Candlestick Trading Blog

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Can You Do It With Candlesticks?
That might be what you are asking yourself....you know that Japanese Candlesticks are great for stocks and commodity trading but Forex trading is a different animal, isn’t it? Different it is, but not in the way you think. Forex trading is a fast-moving, volatile market for sure, but the patterns and signals in Forex apply to Candlesticks the same way that they do in the stock market and commodities. You can chart movements and then use the signals of Candlesticks to draw conclusions about the market. The power of this system can help you with your Forex trading just like it does with your stock trading.

Before we go any further, answer this question. Are you familiar with Japanese Candlesticks? Even though you found this forum, you might still be confused about what you discovered. Candlestick trading is a system that was developed in the 17th Century for use in the rice trade of Japan. Much like today’s commodities markets, people could see trends in the market. By accurately predicting these trends, investors could get the best prices and make the best profits. This system was successfully brought to the United States where it is widely accepted as the premier method of charting and predicting the market.

How To Apply Candlesticks To Forex Trading
This is really not much different than how you would use Candlesticks for commodity or stock trading. You will use a currency pair’s daily open, close, high and low to form the real body and the shadows of a day’s trading. You will then either fill in the body or leave it open based on whether the day closed up or down. This gives you a Japanese Candlestick signal for the day. Combining these signals in to Candlestick pattern formations allows you to not only see a daily sequence but it allows you to use these patterns to look for repetitive events in Forex trading. The simplicity and power of Japanese Candlesticks becomes apparent when you are able to see trends as they are occurring and make successful trades based on those trends. Since the signals are based on the relationship between the currency pairs, this gives you a common number you can track. The rest of it is just like any other Candlestick chart.

Is Candlesticks The Only Thing You Need For Forex Trading?
No, Candlesticks is only one important component in your trading experience. You still need a trading plan to define your strategy, goals and techniques, and you need to be diligent with your technical analysis. These things combined with your Candlestick charting give you an advantage in Forex trading that you won’t get with anything else.