Archives for October 2019

Short Term Stock Trading

Short term stock trading, also known as day trading, is the practice of buying and selling financial instruments within the same trading day on the stock market. Typically all positions are closed before the market close on each trading day. Short term stock trading allows the investors to buy stock and sell shock throughout the day. The goal is to make a quick profit within seconds that day traders own stock, through the rising or falling of the value of stock. Day trading can be risky business and is only intended for the educated investor. There are two techniques that day traders use to make a profit including leveraging and selling short.

Leveraging, when short term stock trading, is the process of borrowing money to make money without changing or increasing the performance of the trade. Leveraging is very risky investing strategy because if the investment goes against the investor, the loss is much greater. The profit is much greater as well! Leveraging increase both gains and losses so the investor must be prepared to pay back not only what he lost, but also what he borrowed if trade does not go as planned. Leveraging allows for more people to trade stock and requires the investor to open a margin account. Margin is leverage and a margin account is offered by brokerage firms allowing investors to borrow money and to use securities as collateral. Once the margin account is opened, when short term stock trading, the trader can borrow up to 50% of the purchase price of a stock. Margin is a great thing when investments are going up in value, but it can be devastating for new investors who are less experienced.

Short term stock trading, requires the use of stop loss strategies when trading on margin. Stop loss orders provide a measure of protection to the investor. Basically a stop loss order is an order to sell a security at the market price once it hits a predetermined level. Investors are urged to implement simple stop loss strategies to prevent from losing big on a trade. Some may not necessarily implement stop loss in their trading system, but they may choose to set a mental stop loss for themselves. This is okay to do; however, a lot of investors have a problem with actually carrying out the stop loss if it not set up in their system. Investors who do not want to implement a stop loss into their trading system must be disciplined enough to actually follow through with the stop loss they have mentally prepared for.

Another method used in short term stock trading is selling short. Day traders that sell short actually borrow a security and then sell it in attempts to pay back the loan. They pay back the loan by buying cheaper shares later on. Day trading is a very exciting way to make money investing in stock however it is also very risky business. For those interested in this type of investing, it is very important that you know exactly what you are doing before you begin to day trade.

Good investing,

The Candlestick Forum Team

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Candlestick Signals For Day Trading Oil

Over the past year and a half, the most volatile commodity traded has been oil. After rising to record highs at over $75 a barrel in 2006, the prices dropped below $50 and then began rising again. While such volatility can be dangerous for the investor, it also presents great opportunities for profit to the successful traders that know what to do and where to look when using signals for day trading oil.

It has been stated that 80% of all futures trades end in failure. The question behind this statistic is “why?” Commodities can be difficult to predict and there is a lot of volatility but what is the underlying reason for so much failure? Commodities trading require the proficient use of a good trading and investing system which can point out signals for day trading oil and many people simply don’t use a good system.

This is where the Japanese Candlesticks method enters the picture. Colder than normal weather….warmer than normal weather. Calm in the Middle East….war in the Middle East. These are the types of things that can drive oil prices drastically up or down. It is crucial to correctly interpret signals for day trading oil. It takes discipline to study the charts and perform technical analysis, and Japanese Candlestick signals are at the heart of the perfect search.
Technical analysis is the assumption that current prices are representative of the sum of all known information concerning the markets. The price of a stock not only reflects clinical facts, but it also represents the emotions and the “feelings” of a particular moment. Profit-taking, skepticism, greed and fear are all tangible factors when dealing with the markets because the markets can move based on emotions as well as facts. An expert in the market tries to remove the emotion factor from all decisions and base decisions on the candlestick chart formations, assuming that the prices reflect all variables.

The question at this juncture is how to use candlestick signals for day trading oil futures. A simple bar chart can follow the open and close of a particular type of oil; what it can not do is help you to see the signals for day trading oil. The main factors of candlestick chart patterns can be applied to align the elements of successful option trades; signals, stochastics, market direction, etc. A few simple processes can be employed that will exploit the same factors that make other option investors lose money to put money into your pocket.

