Candlestick
analysis provides the basic understanding
of why prices move in a trend. The Japanese
rice traders figured this out hundreds of
years ago. The major misconception about investing
is that prices move based on fundamental reasons.
The heart of the matter is that prices move
based upon the perception of the fundamentals.
As was clearly illustrated in the bubble of
1999 and 2000, prices didn't necessarily have
an underlying fundamental reason to go up.
Investors were buying based on the perception
of improved fundamentals in the future. When
that perception dissipated in 2001, prices
moved based upon the new perception of prices
compared to the fundamentals.
Stock market investing 101 should start with
the basics. How do you detect when prices
are going to move up or down. This becomes
a very simple process when studying Candlestick
signals. A much easier process than trying
to evaluate all of the outside influences
and market conditions that would put an investor
into a position prior to all the other investors
and be able to figure out that those outside
influences and market conditions would produce
a profit in that stock, or whatever trading
entity you were evaluating.
The Candlestick signals, especially the 12
major signals, produce an extremely high probability
that a reversal is in the making. This probability
is created because the signals have been identified
through hundreds of years of analysis as being
a graphic depiction of what formations have
occurred, over and over, prior to previous
reversals. Use this information to your advantage.
Identifying reversal patterns when the confirming
indicators are in the right place reveals
what the investor sentiment is at that price
level despite what the fundamentals are projecting.
As in the NASDAQ chart, the signals provide
a clear visual format for when to be buying
and when to be selling. When moving averages
and stochastics are applied to chart analysis,
exploiting the investor sentiment that is
being revealed in the signals makes for high
profit trades.
When you learn how to use the Candlesticks
correctly, you take the guesswork out of
investing. You are now trading with a format
that puts the probabilities in your favor.
Whether you are learning how to invest or
you are a seasoned investor, applying Candlestick
signals to whatever trading method you have
been using can dramatically increase your
returns.
Stephen W. Bigalow is the author of
“Profitable Candlestick Trading” and the
principal of www.candlestickforum.com,
one of the leading websites on the Internet
for educating investors in the use of Candlesticks. |
