January 20, 2019

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. [Read more…]

Price Action Trading With Candlesticks

Inverted HammerThere are many trading systems to confuse the trader these days and almost all of them have one thing in common…indicators! It seems that price action trading, which is what technical analysis is really all about has been all but forgotten. In my opinion, price action is not only the most effective method for analyzing trades but also a simple method to learn for traders at any level.

Price action trading is the study of price movement using nothing more than the stock chart and maybe some moving averages to show dynamic support and resistance levels. The best method of price action is the study of candlesticks which give simple and reliable signals when following the rules of price action theory. Candlesticks as well as the study of price action are actually easy ways to learn trade entry levels for both long and short trades. Candlestick Trading for Maximum Profits has been teaching both since 2007 and is the reason for our great success. [Read more…]

Candlestick Charting Software

Evening Doji StarMany new traders looking for charting software begin their search looking specifically for candlestick charting software. I may be wrong (and if I am correct me please) but I don’t believe there is a robust software package completely dedicated to candlestick charting. Most, if not all, of today’s most popular charting software packages can be plotted in candlesticks. Candlesticks have become very popular in recent years and many choose to plot their charts in candlesticks for the visual appeal. While it’s true that candlesticks are visually appealing it’s the power of candlestick theory that makes them so profitable if used correctly.

To plot your charts in candlesticks the trader simply chooses this format in the chart properties of the charting software which ever that may be. But there is so much more to candlestick trading profitably than just having your charts displaying in candlesticks! [Read more…]

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. [Read more…]

Trading Options with Candlesticks

Bullish EngulfingStatistics show that over 80% of options traders lose money. Because of their very nature, stock options seem to stack the odds against the trader from the very start. Profiting in stock options requires the trader to correctly analyze and predict a future price move. Then the trader will have to successfully forecast the timeframe when that move is going to happen! Finally, the trader must also know how big that price move is going to be! The combination of these three factors makes it extremely difficult for the average trader to enter an option trade successfully.

So how can candlesticks turn these disadvantages onto advantages? When trading using candlesticks we find an answer to each of the elements that make up a successful option trade.

First is the price move itself. As a trader becomes more and more proficient with reading candlestick patterns they also become more accurate in determining changes in market direction. Candlestick reversal patterns have the unique ability to give us a visual snapshot of market psychology and when it is changing. Determining when this change takes place gives the candlestick trader an edge in entering a successful trade, either by entering an established trend or an even more profitable change in market direction. [Read more…]

Why Trade With Candlesticks?

Japanese candlestick charts have been around for centuries and have become increasingly popular among stock traders. Some have heard of candlestick charting and really don’t understand the benefits candlestick analysis can provide. Others use candlesticks on their charts but don’t fully appreciate the power of the signals given by candlesticks. Candlesticks are the study of price action and its ability to gauge market psychology.

I believe today’s trader is so inundated with trading systems based on indicators that they forget (or maybe never knew) that the origin of Western Technical Analysis was also based on price action. Before the computer, technicians would plot daily price movements on graph paper with pencil until familiar patterns would form allowing them to also have a peek into the psychology of the market. In my opinion this is becoming lost by today’s market technicians.

Don’t get me wrong! I’m not against the use of indicators if they help the trader. But it’s important to remember that indicators are mostly numerical algorithms of price movement itself! Forgetting price action and price patterns, even when using Western analysis, is forgetting why price action analysis became so effective in the first place. [Read more…]

Video – Candlestick Charting Market Update 4/23/2011

Candlestick Charting VideoMarket volatility has been the theme during the past two weeks with surprise news announcements and prices moving up and down in a trading range as we approach market highs. I produced this video to demonstrate how the Candlestick Trading for Maximum Profits trading system has fared during the past two weeks and to highlight some of the trades our method of trading candlestick reversal patterns picked out for us. Yes, it’s been volatile but for a swing trader but that usually means the opportunity for profits as long as the trader is willing to keep watch! [Read more…]

Video – Entering Trends With Candlesticks

Candlestick Charting VideoIt’s no secret that candlesticks and candlestick charting have become synonymous with finding and trading trend reversals. Much of the information currently available in books, courses and on websites highlight the ability of candlestick reversal patterns to give signals to traders of a possible change in trend direction. However, if your using candlesticks simply to find trend reversals you are really missing the boat! [Read more…]

Video – Selling Short With Candlesticks

Candlestick Charting VideoOver the past few weeks the market has become decidedly bearish due to many factors. It seems that current world events have traders leaving the markets at least for awhile. Since we have been in such a bullish market in recent months I thought it timely to produce a video highlighting how we safely enter a short trade. When a sustained trend begins to reverse it does not do so easily. Many invalid candlestick signals present themselves as buyers and sellers battle it out for control. If you’ve spent much time on this website you know that Candlestick Trading for Maximum profits is about filtering out these invalid signals.

Candlestick charting is a very profitable and reliable form of price action analysis but it has to be applied with a little common sense! The following video illustrates just that, how to use a little common sense when using candlestick charts and looking for short entries. [Read more…]

Video – Candlestick Trading 03/05/2011

Candlestick Trading VideoOver the past two weeks we have seen a striking change in the dynamics of a very strong market. While these changes may seem challenging, the price action has been fairly predictable in hindsight by bouncing between levels of support and resistance.

Even though the market has taken on what may seem like bearish overtones, all of our highlighted trades are very profitable long trades. These trades were found exhibiting the Candlestick Trading for Maximum Profits rules according to our system of using candlesticks. This weeks video shows you what we look for and gives you an idea of how we trade candlesticks. [Read more…]