These factors are:


As you learn candlestick signals for day trading oil, you will notice that you are more accurately able to assess the trends in the market. When all the essential indicators line up for a successful option trade, the signal showing strong commodity trading, the stochastics below the 20 line, further confirmed by a bounce off a trend line, and overall market direction, etc., the best option trading system can be executed. If you are able to successfully read the absolute bottom signals, your signals for day trading oil just got a lot more profitable!


Understanding the signals for day trading oil also means being able to understand the potential magnitude of the price move. The status of the stochastics should indicate how long the upside move can potentially be maintained. The analysis of the upside is going to dictate the ultimate trade strategy. And this has to incorporate the final signal?.time.


Time is a misunderstood component in the signals for day trading oil. You might be saying to yourself, ?I?m going to move today?s purchases tomorrow, how could time even be a factor?? Signals for day trading oil will focus less on the time between buying and selling and focus more on where you are in a particular movement. Remember, you want to buy at the absolute bottom and sell at the top of a cycle; anything else and you?re taking money from your own pocket. Because of this, candlestick signals are still a strong ally to day trading. By understanding the patterns, signals for day trading oil can be much more profitable as you find the extremes in a movement. Candlestick option trading programs have been developed to make “high” risk trading into a very low risk procedure.

Stock Fundamental Analysis – A Key Component For Success

When it comes to investing in the stock market, one measurement stands out above the rest; how much did the investor earn at the bottom line. Traders use many tools to help determine their stock trading plan, but the best tool for assisting an investor is basic stock fundamental analysis. Stock fundamental analysis is the process of examining businesses at the most essential levels. This method of review evaluates key risk reward ratios of a business to attempt to determine the stability and financial health of a company and to determine the value of its stock.

Many investors use stock fundamental analysis alone for their determination of future stock purchases. While stock fundamental analysis is a powerful practice, it should be an important part of an investor’s overall stock trading plan. This plan should include stop loss strategies, as well as a stock trading system such as Japanese Candlesticks. Such a trading system, coupled with basic fundamental analysis can provide the trader with a valuable insight into the murky waters of the stock market.

Basic fundamental analysis helps an investor to know how much money a company earns. This is the ultimate measurement of its success, both currently and in the future. Earnings can be difficult to calculate, but that is to be expected when dealing with the stock market. When a company is growing and profitable, its stock generally increases; earnings create higher stock prices and in some cases, regular dividends and successful trading. Lower stock value can have the opposite effect, making the market bearish on the stock. By evaluating a stock with stock fundamental analysis, it is possible to look for basic candlestick chart formations and determine the direction of a stock. When the direction is known, an investor can implement stock market strategies which reflect either a bullish or bearish approach.

In addition to understanding a company’s earnings, there are a number of ratios involved in basic fundamental analysis that help the investors to evaluate the worth of a company’s stock. These ratios focus on earnings, growth and value in the market. Evaluating these dynamics together can provide unique reflections on the value of the company. When a company can be identified by basic fundamental analysis, its stock can be tracked using candlestick chart analysis. With this information, an investor can move confidently to make a trade. 
Stock fundamental analysis is a key component in any trading plan. Investors can find patterns and trends in the stock price history and use this information to help make decisions about a company’s value and the value of its stock. Incorporating a stock trading system such as Japanese Candlesticks teams up with stock fundamental analysis to form a powerful team in evaluating stock.

The bottom line is the ultimate measure of the success of an investor. Using basic fundamental and technical analysis, a stock trading plan and a stock investing system, an investor increases the possibility of moving from the hope of being a good trader to the reality of becoming a highly successful trader.

Scalping Commodity Profits

The legal way of scalping commodity profits is to look for many small gains during the trading day. In scalping commodity profits traders can make money in either a moving or a quiet commodity market. Simply using the bid/ask spread the trader can make money always buying at the bid price and selling at the ask price in a quiet market. This is also known as spread trading. When the market moves the trader will buy and sell taking small profits throughout the day. Because the market will fluctuate as it moves the scalper will also take losses. Because there is a cost of trading, commissions and fees, it is important for the trader to keep close track of his or her trades to make sure that the overhead of scalping commodity profits does not eat up all profits. A good way to understand scalping in the commodities markets or elsewhere is to take commodity and futures training. The ability to predict market movement with technical analysis tools such as Candlestick chart analysis and Candlestick trading tactics will help the trader in scalping for profits.

