a bear or bull market and signals that this temporary uptrend or downtrend is

reaching an end, and the underlying trend will continue. It is especially considered a strong indicator

when it appears together with low trading volume.

The top 10 candlestick patterns #8 Morning Star: This formation is considered a

three day bullish reversal pattern that consists of a long bodied black first day, a short gap down

second day, followed by a third long white bodied candle, which closes above the midpoint of the

first day.

The top 10 candlestick patterns #9

Piercing Line: This is a two-day formationconsidered to be a bullish reversal. The first is a continuation of a downtrend with a long black

body. The second day opens at a new low, but closes above the midpoint of the previous days

trading.

The top 10 candlestick patterns #10 Shooting Star: The opposite of the Hammer,

this is a one-day formation and occurs in an uptrend. Trading opens higher and trades much higher

but prices end near the low. This pattern is viewed as a bearish reversal.

So when it comes to understanding and applying high probability candlestick patterns to your trades,

be sure and start with these top 10 candlestick patters ad they are the big money makers and the

most reliable of all the patterns.
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Top 5 Most Consistent CandlestickPatternsNo comments

Top 5 Most Consistent Candlestick Patterns

Some say the power of candlesticks partially stems from a self-fulfilling prophecy. The tremendous

volume of traders who utilize candlestick charts translate into predictable market movements based

upon certain formations. The truth is however thats a bunch of BS the reason they work is because

they pinpoint the underlying emotions of the market as a whole.

The following top 5 five candlestick formations are the most popular among technical analysts, and,

therefore, have the highest probability of producing the most reliable and consistent results.

Top 5 Most Consistent Candlestick PatternsWhen is comes to the Top 5 Most Consistent Candlestick Patternsthese take the cake

Doji Formations

Doji formations, such as dragonfly and tombstone, are widely regarded as strong indicators of a

probable reverse. They both consist of a single horizontal line indicating that both the closing and

opening prices were identical. As a result, there is no body, and the wick is either rising for a

gravestone Doji or falling for a dragonfly Doji. The gravestone pattern implies depleted bullish

sentiment and, consequently, a downward movement will subsequently appear. A dragonfly patternis naturally an opposite bullish type of signal.

Piercing and Cloud Cover Formations

Both of these formations are basically mirror images of each other and represent reversal signal

patterns. The piercing pattern consists of a long black candlestick followed by a long white one that

closes over halfway up the first candlestick. The implication is that market participants, who sold on

the first day in anticipation of a continuing downward movement, had to cover their shorts, and, as a
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result, prices rose and will likely continue in that direction. The cloud cover pattern, on the other

hand, is a bearish indicator for similar reasons and is formed by a long white candlestick followed by

a long black one that closes over halfway below the first candlestick.

Engulfing Formations

This pattern and the doji candlestick are likely top on the list of the Top 5 Most Consistent

Candlestick Patterns. The bullish engulfing formation consists of a short blackbody candlestick

followed by a taller white bodied candlestick that begins below and ends above the previous days

trading range.This means prices on the second day opened lower than the first and closed higher.

This is a highly bullish formation and indicates a long position should be considered.

A bearish engulfing pattern would be the opposite with a short white bodied candlestick followed by

a longer black bodied candlestick. Here the signal is bearish and consideration should be made for

selling short.

Hammer and Shooting Star Formations

These patterns are basically short candles with one long wick. For the hammer, the wick points

downwards, whereas for the shooting star, it points upwards. The hammer is considered bullish inthat price action clearly was able to reverse all selling sentiment, while the shooting star would be

viewed as bearish for a similar reasoning logic.

Harami Formations

A bullish Harami consists of a long black candlestick with a close near the low, followed on the next

day by a short white candlestick. This indicator is interpreted as signaling that selling pressure

dominated the market on the first day, but was halted on the second, suggesting that upward

movement in prices will continue. A bearish Harami has the exact opposite structure and

interpretation.

Top 5 Most Consistent Candlestick Patterns

When it comes to what can be relied on almost all by itself without any other technical indicators it is

definitely these 5 patterns. When it comes to theTop 5 Most Consistent Candlestick Patternsyou

can almost always count on these candlestick patterns.

Trade StocksNo comments

Trade StocksThe keys to success in trading stocks

Trading stocks is a new beast. There was once a time where one could take his retirement and

place a few bucks here and there in some good ole blue chip stocks and in 10 years WALA he

would have a million dollars in the bank. Wasnt hard for many years. You had a good job, you self

directed your IRA and BAMO you were independently wealthy in a decade.

If you could trade stocksyou could be rich. I knew a boat load of dummies that made a fortune

trading stocks. Things are different now. Different than they ever have been before. Gone are the
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days where you could trade stocks with a handful of blue chips, leave your money in for the long

haul and make a killing.

LONG GONE in fact. Luck is no longer a solid strategy when you trade stocks.

Gone are the days of long term BUY AND HOLD!

