The key component to any successful trading is the existence of a good trading plan. For the beginner investing in the stock market, the obvious question is; what is a trading plan and how do I establish a good one? The definition of a trading plan would be a process for evaluating stocks, identifying risk and profit objectives, and planning a long term investing strategy. In addition, a good trading plan will also include defining a trading system such as Japanese Candlesticks. While realizing that even the best trading plan isn’t perfect, most successful traders maintain that the discipline to follow their plan contributed to their success more than their investment philosophy. They know that the proof of a good plan is its results.

Adding to the success of a trading plan are the trading tools, specifically technical analysis tools. When you join technical analysis with a system such as candlestick chart analysis, you can be assured that your trading plan contains the components necessary to establish profitability in the market.

With all of this power available, an investor must still be able to recognize when they have made investing mistakes and be able to recover. A good trading plan will include stop loss strategies and techniques allowing an investor to have a pre-prepared plan in the event that a particular investment goes bad. Preparing for just such a situation can be the difference between success in the market and complete failure.

Another important concept in a trading plan is portfolio diversification. A portfolio that has a broad variety of investment options, varying levels of risk, and diverse profit potential can be an excellent way to insulate an investment. This way, it's possible to speculate on a stock and use the rest of the portfolio as a hedge against a devastating loss.

What part does the investor play in a trading plan? The investor is the centerpiece and most important part of every successful, or unsuccessful, trading plan! The market is as much a mental adventure as it is anything, with euphoria, boredom, joy, pain, greed and fear, all attempting to shake an investor away from following his or her trading plan. A trader that can withstand the emotions of the market and stick to the trading plan will have the best chance at success. As with most things in life, emotional reactions when investing almost always lead to bad decisions. Avoiding investing in unknown markets and resisting the temptation to begin investing in the stock market because of boredom or peer pressure are good lessons to learn in order to avoid potential problems.

It is true that investing definitely has its share of pitfalls and a good stock trading plan goes a long way to assisting any investor who wishes to enjoy profitable trading in the market. When beginning to invest in the stock market, it is critical to take the time to develop a trading plan, acquire the necessary tools to correctly evaluate companies and their financial situations, and to take advantage of learning from the people who have gone through it all before. While the market can be unpredictable, the principles and techniques needed to be successful have been used for years and have been shown to be quite reliable. A well thought-out plan and the lessons learned by others will provide the best investment advice an investor can ever receive.

Market Direction: Most investors do not have a trading plan. They have great difficulty in when and how to enter a trade. They have even a more difficult time for when to come out of a trade. Candlestick analysis makes identifying strong trades with the use candlesticks signals and price patterns. More importantly, candlestick analysis also identifies when to take profits in successful trades.

The IAAC chart is a very clear example for when and why to get into a trade. It also provides a very clear example of when to take profits. The signals produce a strong indication of when the investor sentiment had changed after a trend has been profitable. The IAAC chart showed a good bottom signal with an Inverted Hammer. The bullish candle forming the following day confirmed that signal. The next pattern illustrated a Jay-hook pattern. The gap-up off the Tee line illustrated the success of the Jay-hook pattern, the gap-up coming up through the 50 day moving average. The success of a Jay-hook pattern was more evidence that a longer-term fry pan bottom pattern was confirming. This set of analysis provided a high probability of a successful trade.

IAAC

When was the time to sell? When the Doji appeared at the top. Additionally, the fact that the price opened lower the next day after the Doji was a sell confirmation that the Doji foretells. The Candlestick Forum provides daily picks for the members. The picks are not just to provide stock picks. Each pick is described on the video each morning of what parameters and indicators made that chart pattern a strong recommendation. The purpose is to provide continuous education as to what investors should be looking for strong potential price moves.

Once a position is established, the Candlestick Forum provides a daily follow-up. This video describes why a position should be continued to be held and when it is time to sell. This makes a much stronger educational process for understanding when candlestick sell signals start coming into play. The process for taking profits is also illustrated in the follow-up video, where to set stops. Once an investor recognizes the visual indicators and signals, they can master taking profits out of the market on a consistent basis.

A general rule of thumb is that prices will usually move in the direction of how they open prices after a Doji. This is most effective when analyzing a top or bottom of a trend. It also works effectively for analyzing a trend pattern. The Dow and the NASDAQ formed a Doji last Friday. Both did it right near the Tee line. The Tee line is a very effective trading indicator introduced by Ricky Wayne for improving his success in trades.

DOW

The positive trading in the Dow after the Doji on Friday now makes a Jay-hook pattern analysis more prominent. A Jay-hook pattern at this level would give a higher probability of retesting the 50 day moving average. A breakthrough of that level would then cause another strong rally.

Chat session tonight - 8 p.m. for members. A special session on day trading will be presented by Ricky Wayne, the moderator of the Candlestick Forum chat room, on Wednesday night at 8 p.m. ET. This will be open to everybody. Use the entry password of 123. He will describe some of his successful indicators, applied to candlestick signals, for extracting funds out of the market on a day trading basis. This information will give great insights to the e-mini traders and Forex traders.

Houston candlestick trading seminar April 14 and 15th. The response for the seminar in Houston is once again very strong. There are a few remaining seats. However, history indicates that these will probably be filled before the end of this week. If you have questions concerning whether this training session will be good for you, please feel free to call for more details. Mr. Bigalow can be reached at the 866-251-4015. Pat can answer questions at pat@candlestickforum.com. These two training days will provide some powerful insights into how to use all the candlestick information in a good consolidated analytical program. You will gain knowledge from 20 years of experience in candlestick signals. You will immediately start trading with a much better perspective on which signals and patterns produce high probability profits. Don't miss this opportunity to learn an investment method that has worked successfully for hundreds of years. You will also be rubbing elbows with other candlestick investors. This will provide you with an additional source of continued education. Sign up now. 

The Houston Candlestick Analysis Technician Seminar is almost here! April 14th and 15th, 2007 in Houston, Texas

Last week to register - Door Entry Rate is $1,900

Register now to attend for $1,195.
That's a savings of $705.

Book now before remaining seats are sold out.

Click here for more information about the 2-Day CAT Seminar

Some of the KEY topics covered

• Understanding and profiting from the 12 Major Candlestick Signals
• Technical analysis chart construction
• Identifying  FALSE Signals
• Targeting support and resistance
• Price Patterns
• Gap Trading
• Evaluating charts in multiple time frames for day trading to long term investing
• Placing stop losses
• Evaluating Risk/Reward ratios 
• Combining Candlesticks with other Technical Analysis
• Introduction to Advanced Candlestick Patterns
• Bonus presentation by Rick Saddler, a former student who has gone on to successfully trade full time. He will share his story with you and even better, he will show you one of his favorite trade setups that puts money in his pocket. (Rick is also our Moderator in the Members Trading Room.)