The three basic tenets of scalping commodity profits or scalping in any market are these. The shorter the time you are in the market the less your risk. Small moves in the market are more common than larger ones. The nature of the market is that smaller moves are tied to trading whereas larger moves require a change in market fundamentals. Whether the trader is essentially doing arbitrage on small gaps created by the bid ask spread or taking advantage of the irregularity of a market advance, he or she will rely upon technical analysis to make profits. This is not a world of fundamental analysis of commodity futures or commodity options. It is the very attentive watching of the commodities market and the taking of small profits when they are available. This is a very business like approach to trading that can make money every day.

Something important to remember is that the other meaning of scalping is illegal market manipulation. This kind of scalping is when an broker or other insider purchases a security for his or her own account and then promptly recommends it for long term investment. When the equity price goes up the scalper immediately sells and pockets the profit. This is illegal and, when found out, is prosecuted by the SEC. On the contrary scalping by taking advantage of changes in market liquidity, market direction, and progressively widening bid ask prices as the market will allow is perfectly legal and potentially very profitable. The use of Candlestick basics to help determine the direction of individual commodities is essential in the process of scalping commodity profits.

A nice aspect in trading commodities by scalping is that the trader does not have to wait for a major movement in the market as might be the case with trading options in the commodity market or stock market. As it is just a possible to scalp for profits in a quiet market as a moving market the trader can take a lunch break without fearing that he or she will miss a great commodity market opportunity. A degree of market inefficiency is embedded in the bid ask spread. For many traders with the patience and diligence required, this is enough to profit nicely in scalping commodity profits. Trading mini waves in the market that last less than a minute the commodity trader can take advantage of brief commodity prices changes before they disappear. By staying in the market ever so briefly this sort of trading, of course, requires a familiarity with commodity trading software to keep up the minute if not the second.

Market Direction

Why were we able to make big profits this past week on the short side? Having the knowledge of how price patterns perform! The Dow has formed a Blue Ice Failure pattern. This pattern was named by Dave Elliott of Wall Street teachers. ( We will try to get him back on a Thursday night chat very soon ) a blue ice failure pattern has very simple parameters. Once a price comes down through a potential support level, the price will try to come back up through that support level. If it fails, it will go down to the next support level. This was evident when we saw a Bearish Harami in the Dow, forming at the 50 day moving average. That became an indicator to start shorting with confidence.

Many investors have problems with when to enter a trade as well as when to take profits. If the analysis of a pattern can easily project the next viable target, that should be a place to take profits. That does not necessarily mean completely closing out a portfolio but at least taking part of the positions off at those levels. Why is that? If a pattern has a projected target, such as witnessed in the Blue Ice Failure of the Dow, that means the target has been hit enough times in the past to make it a very high probability level to be watched. If that is the case, once that target is reached, there will be the probabilities of people taking profits. Take some profits yourself. However, be aware of what type of signal is forming at that support level. As demonstrated in today’s trading, the Dow did not slow down at the 200 day moving average, it went right through. This makes the remaining portfolio still short but now looking for the next potential reversal area.

Scalping Commodity Profits, Dow


If there is not a another identifiable support level, what becomes the next criteria for when to close out short positions? The next candlestick reversal signal. Obviously the price trend will be in the oversold condition. Learning candlestick reversal signal appears, that is an indication the Bulls are starting to step in. This could be a good distance below the previous support level. That now makes that support level, in this case the 200 day moving average, the next upward target. Cover the short positions, go long but then watch to see what happens when everything comes back up to test that most recent support level.

When to take profits and when to honor your stop loss levels. That is a very difficult procedure for most investors. Emotions get intertwined very quickly. Take profits when the probabilities indicate it is time to take profits. We were short July wheat. There were a couple of days of indecisive trading. Today, wheat traded lower in sympathy with the equity markets. It was a good time to take profits when the price got back to the same levels it bottomed out previously.