Trade Stocks With Candlestick PatternsIf you are going to trade stocks in todays stock market, whether its options or stocks alone, youneed a solid strategy that includes signals and trigger entries, multiple time frames and a few solid

indicators.

Lets get into it. This is just enough information to give you a solid understanding of whats required

and enough to get you into trouble trading stocks, so make sure you use this information for

educational purposes only, more specifically on a paper trading account.

lets define the difference between a signal and a trigger because this is a critical component to a

solid strategy.

A signal is an area on a chart where you have identified a red flag. A place where you have said

when price reaches this point I should pay attention.The key is PAY ATTENTION and NOT to enter a trade. The trigger is where you enter. You have

received a solid signal, you have identified your trigger, and then and ONLY THEN, do you enter the

trade.

Lets take a look. In the diagram below my signal was price hitting the black resistance line. My

trigger was the low of the first candlestick in the swing high as indicated below.


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Notice that it is possible to get a signal and then not get a trigger. In this case our trigger was set-up

so that if the trigger hit it would confirm the new direction. If your going to trade stocks with a high %

of success you need to clearly identify what represents a signal and what represents a trigger.

In this way you will be able to improve your system over time. Without clear and precise entry and

exit rules you will have nothing to improve and modify in your attempt to attain higher returns.

Formulate a plan before you start to trade stocks and you will have a much greater chance of

succeeding. You can use the form above to enhance your stock trading plan and learn.

Heres a plan you can use to start with. A plan you can change and adapt to suite your style and risk

tolerance.

Also keep in mind that a trigger is a very personal thing. We all may share a signal but a trigger has

everything to do with how much risk your putting on the table.

We can take the same trade and your trigger may be a bit different than mine. Your trigger may be

the close of the candlestick as indicated above OR it may be when the next candlestick closes below

that candlestick.

The give and take is two fold.Trade Stocks with Candlestick PatternsOne is your entry relative to your stop A direct reflection of the risk you have in the trade, and the

other is the move you miss by waiting for more confirmation.

Then of course once the move is in full force its harder to get a good fill and the spread between the

bid and ask is accelerated and therefore you dont make as much money.

So when you trade stocks this stuff is critical in your signal and trigger decision process.

When youtrade stocksyou need to consider first your entry relative to your stop this is directly

related to what you will call your trigger.

Fore example
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If we said that our signal was the lower black support line, we could say that the green line is the

trigger. The green line represents the high of the first candlestick to touch the black line. The

candlestick is indicated by the red arrow. So we could put our stop at the RED LINE and our

TRIGGER entry is the green line. The difference between the green line and the red line is our risk.

Now take a look at the same set-up from a different perspective / trigger. Same signal different

trigger.

In this case we use the same signal indicated by the red circle. Right when price hits support we say

to ourselves OK, this might be a trade. In this case it takes 5 days to make it to our trigger which is

the previous swing high resistance. Once price penetrates this level we will have our trigger. This is

how you trade stocks.The beauty of this trade trigger is that once price penetrates this AREA this line becomes support

immediately. If that support line is broken the trade is no longer valid and a stop equal to or slightly

lower than this area is appropriate for a stop resulting in MINIMAL loss in this trade.

Trade stocks like this and prosper. These are the beginnings to long term wealth in trading stocks.

Trade stocks conclusion; when it comes to trading stocks you just need some rules to follow, these

rules should include a close look at swing structure and always consider candlestick patterns.

Volatility and Candlestick PatternsNo comments


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Volatility and Candlestick PatternsWhere there is volatility, there are candlestick patterns.

Whereas volatility can be unnerving for your portfolio, it is precisely these price fluctuations that

present profit opportunities. With candlestick patterns, you can accurately assess the movements in

the market, giving you profitable entries and exits.

Movements predict profits

The inherent volatility that exists in trading markets gives investors the opportunity to produce

trading returns. Volatility and candlestick patternsgo hand in hand, a volatile market createsopportunities with every sharp movement. What separates the professionals from the amateurs, in

terms of investment success, are the tools that are utilized in order to produce the returns desired.

The direction of movement is irrelevant, as an investor can profit from rising or falling prices, by

either going long or short. The recognition of the meaning of candlestick indicators will allow the

successful navigation of volatile markets.

The reason this is true is that these techniques are centuries old and have been used by the most

successful traders and investors in every type of market. Volatile markets simply represent

increased opportunities as the price movement changes are greater. The rationale behind

candlestick signals holds that prices in any market are greatly dependent on the psychology and

emotional state of mind of those involved in the market. These emotions are at their highest point

during volatile situations, and, as a result, candlestick analysis becomes even more significant.

Volatility and Candlestick Patterns EmotionsThe attraction of candlestick signals to the investor lies in the fact that these indicators are relatively

easy to recognize and have been proven that when properly utilized, they are an invaluable tool in

determining how and when to undertake a position in any type of market. Scores of patterns can be


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distinguished and have been used as extremely accurate tools by some of the most successful

market traders to determine the psychological and emotional sentiment within a market, and to

complement other techniques in order to develop strategies producing successful results.

