Candlestick Trading Blog

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Online Stock Trades using Japanese Candlestick Analysis

Placing online stock trades using candlestick analysis is a very popular method for investing in the stock market. It is based on technical analysis in order to evaluate securities through analysis of statistics generated in the stock market. Rather than looking at the intrinsic value of stocks, like in fundamental analysis, technical analysis is based on the theory that stock prices move in trends and that history tends to repeat itself. Stock traders use candlestick analysis when placing online stock trades in order to identify chart patterns on stock charts. Additionally, technical analysis involves the use of other technical indicators such as oscillators when trading the stock market.

What is Japanese Candlestick Analysis?
Candlestick trading requires that you learn to identify different patterns that demonstrate investor sentiment. You do not have to learn complex formulas or ratios and can pretty easily see the patterns and signals. Online stock trades that are placed using candlestick analysis look at daily price movement that is represented by lines extending from a candlestick body, and these lines are referred to as shadows or tails. The candlestick body that is formed is either a white candle or a black candle. White candles signify that the stock price is closing higher than where it opened. Conversely, a black candle is formed when the stock price is closing lower than where it opened.

12 Major Candlesticks
There are 12 major candlestick patterns that investors must memorize in order to actually place online stock trades. They have credible and proven probabilities of indicating the future direction of stock. These twelve major candlesticks consist of patterns such as the doji candlestick, the bullish engulfing pattern, the hanging man, and many others. In total there are about 40 reversal and continuation patterns. There are also secondary candlestick patterns that investors can utilize once they learn the primary candlesticks. The secondary candlestick patterns consist of the three black crows, the two crows, the three identical crows and more.

Online stock trades made, using candlestick analysis, is a great way to earn profits trading the stock market. Continue to learn about Japanese Candlesticks and how they can help you.