October 21, 2017

Candlestick Charting Is Much More Than Reversal Patterns

Bullish and bearish engulfing, morning and evening star patterns or the bullish and bearish kicker have become well known among traders everywhere as common candlestick reversal patterns. Yes there’s more but for the purpose of this article I wanted to use these examples to get the juices flowing just a bit knowing that they are some of the most popular patterns to trade. Reversal patterns have become synonymous with candlestick charting but if you’re using them as a tool for trend reversal recognition only you’re missing half of the benefit candlesticks give.

Trend trading is undoubtedly the safest method of active trading. We’ve all heard the old adage; the trend is your friend and it’s as true today as it was when it was first thought or said.  Candlestick reversal patterns, or for the purpose of this article, candlestick patterns can alert the trader to trend continuations with as much reliability as any method available. The best part is it is also one of the simplest methods available today! [Read more…]

Common Sense Candlestick Charting

Candlestick ChartingI’ve become pretty well known for pointing out what I believe is a lot of misinformation about candlestick charting over the years. Too many fly-by-night websites feature articles or even pages of information dedicated to trading with candlesticks without any regard to common sense. Many who write these articles make candlesticks seem like magic and act as if the stock price will simply “obey” candlestick reversal signals and rise or fall accordingly. Well, we all know there is no magic in the stock market and candlesticks are no different.

Candlesticks are a powerful trading system of used with a little common sense. As I teach the students of our course, candlesticks need to be applied with the rules of price action and used at price levels where price reversals or continuations are likely to happen. [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…]

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…]