Scalping Commodity Profits, Wheat
July Wheat

Scalping Commodity Profits, Wheat
July Wheat 5 min. Chart

It is the ability to visually recognize what is occurring at previous price points that greatly eliminates the emotions out of trading. This is especially true when trading commodities. Once you have learned how to master your emotions trading commodities, you can trade any market after that. Candlestick signals and patterns have simple trading rules. Those rules were established to take advantage of high probability situations. Once you can utilize the information built into candlestick signals, you would then be able to trade without fear and panic.

Commodity traders – do not miss this weekend’s Candlestick Forum Commodity Trading training – you will discover how to take the fear of volatile trading entities out of your thought process. Understanding how commodities move not only becomes an asset for trading them successfully, you also gain valuable evaluation information when trading commodity-based stocks. This is not rocket science! This is commonsense investment practices applied to trading entities that move with much more profitability with the same human emotions pushing the prices around. Please take time to look at trading commodities. It is knowledge that you will utilize for all aspects of investing successfully. Click here for more information.

Chat session tonight at 8 PM ET

The Candlestick Forum Team

This Week’s Special 

2-Day-Commodity Training

Webinar May 22-23, 2010

Click here for details

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Best Stock Advice

Oftentimes the best stock advice is very simple. The best stock advice should lead to the most stock portfolio profits, the best stock trading profits, and the best containment of investment risk . Best stock advice should not be confused with stock tips . The best stock advice has to do with learning how to trade stocks , how to pick stocks, and how to manage investments. The old saying is that if I give you a fish you will eat for the day and if I teach you how to fish you will eat for lifetime. Therefore the best stock advice is to learn to search for and analyze stocks for both long term investing and for day trading . It is to learn how to manage investment capital and it is to learn how to spot investment opportunity in the continual fluctuation of stock prices . Learning the use of Candlestick analysis gives long term investors and traders an effective tool for anticipating changes in market sentiment and subsequent stock price changes.

Although dividend stocks can provide an investor with a steady return on investment it is stock appreciation that provides the lionfs share of stock profits. The best stock advice is, thus, to learn how to anticipate stock price appreciation. Long term investors look for two basics, a margin of safety and intrinsic stock value . A margin of safety in the form of unencumbered hard assets and cash in hand provides a company, and its stock price, protection in times of economic difficulty and stock market crashes . Intrinsic stock value is the forward looking income stream of a company and is the key to expected stock price appreciation. The best stock advice for a long term investor is to pick stocks with both strong growth prospects and sufficient cash or hard assets to help them weather an occasional economic downturn. That leaves the issue of when to buy stock and when to sell stock . With the use of Candlestick pattern formations the investor as well as the trader can pick and choose when to most profitably enter and exit a stock position.

The best stock advice for traders is to learn how to choose promising stocks to trade and to learn the skillful use of technical analysis tools such as Candlestick charts . While investors seek to profit from stocks with long term growth potential, stock traders take advantage of the fact that stock prices rise and fall. Traders profit from selling short, trading options, and buying at the bottom of price curves as well as selling at the top during a market reversal . With the skillful use of technical analysis with Candlestick patterns traders commonly profit during periods of confusion and market volatility . With Candlestick signals as a guide, traders avoid the pitfalls caused by the psychology of trading . They can trade profitably in up and down markets and sometimes the best stock advice is to sit out trades when the market makes no sense. It is a little like the movie, War Games, in which the young man teaches a computer that there are no long term winners in tic tac toe. The use of Candlestick signals gives the trader as well as the long term investor a rational means of trading the stock market based upon market history and the fact that trading patterns repeat themselves. Typically the best stock advice is simply to follow Candlestick signals and trade accordingly.

Market Direction

Cut your losses short and let your profits run! That is the Sage advice that all professional money managers tell their clients. Unfortunately there is one major flaw in that advice. They never tell you “how” to cut your losses short and let your profits run. Fortunately, candlestick analysis provides very simple stoploss processes that show when to get out of a bad trade situation and when to continue to hold. Today’s market action is a prime example of entering when the probabilities were extremely good that the Bulls had taken over but then the bullish signal was negated, indicating any weakness in long positions should warrant closing long positions.

