August 22, 2018

Candlestick Charting – Why We Misunderstand

So you’ve decided to use candlestick charts and are searching for information to learn the trading methods of candlestick charting. You’ve found lots of information on the web, most giving you the same information you’ve seen many times before and you are beginning to wonder if anyone really knows how to properly and profitably use candlestick charts much less teach it. Maybe you plot your charts using candlesticks because of the visual appeal and the ease of interpreting the daily candles but you really don’t know how to rely on candlesticks to make your trading decisions. This article explains why many traders begin to use candlestick charts and give up without gaining the benefit valid candlestick patterns can give.

The first mistake most traders make when using candlestick charts is assuming that every reversal pattern that forms on the chart will lead to a reversal. This is simply not true! In fact, for every candlestick reversal pattern that signals a reversal there is an average of four that will give an invalid signal. Not a very good probability is it? Candlestick charting and trading on valid signals is an extremely profitable method of trading but reliable information explaining the techniques are very rare.

Many websites post information about candlesticks and reversal patterns but fail to teach a profitable method to use candlesticks much less state the fact that most likely those signals will be false signals. This leads to the misconception that all one has to do is trade on reversal patterns alone to profitably trade with candlesticks. Traders then give them a try and are bitterly disappointed with the results!

Many of those same websites go into the history of candlestick charting explaining how this method of trading is centuries old and therefore must be a reliable method of trading. The trouble is today’s markets are not only completely different than they were centuries ago; candlesticks were developed for ancient commodity markets not present day stock trading. The trader that wants to benefit from modern day candlestick trading has to realize they will need to trade candlesticks using more advanced methods. These methods are not only are compatible with today’s stock market but are equally as simple to learn and apply.

Forget the “fad” approach to candlestick charting! Candlestick charting has become fashionable among traders and information sites. Using the terminology of candlestick charting and its reversal patterns are almost as common as the names of the stock exchanges themselves. Yet most traders lack the understanding of candlesticks and their application to the modern day stock market. The profitable candlestick trader is successful because their approach to trading with candlesticks is different than that of the common trader! Isn’t that true with any profitable trading system? It’s no different with candlesticks.

Profitable candlestick techniques are a somewhat advanced method of trading but part of the beauty of candlestick charting is its ease of learning and practice. Advanced methods don’t have to mean they are difficult; especially when using candlesticks! The method I teach in Candlestick Trading for Maximum Profits is completely based on price action. There are no complicated indicators to learn or use and the learning curve is very quick.

If you would like to learn how candlestick charting could help your trading I invite you to become a member of our site and study our course. I think you’ll look at candlestick charting in a whole new light!