Investment Options Can All Be Enhanced With Japanese Candlesticks
When considering the basics of stock market investing, there are generally three different investment options. Stocks, bonds, and cash. Does this sound simple? Well, unfortunately it gets very complicated from there. You see, each of these investment options has numerous types of investments that fall under it.
There is much to learn about each different investment option. Investing and trading can be intimidating for the beginner investing in the stock market for the first time. On the bright side, the amount of information that you need to learn has a direct relation to your investment style. There are basically three types of investors: aggressive, conservative, and moderate. The different types of investment options also cater to the two levels of risk tolerance: low risk and high risk.
Aggressive investors use a stock market investing strategy that involves greater stock volatility, which is higher risk. They also tend to invest in higher risk real estate and business ventures. For example, if an aggressive investor puts his or her money into an older apartment building then invests more money renovating the property, they are running a risk. They expect to be able to rent the apartments out for more money than the apartments are currently worth or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine and in other cases, it does not. It is a risk.
Conservative investors often invest in cash. Conservative investment options may include mutual funds, interest bearing savings accounts, money market accounts, CDs and US Treasury bills. These long term investing options are relatively safe, low risk investments that grow over an extended period of time.
Moderate investors often invest in bonds and cash and may occasionally participate in the stock market. Moderate stock market strategies include low or moderate risks. Also, moderate investors often invest in low risk real estate.
Before you start investing, it is very important that you learn about the different investment options and what those investments can do for you. Pay attention to past trends and understand the risks involved. History actually does repeat itself and investors know this first hand. Find a convenient Internet investment service that provides real time market information and gives you round-the-clock access to your account for secure and easy stock market online investing. Access trusted sources of research and investment information to keep you informed and up to date about mutual funds, equities, and fixed income investments. Be sure that you can obtain current company news and invest from any personal computer with Internet access and the appropriate Internet browser.
Market Direction: - When doji start forming in an overbought trend, that warrants watching to see what investor reaction is going to be over the next day or so. As was seen in the Dow after a strong up day last week, a doji formed. That should warrant watching to see what investors sentiment is going to do the next day. The lower trading day on Wednesday formed an Evening Star signal. That signal occurred at what could be perceived as the top of a trading channel.
Dow
Additionally, the NASDAQ had seen a doji formed earlier in the week. The bullish day following the doji gave some comfort that the uptrend was still intact, other than the warning coming from the doji forming in the Dow. The fact that doji's were starting to occur provided a little bit of warning of a possible reversal. With strength showing up on alternating days in the NASDAQ and the Dow, a severe candlestick sell signal was required to indicate a change of investor sentiment.
Nasdaq
The magnitude of the weakness of the market open on Wednesday became an immediate alert that the doji's were representing indecisiveness. The previous analysis had been that the NASDAQ could possibly test the 200 day moving average. Unless a severe candlestick sell signal appeared! That could be seen to be occurring when Wednesdays open in the NASDAQ opened below the previous day's open of the bullish candle. That alone was an indication that investor sentiment had dramatically changed. Witnessing immediate selling at that point revealed of the sellers had obviously taken control. Although this observation is fairly simple to in hindsight, it should provide some common sense candlestick analysis insights.
If a market is in an uptrend in the overbought area for an extended period of time, the candlestick signals can start revealing signs of weakness. Although the previous uptrend appeared to be intact, the appearance of the doji's should have provided some suspicion. Those signals illustrating some possible weakness should prepare the candlestick investor for the 'possibility' of a trend reversal. That preparedness permits an investor to take immediate action upon seeing price movements that would confirm the change of investor sentiment. The open, below the previous day's bullish candle open, should have been an indication that investor sentiment was dramatically different from the previous sentiment.
What can possibly occur on a gap down below the previous days open? A Kicker signal! Having the knowledge of the formation that makes a Kicker signal creates the opportunity to take profits at the end of the uptrend with much less analysis time than most other investors. And it allows short positions to be established immediately in chart patterns that have already shown candlestick sell signals.
This is just common sense analysis being visually clarified by candlestick formations. Utilize the information incorporated into each signal. The probabilities of being in the right positions at the right times is dramatically increased. If the markets are illustrating conditions that would possibly create a reversal of the current trend, buying the charts that are also confirming their individual trend reversals produces highly probable results. As seen in the CVTX chart, as both the Dow and the NASDAQ were revealing possible reversal signals in overbought condition, an Evening star signal formed right at the 50 day moving average. Was this a failure of the 50 day moving average or was it just a temporary pullback after touching the 50 day moving average for the first time?
CVTX
An Evening Star signal produces a high probability of the 50 day moving average was going to act as resistance. Being able to analyze and see that the markets in general were reversing their uptrend, the next few trading days after the candlestick Evening Star signal has that much more probability that the downtrend will remain in place in this stock. Having the ability to recognize the reversal in an individual stock and then being able to analyze the overall trend of the market produces a huge advantage. Click here for information on the 12 major signals training CD special.
Where are price trends most likely to reverse? What candlestick signals improve the probabilities of a trend continuing one way or the other? These analytical tools can be easily reviewed with high profit candlestick pattern flashcards. Keeping a set of these flashcards next to your computer screen greatly assists in identifying high profit trades. Click here for the high profit patterns flashcards set.
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Good investing,
The Candlestick Forum Staff