Candlestick analysis works for all trading entities. Join us tonight as Brad Powell will demonstrate how his Right Angle Trading techniques produces huge trading advantages when trading ETF’s.

Chat session tonight is at 8 PM ET.

The Candlestick Forum Team

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Stock Futures

Stock futures can be purchased or sold for single stocks or for exchange traded funds based upon stock indexes. Stock futures are traded on margin. A futures contract on individual stocks, like options contracts, is for 100 shares of the underlying equity. Because stock futures are traded on margin, using a margin account, they offer the trader a degree of leverage. Unlike trading options the buyer of stock futures is obligated to buy on the delivery date or execute the opposite trade in order to exit the contract.

Unlike buying calls or buying puts in options trading the trader is not protected against downside risk. Unlike buying options there is no premium paid by the buyer. The value of an options contract starts at zero the moment the contract is made. However, as stock prices move and both fundamental and technical analysis reveal new pricing possibilities the contract gains, or loses value, depending upon if one is buying or selling. As with options trading using Candlestick pattern formations as a guide traders can anticipate stock price movement and profit from buying or selling stock futures.

Single stock futures are not heavily traded in the United States. The largest market for single stock futures is, in fact, in South Africa. Other markets for stock futures include the UK, Spain, and India. Total daily trading is typically less than a million contracts a day. Stock futures exchanges typically act as a clearing house and cover the counterparty risk associated with futures trading. In the United States OneChicago is a market for single stock futures. Unlike single stock futures exchange traded funds futures trade in the millions of contracts per day. The analysis for this type of futures trading commonly leans much more toward technical analysis that that for individual stocks. Using Candlestick analysis a trader can follow pricing for an ETF and profit from recognizing Candlestick pattern formations and trading effectively.

There are somewhat complicated formulas that (theoretically) price stock futures. Despite their apparent complexity they simply put in mathematical terms what is know about stock pricing and what is assumed. The problem for the trader is that much of what is in the formulas is largely fundamental information, such as whether or not a dividend is about to be paid on a stock. Thus, to profit from stock futures, the trader needs to get a glimpse of the future. He does this with technical analysis tools such as Candlestick chart analysis.

By following stock price the trader can commonly anticipate price movement and have a clearer view or what the stock price will be at the time the futures contract expires and the contract must be satisfied. Also, market psychology works as much on futures as on stocks themselves. To the extent that futures seem to act independently of the stocks themselves Candlestick patterns will commonly be a better guide than any “fundamental” information. Using the fact that market price patterns repeat themselves in futures trading as well as trading stocks traders can profit buying and selling stock futures.

Market Direction: The slow steady upward trend of the market may be the result of investors waiting to see what political ramifications will be, now that the election is over. It was reported last week on CNBC news that the Dow had not had a trading stretch where it didn’t have a 100 point price move during the day since 1996. This has allowed for the maintaining of positions that continue stay above the tee line. It has also allowed for the liquidation of positions that have closed below the tee line. Keeping this money in cash will be advantageous for the first day/week of the new year.

There should be some tremendous opportunities after the first of the year. Keep in mind, the holidays are utilized by money managers just as most people use them for themselves. It is a time to reflect on what went right and what went wrong during the past year. It also gives some quiet time to evaluate where the strength in the markets will be in the coming year. It is not unusual to see which sectors are considered to be the ones with the strongest potential on the open the first trading day of a new year. This is where the big money is going to be anticipating the high profit returns. Obviously, most of us do not have the time, smarts, or access to research to make a sophisticated analysis of which sectors should perform well during the coming year. This usually involves analyzing world market and political situations. It also involves a staff of people researching specific industries and countries. Fortunately, the benefit of candlestick analysis is the quick and easy assessment of what the big-money consensus will be.

The longer the Dow and NASDAQ maintains a steady uptrend, the higher the probabilities investor sentiment will maintain a positive outlook. This is important for anticipating the direction of the market during the first two weeks of the new year. It becomes important to be able to analyze pre-market conditions during that first day of trading. Huge profits will be made during the first few weeks of the coming year. It is knowing how to anticipate which sectors will be forming the best patterns. Members should be prepared for a online analysis starting 30 min. before the market opens on January 3. Being in the right sectors on the open can easily produce 25% to 50% profits over a two-week period.

