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Successful Trading System

What constitutes a successful trading system? Certainly a successful trading system is one that results in profits in trading stocks, trading commodities, trading futures and trading options. A stock trading system at its most basic is a set of rules, an algorithm, for deciding when to buy stock, sell stock, or sell short. A successful trading system can be applied to stocks, options, commodities and futures. A basic stock trading system is based upon technical analysis of stock prices and provides buy or sell signals. There are lots of trading systems. A truly successful trading system such as Candlestick analysis stands the test of time. Japanese Candlestick basics have been around since the days of the Samurai in Japan. Although rice traders in ancient Japan were fully aware of the fundamentals that drove rice prices, such as a good harvest, a drought, war, etc., they also learned that price patterns repeated themselves. By identifying these patterns and learning what the pattern was likely to indicate, traders developed Candlestick signals such as the Doji Candlestick which is a strong indicator of market indecision and predicts the reversal both upward and downward market trends.

A successful trading system must be one that the trader can use effectively in stock trading, commodity trading or trading derivatives. A distinct advantage of Candlestick charts is that they are easy to read. Candlestick stock charts display the same information as other, more difficult to read, charting methods. However, Candlestick signals distill the same essential information into each signal without displaying complicated, statistics that take valuable time to read. No matter how accurate a trading system is the system must be functional in the rapid paced world of day trading stocks, commodities, and derivatives.

A broader view of a successful trading system includes time management, management of investment risk, choice of trading hardware, choice of online trading software, and routine reviews of trading results. In a successful trading system picking stocks that are routinely profitable to trade may be just as important as skill in technical analysis of stocks. Exerting discipline in executing trades according to a pre-determined trading strategy is as important as setting up the strategy. Traders who maintain discipline and use an efficient tool such as Candlestick pattern formations to analyze the market will commonly have a successful trading system. By using Candlestick signals in day trading or in long term investing it is possible to profit from buying at the bottom of a price curve, from anticipation of market reversal, and from the market volatility that often follows sudden changes in stock fundamentals. And, although it is not the most glamorous aspect of successful stock trading, routine analysis of trading results leads to profitable modifications of trading systems and increased long term profits. No matter how skillful a trader is at fundamental and technical analysis he can always improve. By evaluating each Candlestick trade after the fact a trader can commonly improve his use of the system and his profits leading to an increasingly successful trading system.


Market Direction: Washington was able to resolve the debt crisis! So that is at least what Washington thinks. However, the clear graphic depiction can be seen with candlestick analysis of what the rest of the world thinks about this latest financial crisis. Using candlestick signals allows an investor to correctly evaluate what the financial community thanks of specific events. Also, the Japanese Rice traders have one basic assumption that allow candlestick investors to make a huge amount of money. Where do most investors sell? They panic sell at the bottom! Where do most investors buy? They usually buy exuberantly at the top. Today's 600 point plus move to the downside in the Dow clearly indicates panic coming into the market. Knowing how to utilize that information through the graphics of candlestick signals helps an investor make huge profits in one day, 20%, 30%, 60%. Panic market pullbacks occur occasionally, knowing what to do when experiencing one is a very profitable endeavor.

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Good Investing,

 

The Candlestick Forum Team


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