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Understanding Stock trading

Understanding stock trading with candlestick signals

Understanding stock trading becomes much easier when an investor understands what candlestick signals reveal.  Japanese candlesticks are in existence today because Rice traders identified powerful results.The results occurred in spite of other market conditions. Understanding successful stock trading or trading of any other markets stems from the understanding of investor psychology. Perception of events is a much stronger influence on price movements than actual fundamental realities

Is the overall direction of the market important?  Definitely, and candlestick analysis provides a very clear evaluation of the probable direction of the indexes. Understanding stock trading includes putting the probabilities in ones favor.  Candlestick signals however produce a much more powerful investment element. The signals and patterns can identify potential price movements that do not necessarily become influenced by the general market trends.  This becomes a very important investment tool. Do the markets always act in a rational or predictable manner?  Obviously not, or else everybody would be making money in the markets.  How does an investor protect themselves from the world events that can dramatically change investor sentiment? The use of candlestick signals and patterns makes for compelling investment strategies.

 

What makes the Dow dropped over 200 points in one day?  Evidence of events that were not considered in recent evaluations.  Rumors that develop new scenarios to economic conditions can instantly alter the general investment considerations.  Friday, rumors started the indicated that Iran had  started to withdraw their assets from the world markets, bringing their assets back home in case sanctions were put on. The next rumors were that Iran would cut production to give the world a taste of what $100 a barrel oil would do to world economies. These rumors permeated on Friday, not being in the investment scenario the previous day.

Understanding stock trading is understanding what the general investment sentiment is toward the markets.  Three weeks ago, the future looked rosy.  2006 did not appear to have a stumbling blocks for having a nice consistent up trending economy. The past week has now been influenced by the ramifications of dealing with the government of Iran.  Could this analysis been projected a few weeks ago? More than likely, no!  As illustrated in some of the previous newsletters, trying  to project what was going to occur in the markets/economy one year out was like spitting in the wind. 

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