2010 was a profitable year. As usual, although the markets created some stagnant movements during the year, the visual aspects of candlestick signals allowed investors to maintain positions in the strong sectors. Taking advantage of the common sense elements found in candlestick analysis keeps an investor on the front edge of price movements. This coming year, the Candlestick Forum will be concentrating on everybody’s learning process. The mini training sessions are for the purpose of educating investors in all aspects of successful investing strategies, using candlestick analysis. January 4, 2011 will be a mini training on options. This session will expose investors not fully educated on how the option market works. It will also clarify the disadvantages of option trading and how to circumvent those disadvantages with candlestick analysis. If you have been interested or attempting to learn how to trade options successfully, do not miss this training. It will at least mentally prepare you for what you should be expecting for successful option trading, no matter which trading method you plan to use.

Please join us next Tuesday. It should be well worth your while.

There will not be a chat session tonight. Tomorrow’s trading should be fairly lethargic.

Good Investing,

The Candlestick Forum Team


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Futures Analysis – Reading the Future with Japanese Candlesticks

The name is definitely appropriate; futures analysis rests on being able predict future movements with a reasonable level of accuracy. For many people, bar charts are their tool of choice; it is familiar for sure but it leaves its users without valuable futures analysis information. When reading a commodity trading chart, the Japanese Candlestick signals provide users with a big advantage because they offer more information and predict trends that bar chart simply can’t.

The History of Japanese Candlesticks

Japanese Candlestick signals were invented around 1700 as a method of futures analysis and developed over the past few hundred years while trading rice. The Japanese Rice traders analyzed reoccurring signals on their commodity trading chart when trying to pinpoint the exact times to get in and get out of rice trading. Futures analysis with these signals made the Honshu family immensely wealthy. The signals they identified are as effective today in futures analysis as they were centuries ago.

Why Candlesticks Are So Powerful
Candlestick signals are the only trading system for futures analysis that considers human emotion. Emotions will always be the same; whether you are analyzing a stock trading chart or a commodity trading chart the same factors that have moved prices for centuries will still be in effect today. This is not any new; the human psyche is very predictable when it comes to investment decisions. Candlestick charts give a visual representation of the investor’s sentiment to futures analysis.

For futures analysis, a commodity trading chart will show a distinct advantage over a stock trading chart. The trends in a commodity trading chart will be more consistent, lasting for longer periods of time. The outside influences on a commodity are dramatically less than those found in a stock price. That can be used to an investor’s advantage when using futures analysis for a commodity trading chart.

You will find through futures analysis that most commodities have fewer elements to affect the supply and demand than do stocks. Grains and some of the soft commodities might have weather affect supply; in the currency trading, different currencies may be affected by each other. The British pound, the Eurodollar and the Swiss franc will usually trade the opposite direction of the US dollar.

The ability to analyze a commodity trading chart very quickly with Candlestick signals produces a huge advantage for being able to analyze what the equity markets would do. Crude Oil prices, the US dollar, Gold or any other commodity that could be affecting the direction of the equity markets can be seen and analyzed very efficiently using Candlestick signals.

There are 12 major candlestick signals that relate to trading commodities just as much as they do stocks; probably even more so! The bullish signals contained in them are just as powerful and effective as the bearish signals. Demonstrating when to get into a position is very important; however, what is more important is being able to analyze when to get out of a position. Commodity trading information comes to investors in different forms and different times; the analysis of that information can be interpreted dramatically different by investors. When the media creates euphoric buying at the top, it is hard for many investors to take profits. What if this is the position that is going to make the big money?  Should I be buying?  I don’t want to be selling with all this great Wall Street news around. Emotions such as there keep most investors from selling at the appropriate times.

In futures analysis, it is important to avoid reacting on emotions. This is the reason for having trading rules, a trading plan and following the signals you find with Candlesticks. Futures analysis with Japanese Candlesticks is a highly developed means of looking into the future.

