The following questions are taken from individual emails to the Candlestick Forum staff. They are asked by members and non-members and relate to Candlestick Trading and other miscellaneous topics. We thought it would be a good idea to share the answers with all who are interested for an education on stock trading for the entire Candlestick Trading community.

 

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2. What is the "January Effect"? - B.M.

The "January Effect" is when stocks have big losses in the prior year, they are dumped a lot to take the tax losses, and are driven down even lower in price than where they should be. But in January, investors come in and scoop up the "bargains", driving the price back up. - Daryl Thompson

3. If I become a member, how much do I need to start with in my trading account to follow all of your recommendations? - A.L. 

The amount is not all that important. It is the learning process for preparing yourself for future management of investment funds that is the key. It is better to learn with lower amounts of money versus making some learning mistakes with a large amount of funds. The training does not equate to the amount of money you are investing but to the mental preparedness that the candlestick analysis will be able to hone. - Steve Bigalow

 

4. I was recently involved in a bad trade on some micro cap stuff and
saw a Bearish Engulfing Pattern at the bottom. Since you normally see these
types of signals at top reversals, if they occur at the bottom are they
just less powerful since you're already there? - S.J.

 

Yes, and usually a Bearish Engulfing signal is the last gasp selling at the bottom. You would want to start watching for a buy signal very soon. - Steve Bigalow

 

5. What time frame would you suggest for Candlestick 'watching' in the Forex?
I've been looking at 15M and 1HR charts. Is there a 'best' time frame for 'reverse' type signals? - J.P.

 

If I am day trading I use the 1, 5, and 15 minute charts, but the charts are based on the time frame you like to trade. If you're making 2 or 3 trades per day, then a 10, 30, and 1 hour chart may be the best. - Steve Bigalow

 

6. Could you help me on how to do sector research to help find which sectors are cooking and which are cooling? Do I check the indexes for different sectors or what? Do I look at candlestick patterns for sector indexes, and if so, where can I find the various sector indexes? - D.R.

 

Sectors are found on TC2000/TCNet in the "All Media General Industry Averages",  they can be put to the same scans as individual stocks. Look for the oversold sectors that have the biggest percentage move coming up from the oversold area. - Steve Bigalow

7. I read your book with great interest..never thought about candlesticks the way you presented them. Thanks. I have a question. I am considering trading commodities (grains, bonds, meats, etc;) using options. I am trying out a charting service by Gecko that specializes in just the commodities (kind of like TC2000 with stocks, but not quite as elaborate). In the software that Gecko has, the time frames are based on daily, weekly, and monthly charts. Do you think that any shorter time frame is needed? I just plan to trade the options, so it's not like I will be watching the computer all day. Also, TC2000 is sending a package to me...I want to explore trading options with stocks also, but I think the commodities interest me the most. Just wanted your feedback as to the time frames. I also plan to be using slow stochastics, as well as MACD. Presently, I am trading the E-mini S&P using a 30 sec. tick chart as well as a 250 tick chart. This is too much....having to sit at the computer all day watching these short time frames, which is why I am interested in the longer time frames. - E.H.