August 22, 2018

Candlestick Charting and the Novice Trader

Morning StarWhenever attempting any new undertaking, it is always best to start simply by using time proven methods.  For anyone considering online trading, there are no better recognized techniques than the art of mastering candlestick chart formations.

A Little Candlestick Charting History

Candlestick charts have been around for centuries and were first used by a rice trader by the name of Homma Munehisa.  The rationale behind candlestick charting is that there is an irrefutable connection between the supply and demand of any product which is reflected in the price. The theory behind candlesticks also holds that prices in any market are greatly influenced by the psychology and emotional attitudes of the market participants.  Fear and Greed are two of the psychological attitudes that cause prices to move in any direction and candlestick charting reveals these emotions like no other form of analysis can.

Candlestick chart patterns actually originated for use with the commodity market (rice) and have since made their way to the stock market due to their uncanny ability to predict price movement.

Easily Recognizable Patterns

The effectiveness of candlestick chart pattern formations to the new trader lies in the fact that these signals are easily recognizable and can be learned much more quickly than other price action techniques. Many of today’s trading systems use complicated western indicators and do little more than confuse the novice trader. Often, candlestick reversal patterns and charting techniques come as a welcome relief to those traders looking for a simple yet powerful method of analyzing the market.

Candlesticks used by novice to advanced traders

Candlestick patterns have been recognized by traders as being extremely accurate tools reflecting the psychological and emotional nature of any particular market.

The simplicity of candlestick formations makes them the ideal starting point for the beginner to successfully take advantage of the opportunities available in the markets.  The key to success for any trader is the ability to properly recognize price action inline with the previously demonstrated trend in order to effectively predict imminent rising or falling prices.  When this pattern recognition has been perfected, risk is greatly reduced and profitability increases.

A Common Sense Approach

There is no shortage of information on candlestick charting and their signals. There is however a shortage of successful candlestick traders. Why the gap between information and success? It’s all in the approach candlesticks are used when trying to analyze price action. As I said earlier, candlesticks were developed and used in the commodity markets many centuries ago. We are applying them to the present day stock market and expect them work like magic. We all know there is no “magic” when trading and candlestick reversal patterns are no different.

We couple the powerful signals that candlestick charting provides with common sense price action techniques that are time tested and teach you how to find stocks that fit the criteria of a successful trade.

Yes, candlestick charting is an excellent method to quickly teach the beginning trader to correctly analyze the market and make them better traders. With all the complicated trading systems out there, some having nothing to do with price action, candlesticks bring a refreshing simplicity back to technical analysis.