Oil StocksOil stocks have fallen dramatically since two months ago. Oil stocks have also remained quite volatile, often offering opportunity to savvy traders skillful at trading bad news gaps. Commodities in general have fallen as traders anticipate another dip to the recession. The European debt dilemma is on the front pages. Oil futures are down as traders expect decreased demand due to a slowing global economy. Although oil stocks donít currently look good for buy and hold investing they can be profitable in day trading. Using Japanese Candlestick charting, traders are able to objectively assess market sentiment and profitably anticipate stock price changes. Whether trading oil stocks, on oil stock options, or futures on these stocks, traders can use Candlestick charts to gain profits in both rising and falling markets.
The benefit of stock trading versus long term investing in a bear market is that traders can profit from short term market trends and market reversal. Using Candlestick patterns as a guide, traders can buy stock, sell stock, and sell short in oil stocks or any equity. Oil stocks have fallen in response to worries about a second dip to the worst recession in three quarters of a century. The abrupt up and down volatility of the last weeks has investors worried. The same repeated fluctuations in prices of oil stocks have been profitable to traders tuned into technical price patterns. Using Candlestick analysis traders obtain an objective view of market sentiment. Using Candlestick signals traders can avoid the twin pitfalls of fear and greed that too often destroy the best stock trading strategies.
Oil stocks have gapped on opening a number of times recently as bad news drives opening prices below the close of the previous day. Traders can use Candlesticks in trading bad news gaps. The market inefficiency that often follows breaking news keeps many investors out of the market. The same market inefficiency can lead to handsome profits for traders adept at reading Candlestick patterns. Candlestick traders do not become invested in the success or failure of stocks. They maintain objective views of both market sectors and individual stocks. With the use of Candlesticks, traders donít respond with fear to market changes. Rather they see stock price changes as opportunity and trade accordingly. Oil stocks may well fall farther as investors and traders seek to sell long positions and avoid risk. Options traders can often profit in such a falling market by selectively buying puts on these stocks.
A clear advantage to using Japanese Candlesticks to guide oil stock trading is to anticipate when stock prices have bottomed out and to profit in buying at the bottom of the price curve. There is a sad but recurring tendency for stock investors and stock traders to follow the herd. When things get bad not everyone believes they are bad. When things get worse more traders and investors believe. When virtually everyone thinks that things cannot get worse the market often turns around. But, this is not guess work. Smart traders use Candlestick pattern formations to profitably anticipate when to stop selling short and start buying calls. Veteran Candlestick traders objectively choose when to start buying as the market in oil stocks or other equities bottoms out.
Market Direction: Candlestick signals have one uniform "truism" built into them. They work in all markets, sectors, individual trading entities, and time frames. When market conditions do not show across-the-board trend identification, utilizing candlestick signals allows investors to pinpoint the sectors/individual stock positions that are showing the best bullish or bearish trade situations. This process is as simple as doing simple scans for which sectors are showing the most strength or weakness. That process is further refined upon identifying a strong sector by doing scans of individual stock positions that make up that sector. Putting as many positive probabilities in one's favor is a simple process of finding a strong sector, then identifying which positions in that sector are producing the strongest candlestick charts
This procedure once again spotlights a basic premise of candlestick analysis. The candlestick signals and patterns are derived from common sense investment practices put into a graphic depiction. Having the ability to identify the direction of the market trend, the direction of a sector, and identifying the strongest potential stock chart moves in that sector, puts the probabilities of being in the correct position at the correct time an extremely high trade result. Not only will a candlestick investor be in the correct trade at the correct time but also have a good probability of being in 'high' profit trades. The appearance of candlestick signals and patterns produce expected results. The reason the Japanese Rice traders have passed candlestick signal information along is because they do produce profits. Not merely the ordinary profits produced by a market uptrend but inordinately strong profits.