Commodity Trading Patterns

Knowing commodity trading patterns allows traders to anticipate the markets in commodity futures. Successful commodities trading is based upon fundamental analysis of the commodity you wish to trade. It is also based upon astute technical analysis of technical analysis charts. Using technical analysis tools such as Candlestick pattern formations allows the trader to predict future market movement and market reversal based upon past and current market action. Commodity and futures training will help the new trader understand and use Candlestick charts and Candlestick charting techniques to make money in a commodity market.

Longer term commodity trading patterns will vary among commodities. For example, gold bullion prices and gold bullion futures will vary with the economy. Corn futures will vary with the weather and crop forecasts. They will also vary by season. The different fundamental analysis of these two different commodities is based upon their being totally different entities. Other precious metals will commonly trade like gold does. Industrial metals such as copper will trade with the rise and fall of the global economy. The commodities markets in wheat, rice, live cattle or other agricultural commodities will trade seasonally and will rise and fall with the ability of the agricultural industry to produce and ship food throughout the world.

Many commodity trading patterns, especially the seasonal agricultural ones, are unique to those commodities and are more closely tied to the fundamentals of the commodity than to the technical aspects of market reaction. However, the bulk of commodity trading patterns are really the same ones seen in trading stock and trading options. An example is the head and shoulders pattern or the reverse head and shoulders pattern. The head and shoulders pattern signals a market reverse of an equity on an upward trend towards a downward trend. The reverse head and shoulders pattern signals a reversal from a downward trend to an upward trend. Although a persistent drought in a major agricultural producing area may well drive up prices the various interpretations by many traders will cause market fluctuations superimposed upon an underlying trend. Understanding commodity trends, both large and small, will allow traders to profit both from long term market trends and the market inefficiency that result from important new news and market disruption.

One factor that affects commodity trading and commodity trading patterns as opposed to trading in another equity market is hedging. The biggest actors in the commodity markets are typically the producers and buyers of commodities. In fact, commodity markets had their beginning as a place for producers and buyers to come together and agree on future prices that protected each from catastrophic loss in case of a large change in market prices. Rice traders in ancient Japan used Candlestick basics to profit from market movements in rice. Learning through commodity and futures training how to do Candlestick chart analysis and use Candlestick trading tactics will profit the trader in both the short and long run. It is all about leaning the basics, applying them, and maintaining discipline in using commodity trading patterns.

Market Direction

What is the market telling us? The past five days of trading have shown severe whipsawing. As can be seen on the Dow chart, there have been huge down days followed by huge up days. This makes trading difficult. Obviously, it makes analyzing what is occurring in investor sentiment very difficult to interpret. This is usually an indication  there is going to be some dramatic change. In the case of the Dow, after a very steady uptrend, the severe oscillation in investor sentiment is probably an indication that something is going to move the markets in a more dramatic fashion than what has been experienced over the past two months.

Is this a top or is this a resting phase? By analyzing the charts, that cannot be answered. What should be the strategy when this market condition occurs? The point of investing is to analyze indicators that have shown a proven probability for the next move. The use of the tee line has been very effective until the past few days. The uptrend remained in progress as long as there was no close below the tee line. The Doji, followed by a large bearish candle that close below the tee line, indicated there was a change of investor sentiment. The past four trading days has revealed investor sentiment is wildly uncertain. For current trading, it is very difficult to make a profit. That is when an investor should observe the obvious. If market conditions cannot be analyzed to the degree where it gives you the edge, then you should not have your money exposed. Sit in cash or at least have the portfolio positions to where half is in long positions, the other half is in short positions.

Commodity Trading Patterns, Dow


No matter what market conditions are prevailing, the candlestick signals and patterns can produce a number of bullish or bearish potentials. A sideways, choppy market will allow both longs and shorts to be profitable at the same time. This requires one simple analysis. Which long positions continue to show strong charts? Which short positions continue to show week charts? There will be profits made on both sides when the market is predominantly moving sideways.

