Earning stock trading profits with Candlestick signals is something that traders beginning investing in the stock market can do with proper training and practice. A good place to start training to learn Candlestick analysis is at a Candlestick Forum Boot Camp. A good place to practice is at a trade station in simulation stock trading followed by online coaching during trading sessions. Earning stock trading profits with Candlestick signals is what traders have done for years. In fact, Candlestick charting techniques go back hundreds of years to commodity trading in rice in Japan. Because Candlestick patterns can be seen any market it is possible to use Candlestick trading tactics when trading options, trading futures, and trading commodities as well as trading stocks.
After initial training, earning stock trading profits with Candlestick signals is a matter of applying what the trader knows. Traders need to choose which stocks to trade and the method by which to trade them. Trading stocks directly is possible as well as trading stock indexes and trading stock options. In any case traders will use Candlestick chart formations to predict future movement of stock prices as it is the stock price that matters even in index trading and options trading. Often times the choice of stocks or indexes to trades is as important to earning stock trading profits with Candlestick signals as trading technique. This is because some stocks have such little price variation that there is little profit to be made. In looking for stocks to trade it is important to look for price fluctuation and volatility. It is in trading volatility such as a breakout gap where trading profits can multiply for the trader skilled in Candlestick trading.
Earning stock trading profits with Candlestick signals is possible because price patterns in markets repeat themselves. Although these price patterns are based upon fundamental factors the technical trader knows that the fundamental factors are generally known. As the market reacts to the fundamentals traders will find a Candlestick pattern that reliably predicts the next market move. At that point all of the training in simulation and all of the online training webinars come to fruition as the trader will buy stock or short sell stock as dictated by a Candlestick pattern. Profits come when they are ready and one of the reliable ways to know if the market is going to change is by learning and using Candlesticks.
Earning stock trading profits with Candlestick signals also has to do with avoiding losses. Managing investment risk comes into play in all successful stock trading. By learning to accurately identify as well as interpret strong Candlestick signals the trader will learn to stay out of trades where the signals are weak or even unclear. There is always time to trade and stock to pick for trading. A large part of the wisdom of trading with Candlesticks is to identify when earning stock trading profits with Candlestick signals is likely and when what you see on the stock chart is only a semblance of a signal and not the real thing.
Market Direction
Candlestick analysis is not merely identifying when a reversal signal occurs. It also involves analyzing potential change of investor sentiment at the appropriate conditions of a trend. This allows an investor to be prepared for repositioning a portfolio by anticipating when a signal should appear. As seen in the Dow on Tuesday, it sold off hard and closed below the T-line. The dark candle did not form a reversal signal. However, the magnitude of the selling and the fact that a close below the tee line provided valuable information. This may have been the first crack in the confidence of the Bulls during a nice steady uptrend. Wednesday.most of Tuesday’s losses back. Today’s early-morning buying was showing more bullish sentiment but needed additional confirmation. The bullish sentiment needed to stay in the markets today, indicating the Bulls were solidly in control. As pointed out in the morning comments, a close at the lower end of the range would raise suspicions the Bulls were becoming more nervous.
Today’s close clearly revealed the investor sentiment. Indecision! The Dow and the NASDAQ finished the day as a Spinning Top. The underlying factor remains that the indexes did not close below the tee line. The market uptrend still has to be considered to be in progress. There is now evidence the bears are coming into the market. There are strong bullish charts continuing and there are some good short positions setting up. This may be another indication the investor sentiment is starting to switch over.
DOW
The same evidence that is used to show when a trend might be losing steam can also be applied to identifying the strength of a trend coming out of a candlestick pattern. As seen in the TPC chart, the fry pan bottom was followed by a breakout and produced the expected uptrend. Note how indecisive trading over the past few days in the market has not altered the strength of this trend. This reiterates the point that a pattern price move is usually going to continue based upon the force built into the pattern versus what the rest of the market conditions are doing.
TPC
Learning how to use candlestick signals and patterns effectively involves knowing what a price move should do after specific circumstances. The alternative is knowing what the signals and patterns should not produce as a result. This is what allows investors to cut their losses short and let their profits run. Very simple rules can be applied to the high probability signal in pattern situations. How a price opens following a candlestick signal is a strong determining factor as to whether a trade is entered or not entered. The probabilities become greatly in your favor when you know what the price should be doing. This is not rocket science. This is merely taking advantage of the information that is built into candlestick analysis.
Chat session tonight at 8 PM ET. Everybody is welcome.
Good Investing,
The Candlestick Forum Team
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