Stock Market Programs - When to Sell, Candlestick Sell Signals
Stock market programs, what every investor should have!!! However, most investors have no inkling of how to research stock market programs. Unfortunately most investors put their portfolio together with a scattered approach to buying positions. Because they do not have stock market programs for defining when to buy, they definitely do not have a program for when to sell.
Candlestick signals are as accurate for defining the time to sell as they are for showing the time to buy. Considering that the signals are still around after hundreds of years of utilization and producing profits, it should be assumed that there is something in the signals that work. As hard as it is for most investors to find a system that produces many good trades, it is even harder to figure out when to sell, especially when the enthusiasm is running over for owning a particular stock.
Buy low, sell high. The same emotional problems that most investors have when buying into a stock, when there is panic in the streets, occurs just as frequently when investors try to figure out when to sell.
The Japanese traders say "let the market tell you what the market is going to do." The utilization of Candlestick signals makes analyzing the direction of the markets and stock price trends relatively easy. It becomes difficult at times to sort out what the price intentions are when listening to the many scenarios from the so-called “market experts.” Watching the financial news stations will always provide a multitude of opinions on where the market or a stock price is going. Using Japanese Candlestick signals will circumvent all that noise.
The one basic factor built into Japanese Candlestick signals is that they are formed by the cumulative knowledge of all of the investor input, the buying and selling, of a trading entity or trading entities, during a certain time period. No matter what you hear elsewhere, the Candlestick signals tell you exactly what the investor sentiment is doing.
When an investor is fortunate enough to be holding a stock that has made a strong up-move, the same emotional factors enter the selling decision. Where do I sell? Two emotional elements enter the picture. First, there is greed. The average investor wants to hold on to profitable stock positions because one could keep going to the moon and ‘make me rich’. We imagine how much money we would make if the trend continued for another profitable 20 points. This emotional strategy now deters the rational decision of selling when it is time to sell. Instead of analyzing where the trend could be ending, what the stock price could potentially do becomes the overriding factor. Unfortunately investment prices do not give a hoot about what an investor is “hoping” for.
Fear is the next factor. How stupid we would look if we sold a stock at $20.00 and it went to $30.00. The biggest fear becomes selling out too early. Investors usually have a hard enough time identifying profitable trades. They definitely do not want to sell out too early. That fear now causes investors to hold on to a position well past the time that it should have been sold, giving back a good portion of the profits. Candlestick signals eliminate that dilemma. Hundreds of years of refinement have defined “high probability” sell signals. Using the major Candlestick “sell” signals will immensely increase your profits. Candlestick analysis provides a format for establishing buys and sells.
Most investors do not have a game plan when it comes to their investment dollars. They buy when somebody tells them about a good stock to buy. The next purchase might be something they read in the newspaper or a magazine article. After a while, they have a portfolio of positions of which they don't remember why they bought each position, which certainly means they do not have a program for when to sell the positions.
Buying a position using a Candlestick buy signal puts the probability of being in a correct trade highly in the investors favor. Conversely, selling a position when the Candlestick sell signals start to appear puts the probabilities of being out of a trade near the optimal sell areas highly in the investors favor also. The critical word is probabilities. The probabilities already have been identified through the use of Candlestick signals for centuries.
Does that mean that every buy signal is going to work correctly? Definitely not! But it does put the Candlestick investor into positions that have a great probability of working. It also allows the investor to close out trades that aren't working immediately, cutting the losses short.
The Candlestick sell signals create a high probability situation indicating that is time to take profits. Does this mean that every sell signal indicates the absolute top of a trend? Definitely not! But it does provide a format to indicate that the probabilities are that the top is near. Additionally, there is nothing wrong with selling a position when the probabilities say it is time to sell and buying back later when the signals indicate that is time to buy again.
There is nothing wrong with getting out of a position when the signals say it is a good time to get out and buying back, even at a higher price, when the signals indicate the buyers are coming back in. The point of investing is not to maximize your profits on each trade. The point of investing is to maximize your profits in your account.
When the Candlestick signals indicate that the probabilities are not in your favor, why fight it? As illustrated in the Dow chart, the bullish trend from late October into mid-November started to reveal Candlestick sell signals, an Evening Star signal, a Bearish Engulfing signal, and a few Doji's. This congestion area became an opportune time to take profits in some of the stock charts that had moved up and were now getting toppy. And with simple analysis, upon seeing the trend exhibiting bullish Candlestick formations coming up out of the congestion area would have been a signal to buy back into the positions that had pulled back or buy new positions that were showing good strong buy signals at the time the Dow was moving up again.
This is not rocket science. This is being able to visually analyze what the Candlestick signals are telling us. The final trend has come to an end when stochastics show an overbought condition and Candlestick sell signals appear. Once again, the probabilities tell us that it is time to take profits.
When the market in general starts to get toppy, the valuation of individual stock charts becomes more easy to analyze. If the markets are getting toppy and a stock position is getting toppy, again, why go against the probabilities? Take profits. If the market turns back up or the stock starts showing buy signals again, it can always be bought back. Why sit in a position when the Candlestick signals that have worked effectively for centuries are challenging investors to get out?