Few, if any, investors who based their decisions upon technical analysis tools did not include

candlestick formation patterns into consideration before placing orders into the market. As volatile

markets reflect upon the strong emotional character of the traders during this time, and candlestick

patterns by their design measure market sentiment and emotion, they become particularly important

to successfully trade volatile markets.

Volatility and Candlestick Patterns The Keys to Price MovementVolatility and candlestick patterns and their keys to success in their utilization for trading purposes, is

to be able to properly recognize individual pattern formations and understand how they reflect upon

trading activity. Once this has been accomplished, trades can be placed that have a high probability

of successful results because optimum points of entry and exit have been identified.

Candlestick chart analysis is a proven technique for investment success, even in volatile markets. It

is well worth the consideration of any individual wishing to produce profitable results by trading.Used in conjunction with other tools and signals, they can only help improve the returns of

investment activity.

Keep in mind that volatility literally refers to movement. Boiling water is volatile water, while cool

water is not. When it comes tovolatility and candlestick patternsthis refers to a market that is nicely

moving and printing highly predictable candlestick patterns.

What Are Candlestick PatternsNo comments

What Are Candlestick Patterns?
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What are candlestick patterns? Candlestick chart patterns offer independent

investors and financial institutions a way to look at price fluctuations from a unique

perspective. These charts are most commonly used for day trading stocks,

commodities, and currency (forex). However, they can actually be used effectively by

any investor in any market. A specific set of well-known candlestick patterns reveal

overall market sentiment at any given time. They can also indicate the future direction of

trading over the short term.

A daily chart that displays candlesticks can incorporate other traditional indicators such

as moving averages and Bollinger bands. Using candlesticks rather than just a daily

average or closing price can give you a better feel for the direction or flow of the market.

Thats because intraday fluctuations are revealed within a wider range of longer term

data. This additional information can make a significant difference in your ability to make

smart trading decisions. So if your wondering just what are candlestick patternsthe

truest and simplest answer is they are the nest way for you to see what price might do

next.What are candlestick patterns Chart Basics

The candlestick chart gets its name from the vertical rectangles featured on the

diagram. They look like multiple candles in a row. Each stick represents a specific time

period of trading. Typically, this is a whole day per candle. However, sticks can

represent any relevant time span (5 minutes or 1 hour for example) as long as they are

consistent throughout the chart and appropriately labeled for the end user.

White candles represent a day when the closing price was higher than the opening

price. Black candles represent the opposite a day when the price ended lower than

when it started trading. The main body of the candlestick shows the range of trading

between the opening and closing prices.Each candle may or may not have a shadow. This is depicted by a vertical line

extending above or below the ends of the candle itself and is sometimes referred to as

the wick. The shadow gives additional information about the extent of trading

throughout the days session. It represents a price range where the stock traded during

the day that was outside the range between the opening and closing prices.

Although important, the shadow tends to hold less significance than the main body of

the candle. You should take both into account to achieve a reliable interpretation of

what is actually happening in the market.What are candlestick patterns Pattern Basics

If you are at the point where you are asking what are candlestick patterns then a good

place to start is with the top 10 candlestick patterns.

Patterns are created by the makeup of individual candles and the differences (or

similarity) in multiple sticks in succession. These give you important clues about how

the majority of relevant investors feel toward that particular investment vehicle. Prices

tend to follow the opinions of the crowd. These sentiments can change drastically over a

short period as relevant news is released. Candlestick chart patterns are a graphical
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indication of investor sentiment and the publicly known information about the investment

over a given time frame.

Of course, not everyone receives news at the same time or digests it at the same rate.

As more and more traders incorporate available information into their decision making

process, this will be reflected in the chart as they buy or sell. If you can read the

patterns in the chart, you will have a good idea of which direction the price is about to

go.

Correct interpretation of candlestick charts depends on:

The size and shape of the individual candles within the relevant time span

The time frame and type of trading involved

The current price trend indicated in the chart

The distinctive pattern created by multiple candles in a row

The historical significance of those patterns in forecasting price movements

accurately

The ability to recognize a given pattern within the chartWhat are candlestick patterns

Fortunately, there arent too many candlestick patterns you have to memorize as a

beginner to effectively use this type of chart. Start with these 12:

Evening Star Abandoned Baby Engulfing Pattern

Doji Harami The Hammer

Spinning Top Inverted Hammer Three Soldiers

Three Crows Piercing the Line Dark Cloud Cover

What are candlestick patterns ? You can understand most candlestick patterns through

building a solid knowledge of trends, support, resistance, and the breaking or holding of

those lines through changes in price. In short, you dont have to actually memorize the

names of these patterns to know what they mean.

However, knowing them by heart and being able to instantly recognize them by sight will

save you from having to figure out the reason for each upcoming tend. It will also help

you feel more confident in your predictions and allow you to move swiftly to take

advantage of trading opportunities.

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Candlestick Investing