Stock Trading - making Consistent Profits With Candlestick Signals
Stock trading becomes much easier when trend reversals can be visually identified. The Candlestick signals produce a high probability trading format. Most stock trading is done based on fundamental reasons. However, prices do not move based on fundamental reasons. Prices move based on the perception of fundamental reasons. When an investor can implement this logic into their stock trading program, or any trading entity program, producing profits becomes a much easier task.
The advantage that Candlestick signals provide for a stock trading program is statistical results. These results are the basis for identifying Candlestick reversal signals today. When patterns or signals occur an extremely high percentage of the time, they represent a function of human nature. Candlestick signals are nothing more than a graphic depiction of what human emotions usually do under certain trend conditions.
Stock trading programs can produce consistent profits when implementing Candlestick analysis correctly. The 12 major Candlestick signals identify the majority of the reversal patterns. It is often a common complaint of stock trading investors that there are too many Candlestick signals to learn. Fortunately, the 12 major Candlestick signals are all that you need to learn. They will produce 99% of all the trade analysis in investor will need.
Learning the 12 major signals simplifies utilizing Candlestick analysis. It greatly reduces the number of signals that have to be visually memorized. This process is very simple for those who want to make money. If a Candlestick reversal signal signifies a profitable situation forming, it will not take long to remember what it looks like. Utilizing these signals on candlestick charts dramatically improves analytical capabilities
An investor can dramatically improve their stock trading profits by understanding the psychology that forms the major Candlestick signals. Once these 12 signals are learned, understanding why a trend reversals occur with the signals becomes easy to analyze.
Market Direction - As described in our last newsletter, a congested area of trading does not tell much about what investor sentiment is doing. However, a great benefit of being able to identify major reversal signals during that congestion area allows an investor to prepare the portfolio for the next major move.
As pointed out previously, the Bullish Engulfing signal and the Bullish Harami are two observable signals occurring in the past few weeks of choppy trading. The fact that both of those signals occurred right on the 500 day moving average provides significant information. Although the trading of the past couple of weeks was very indecisive, being able to pull out those two major bullish signals allowed for the anticipation of a bull move.
A bounce off of the 500 day moving average made the next logical target for the Dow at the 200 day moving average. The moving averages become valuable support and resistance targets. The Candlestick signals allow an investor to get a better evaluation of what is happening at those important technical levels. The Candlestick Forum provides a one-hour CD on how to use the Candlestick signals very effectively at the moving averages.
Analyzing that the stochastics have not quite gotten into the overbought area yet makes the potential upside target the 50 day moving average. This may take a few days. Notice the congestion area prior to the break down through the 200 day moving average. That might cause more congestion once the 50 day moving average has been reached, causing a trading area between the two moving averages.
The information conveyed on a Candlestick chart with moving averages produces a highly profitable stock trading format. A bullish Candlestick signal with stochastics in an oversold condition and that signal forming right on a major moving average has much stronger implications than a Candlestick signal forming away from the moving averages.