When the investor sentiment starts to become volatile, it reveals a potential change. This provides a self fulfilling discipline plan. The lack of identifiable direction creates the conditions to be sitting heavier in cash. Thus, when the market does reveal what it plans to do after an indecisive stage, the candlestick investor has heavy cash allotments available. A sideways moving market also allows price patterns to continue to formulate. Watching which trading patterns are setting up doses immediate profitable opportunities in the market does choose the next direction move.
CYTX was a recent recommendation. It had the evidence of a strong price move coming out of a frypan bottom. The resistance level, the 50 day moving average, was the first logical spot to take profits. As the markets in general have moved sideways over the past five trading days, CYTX has continued to set up a J-hook pattern. This becomes a very simple entry decision.

Commodity Trading Patterns, CYTX


If the markets/Dow break itself out of the consolidation stage, the anticipated bullish sentiment would continue confirming the J-hook pattern. Piecing simple common sense deductions together, based upon expected market movements, produces an analytical format that makes identifying high profit situations much easier to evaluate.

Chat session tonight at 8 PM ET.

Good Investing,

The Candlestick Forum Team

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Setting Stop Loss Orders – Also Called ‘Stop Market Order’ or ‘Stop Orders’

What is a Stop Loss Order?

An order (instructions to your stock broker or pre-set in most trading platforms) to sell your security once it trades at a set price. If the price never falls to the stop loss, the order will not be executed. Stop loss orders don’t protect you before you make a trade; they protect you AFTER you enter a position.

Setting stop loss orders limit an investor’s loss on a security position, yet too many investors do not know how to determine the price on a stop loss order. Arbitrarily picking a set percentage, anywhere from 5% to 10%, might make sense for asset protection from a money management perspective. However, setting a 7% stop loss order on a stock that historically fluctuates 10% or more during a seven-day trading period is not a realistic strategy. Setting your stop loss orders based upon your risk tolerance is an emotion based decision – not a technical determination for setting stop loss orders.

The stock market becomes an easy medium for making money when using Candlestick signals properly. The stock market is the cumulative knowledge of all investors buying and selling during any particular time. Just like an individual stock, the stock market itself incorporates waves of human emotion. Whenever human emotion is involved with an investment entity, Candlestick pattern formations  visually clarify what those emotions are doing. The stock market can easily be analyzed when applying Candlestick technical  analysis.

Being able to analyze the direction of the stock market greatly enhances the ability to extract profits. The fact that the stock market moves up and down without major changes in fundamental economic conditions from week to week is a clear illustration that fundamentals do not move markets, the perception of fundamentals is what moves markets. Candlestick signals identify what is going on in investor sentiment and makes it possible for setting stop loss orders at logical points.

June 4th Market Direction

Candlestick analysis provides a very simple visual confirmation of whether the Bulls are in control or the Bears are in control. Over the past couple of weeks, the Dow and S&P 500 have been trading below the T line. The T line is a very high probability trend indicator. Historic results show that as long as a trend is closing above the T line, the up trend remains in progress. As long as a trend continues to trade below the T line the downtrend remains in progress. Over the past few weeks of trading, the Dow and S&P 500 have been trading below the T line while the NASDAQ has traded above the T line. For the candlestick investor, this makes the trend evaluation relatively simple. The overall market trend was not going to move in any powerful direction one way or the other. Today’s positive trading change that evaluation. Today the Dow closed above the T line as well as the S&P 500 gapping up above the T line and the NASDAQ continuing it’s uptrend above the T line. This provides much more evidence that bullish sentiment is now in control of the market. This allows the candlestick investor to be more aggressive when scanning and implementing bullish trades. It also provides accurate trend assessment that instigates closing any short positions that are starting to show too much bullish sentiment.

Candlestick patterns, in conjunction with the T line, provide an extremely highly accurate trend analysis. It is merely logic put into a graphic depiction. Bullish sentiment witnessed in the big trading stocks such as AMZN, TSLA, NVDA provide additional confirmation there is a lack of bearish pressure in the general markets. Knowing there is better probabilities the market uptrend should continue make scanning for the potential big price move pattern breakouts the better trading strategy for these market conditions.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team

Website Special

Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to the Current Website Special