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Candlestick Day Trading

A common perception of Candlestick analysis is that it applies to day by day trading or even longer time frames. However, Candlestick day trading is possible by simply shortening the Candlestick time frame. While one can construct Candlestick stock charts based on a monthly, weekly, or daily time frame traders also use Candlestick charts based time frames of as little as an hour or even five minutes. Candlestick patterns have provided profits for traders ever since the days of the Samurai in ancient Japan. Because commodity , options, and stock price patterns repeat over time it is possible to use the front part of the pattern to predict the back half. Candlestick signals are based upon market experience thus it is just as possible to use Candlestick pattern formations to predict very short term stock price movement as it is to predict longer term movement. A day trader can search for market volatility in stocks and then follow the stock in Candlestick day trading in order to predict market trends , market reversal , or the next market rally .

Candlestick day trading works much like other types of day trading based upon technical analysis . The market tends to rapidly discount fundamentals as they become known. Thus traders use fundamental analysis to remain aware of the general limits and eventual direction of stock prices but use technical analysis tools to direct minute by minute trading. Because of the ability of Candlestick signals to illuminate market sentiment in both long and short time frames day traders use a modern version of an ancient rice trading technical analysis tool to successfully trade stocks online . Using Candlestick trading techniques on a daily basis allows the trader to insulate himself against the twin trading psychology demons of fear and greed. Because Candlestick day trading is statistically based it offers the trader high probability choices and not psychologically confusing stock tips or stock market news .

Candlestick day trading uses signals such as the Doji Candlestick. When upward or downward market trends are about to reverse there is often a period of confusion in the market. Some traders expect the trend to continue and place trades in the direction of the trend and others place trades in the contrary direction. Fundamentalists commonly bring the stock price back to the starting point at the end of a time period such as a day or even less. The Doji Candlestick is a good means of identifying market indecision. It is a very short candlestick with, often, very long shadows. This candlestick reflects the fact that a stock may be trading up and down from a base price but keeps returning to that price, as the market is confused. In Candlestick day trading this candlestick indicates that a now-confused trend is about to reverse. Using the Doji Candlestick and other Candlestick pattern formations a trader can succeed in Candlestick day trading as well as in trading stocks in the longer term.


Market Direction:

The trend is your friend! That is usually a truism that works fairly consistently. The reason is relatively simple to analyze. Investor sentiment will continue to move in the same direction as long as there is no need to change. That was relatively evident in the past few days of trading. The Dow could not break up through the T-line. The NASDAQ formed a potential reversal signal but was not confirmed.

 

 

BOOK ERROR contest - if you have been keeping track of the occasional flaws that you may have found in Profitable Candlesticks  "Eliminating Emotions with Candlestick Analysis", the 'find the error contest' will be handing at the end of this week. Prizes will be plentiful!

 

Introduction To Commodity Trading - June 15 8 PM ET - Learn the basics of commodity trading with candlestick signals. Learn the different methods of trading for commodities versus stock trading. Join during the summer special rate of $68.00, discounted from the normal rate of $127, and members are free.

Chat session tonight at 8 PM ET.

 

Good Investing,

 

The Candlestick Forum Team


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