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Holiday Gifts; give the unique gift of education for individuals new to investing in the markets.

Beginning investors new to trading the stock market should begin by learning candlestick charting. This is the quickest way to begin interpreting price direction and begins all technical analysis.

Both standard bar charting and basic candlestick charting are commonly used to convey price activity into an easily readable chart. Usually four elements make up a bar chart, the Open, High, Low, and Close for the trading session/time period. A price bar can represent any time frame, as shown with the horizontal element of the bar. The total vertical length/height of the bar represents the entire trading range for the desired period. The top of the bar represents the highest price of the period, and the bottom of the bar represents the lowest price of the period. The Open is represented by a small dash to the left of the bar, and the Close for the session is a small dash to the right of the bar. At this point, you might be asking yourself why you need to know candlestick chart analysis if you understand a bar chart. Because; Candlestick analysis provides a quick  and easy visual analysis.

Comparing Candlestick Charting and Bar Charts

Lacking the Shadows of a basic candlestick chart, a bar chart cannot reflect the difference between a price extreme and a high or low. For example, a stock that opened high, but traded low for the day would not be accurately depicted in a bar chart. In a basic Candlestick chart, however, the Upper Shadow would show the extreme of the opening price as well as the trading range for the day.  In this example, the basic candlestick chart formation more accurately represents the trading of the day. In addition, since the stock closed lower than the open, the Real Body would be black; indicating that the day's trading was bearish. A typical bar chart is simply unable to provide this level of information. And remember, these are just the basics of a candlestick chart! Our Free Resources category provides a detailed list of invidiual candlestick charts; how to trade the stock market with candlestick patterns.

Holiday gifts for the more experienced investor are available in both our newly released Option Training tutorials and the Holiday Specials 2009 Category.


Market Direction: What is the best holiday gift somebody could give? The education on how to analyze market trends and price moves. Candlestick analysis provides an education on how investors think. That is what moves markets and stock prices. The Japanese Rice traders provided an invaluable analytical tool when they demonstrated the visual characteristics of price moves, candlestick signals. Additionally, they provided a much more powerful educational aspect. They explained what the investor sentiment was doing to create a candlestick signal or pattern. Most investors do not realize how powerful this combination is. This information is what should be conveyed to kids well before they have to become involved with investing. This information should also be provided to struggling investors that have not been taught the proper analysis for projecting price moves. The Candlestick Forum provides gift packages during the holidays. This allows investors, that are starting to gain the insights produced by candlestick analysis, to pass on that same information as a gift.

Why do most investors have to rely upon the so-called professionals to produce returns for them? Because they think it is too difficult to take control of their own investment future. Learning how to use candlestick signals correctly makes an investor independent. The commonsense knowledge built into the signals produces a visual format for allowing each investor to analyze price movements correctly.

What is the market telling us? The Dow is providing some very valuable information. The past few weeks of trading has revealed what the market is doing. It has moved basically sideways with bullish days followed by a bearish days followed by bullish days, etc. Obviously this has made it very difficult to hold onto positions for a very long time frame, unless they were in a price pattern. What is the market telling us it wants to do? Most investors would evaluate the market is now moving sideways. A  game plan could not be put in place until the market breaks one way or the other. The candlestick investor can analyze what type of pattern formation might be setting up. The rounding top, being created over the past few weeks, indicates a Dumpling Top potential. This makes the assessment for trading much easier. The description of a Dumpling Top pattern provides the information a trader can utilize immediately. A Dumpling Top is formed by a rounding top, formed by indecisive trading. That description allows an investor to decide that they might want to stay out of the markets until the Dumpling Top is fully formed. Then take advantage of the anticipated results of the Dumpling Top, which is a strong downward move.

DOW

Knowing what the candlestick patterns require for their formation and the results of the pattern formation is a valuable aid for positioning a portfolio. In this case, moving to a heavier cash position is a viable program. Trading may be difficult.  Being prepared for a strong down move will be the next portfolio positioning. The patterns help investors anticipate what to expect in the future.

Chat session tonight at 8 p.m. ET. This session is open to everybody. Learn which price patterns are working most effectively in these market conditions. Click here for instructions.

Good investing,

The Candlestick Forum Team


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