Whether a beginning investor or a seasoned trader, a steady uptrend can create an atmosphere of confidence. This is why knowledge about candlestick signals is very important. It controls the human emotion factor. The logic built into candlestick signals allow investment decisions to be made based upon the mechanics of visual signals versus the rationale created by emotions. The market opened up strong today. Many of the positions that have been followed in the Candlestick Forum chat room have been producing inordinate profits. When the portfolio is producing strong gains day after day, the danger of emotional investing becomes much greater. An investor can get caught up in the euphoria most investors feel as stock prices continue to rise. When you begin feeling invincible, that your investment abilities are superb, do a reality check immediately.

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Candlestick analysis provides valuable signals for taking profits. Where do most investors buy? They buy exuberantly at the top. There are indications of that exuberance. The formation of long candle bodies reveal exuberance. Gap-up in prices in the overbought condition reveal exuberance. Today's bullish trading, on the open, produced a large number of gap-up prices in stocks that had already produced very strong gains. When a price gaps up in overbought area, what should a candlestick investor do? Start watching for sell signals. There are some very simple stoploss strategies for taking profits at the appropriate time.

LDK had been producing some good profits coming out of a Jayhook pattern. It looked like it had the possibility of producing some big gains. However, the gap-up open provided an alert. What should be watched for after a gap-up in an overbought condition? A candlestick sell signal! A very simple technique for maintaining profits can be employed after a gap up. If the price gaps up and continues higher, put a sell stop at the open price. Logic dictates that if the price gaps up, continues higher, but then comes back down through the open price, there is an extremely good chance a candlestick sell signal will occur. If a price gaps up, and immediately started selling off, put a sell stop at the previous day's close. Prices coming back down through that level have a high probability of producing a candlestick sell signal.

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Utilize the other simple rules of candlestick analysis for assisting in taking profits. LDK was recommended as it was forming a Jayhook pattern. Knowing the simple rules about a Jayhook pattern allows for better preparation for taking profits. Wave one will usually equal the price move of wave three. If that is the case, wave three can be measured to project where it might end. Wave one produce approximately $4.50 of a profitable trend. Wave three, starting at the seven dollar level, should be expected to move to approximately the $11.50 area. This was exactly the price area where the morning gap up in price opened. With this price move precalculated, an investor would be more alert as to where to start watching for a potential reversal.

Candlestick analysis greatly diminishes the potential of emotional decision-making. If an investor knows what a pattern should do, they have a much better control for analyzing where to watch for sell signals. Having a roadmap for when the buy and when to sell creates a trading platform where the investor is dramatically more in control of their own profitability. If you are not using the information built into candlestick signals, you are putting yourself at a great disadvantage. The profitability from investing becomes dramatically more consistent when you know when to buy and when to sell.