Candlestick Trading Forum
keyword search

Candlestick Trading Forum        

Low Risk Investments

In times of economic turmoil low risk investments are attractive. In times of high inflation low risk investments may lose ground to currency devaluation. When there are stock market crashes low risk investments are solid ground to stand on when everything else is quicksand. Picking stocks that are low risk investments helps preserve investment capital. Seeking low risk may also cause the investor to miss growth opportunities. Low risk investments are often low return investments. In stock investing a companys record of paying dividends is often used as a measure of low risk. Companies like Archer Daniels Midland have been paying dividends since 1927, Becton, Dickenson, and Company since 1926, and Exxon-Mobile since 1882. One of the low risk investments with persistent dividend payments is Colgate-Palmolive which has paid uninterrupted dividends on its common stock since 1895 and increased payments to common shareholders every year since 1963. Investing in dividend stocks with a long record of uninterrupted payments is a means of limiting risk. It may not be the most reliable route to the best profits. While one investor is holding on to a low paying but reliable dividend stock another is assessing market volatility, using Candlestick analysis to predict market reversal, and buying puts or buying calls on volatile stocks.

There are other ways to engage in low risk investments besides buying and holding dividend stocks. Options trading allows one to contain investment risk while gaining the right to buy stock or sell stock at a priced fixed by an options contract. Even if one is invested in a stock that has paid dividends for a century without fail that does not guarantee a good rate of return on investment going forward. Long term investing as well as day trading do best with a combination of fundamental and technical analysis. Using tools such as Candlestick patterns to assess market sentiment can alert both trader and investor to when to buy or sell stocks. Assessment of the margin of safety of a stock and intrinsic stock value are often better guides to whether to hold a stock than its record of dividend payments. Investment risk is limited to the price on an options premium when one buys calls or buys puts on a stock.

The best low risk investments are often those investments that are well understood and well researched. They are not risk free in the sense that the investor can purchase a stock and walk away. They are low risk investments because investors or traders have analyzed these stocks by looking at the fundamentals and then following stock price patterns with technical analysis tools like Candlestick stock charts. An investor who uses Candlestick pattern formations to guide himself in buying stock, selling stock, buying options, and selling options reduces his investment risk while increasing his opportunity for substantial gains. Traders and investor have profited from using Candlestick charting techniques in trading stocks, options, commodities and futures for years. Using Candlesticks one is commonly able to increase the chance of profits and reduce investment risk in stock trading.

Market Direction:

Trend analysis with candlestick signals can become extremely accurate when all the analytical factors are taking into account. One of the most important confirming indicators is the T-line. This moving average has extremely strong ramifications upon seeing a candlestick buy signal and a close above the T-line. However, the analysis of the market trends should not rely on one chart. Friday, the Dow closed above the T-line after seven indecisive candlestick signals, two Doji days. This would have made for a compelling reason to cover short positions had there not been other valuable indicators to collaborate or not collaborate a reversal.


The NASDAQ and the S&P 500 both closed right at the T-line. This would have required witnessing bullish confirmation on Monday. The reason for some skepticism of whether the trend has reversed or not came from the analysis of the stochastics. They showed they had not reached the oversold condition. Simple extrapolation would have shown that if the markets had open stronger on Monday, the stochastics would have probably continued their curled to the upside. The weaker premarket futures today revealed the Bulls were not participating in pushing the indexes up through the T-line. This analysis becomes much more obvious to a candlestick investor because they know what should be expected at specific support and resistance levels.


A very important aspect of investing is the realization that prices move in waves. These waves are generated by changes or continuation of investor sentiment. The signals by themself are very powerful indications of what is occurring in investor sentiment. Applying that information to chart patterns that occur over and over provides the candlestick investor with a great advantage when analyzing overall market trends. This analysis does not require extensive technical background. It works merely off common sense observations. Having the visual aspects of candlesticks allows for the very simple question, "What is the chart illustrating now?"

Keeping the knowledge of price movement in the forefront, candlestick analysis takes advantage of the historic results produced by reoccurring investor sentiment thinking. As illustrated in the AMRN chart, it had been pointed out in the chat room, especially from ANN E, that there was something about to happen in AMRN. That could easily be verified by the price pattern .


 A Fry pan bottom pattern was developing, showing the price holding steady or moving slightly positive when the general market conditions were selling off. The limited time and research budget expense makes knowing what is going on in all stocks make the impossible for most investors to be in the right place at the right time. Fortunately, candlestick analysis is the visualization of chart patterns that demonstrate when the buyers are taking control and when the sellers are taking control. This dramatically improves the probabilities of be any in the right trades at the correct time.

Special training - The Dynamic Doji Updated. For members only, Tuesday night April 19 will be a mini training session going through all the characteristics of a Doji that contribute toward the profits. Understanding what investor sentiment makes up the Doji signal allows for recognizing high profit trades situations. The new upgrade of the dynamic Doji video is going to be made available in a free training session to the candlestick forum members. This is especially useful the member that is just becoming familiar with candlestick analysis as well as helping the more seasoned candlestick investor get high profit trades setups more ingrained in their mind.

Chat session tonight at 8 PM ET for members.

Good Investing,

The Candlestick Forum Team

Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to Current Website Special



Candlestick Trading Forum