Short Term Trading

Short term trading requires that investors understand important concepts. This style of trading attempts to capture gains in a stock within one to four days and moves very fast, so understanding these concepts and the ins and outs of short term stock trading is crucial to your success as a stock trader.

Short term stock traders must have a sense of the overall market trends in order to successfully trade stocks. You don’t want to take the chance of having the market trend go against you so if the trend is negative, then you should consider shorting and buy very little. Conversely, if the trend is positive, then you may want to consider buying stock and doing very little shorting when short term trading.

Short term trading also requires that traders understand the overall patterns that take place in the stock market. The market tends to trade in cycles and these cycles are used by traders to determine when they should enter the market, exit the market, and whether or not they should go long or short when they enter the market.

Moving averages are also important to understand for short term traders. The moving average tells us the average price of a stock over a specific amount of time. The purpose of using moving averages is to indicate to the trader whether or not a stock is trending upward or downward. There are different types of moving averages including the simple moving average (SMA), the exponential moving average (EMA), and the weighted moving average WMA). Understand how to read moving averages and you are one step closer to successful stock trading.

Swing trading is a type of short term trading where technical analysis is used to look for those stocks that have short term price momentum. Swing traders will hold onto a stock for typically a few days or for two to three weeks. They trade stock based on its intra-week or intra-month oscillations. Candlestick analysis is helpful tool for swing traders. The characteristics of candlestick signals create the parameters that make swing trading successful. Pattern recognition is necessary when trading stocks using candlestick analysis. The trader must learn to identify signals indicated in various Japanese candlesticks patterns that tell a trader when it is time to enter and or exit a trade.
There is a lot more to learn about short term trading in addition to what was briefly addressed in today’s article. Continue to learn about the different technical analysis tools available to investors and find those tools that work for you. Just be careful that you keep it relatively simple by using only a few different technical indicators. Trying to incorporate too many can actually go against you. Master a few and you should start to see results.

Market Direction

Observe the obvious! A major advantage provided by candlestick signals is the clear visual information that is conveyed. It makes the obvious technical analysis indicators more obvious. As can be observed in the Dow chart, the trend channel was acting as support. When a trend channel, trend line, moving average, or any other indicator that can be obviously observed as having an effect on a trend, the utilization of candlestick signals allows an investor to make strong and appropriate decisions immediately.

Short Term Trading, DOW


Even with the weakness in Friday’s trading, the Dow still closed in the trend channel range. The NASDAQ formed a Doji right on the 50 day moving average and the T. line. This made for a very simple analysis. There is an expectation in price movement after a Doji. A trend will usually move in the direction of how it opens after a Doji.

Short Term Trading, NASDAQ


Having that knowledge made for a very easy strategy decision for this morning’s trading. The Dow and the NASDAQ pre-market futures showed a significant downside. A bearish indication in the NASDAQ futures illustrated that it would open below the uptrending channel. This presented the opportunity for a very simple game plan. Closeout long positions that were not demonstrating excessive strength. Add short funds to the portfolio. Why could this be done with great confidence? Simply because of the results that should be occurring based upon candlestick signals and support levels.

Short Term Trading, FAZ

FAZ Short Fund

Many investors have a hard time making decisions when closing out existing positions and adding new positions. Too often hesitancy is created because of the lack of a defined trading strategy. Candlestick signals, in conjunction with other technical indicators, allow for rapid and decisive position changing. Todays gap down in the NASDAQ, after a Doji and below the lower trend channel required immediate action. The candlestick investor has the benefit of simple trading rules that create high probability results. Once an investor learns a few easy-to-identify price patterns and signal actions, the fear of moving funds into and out of  positions becomes dramatically reduced.

Why do professional investors consistently make money? Because they understand price movements are caused by reoccurring forces as a result of investor sentiment. Investors that trade for a living or are dependent upon substantial income from the markets recognize the reoccurring signals and patterns. This is what allows many investors to make a career out of trading/investing in the markets. Knowing and understanding the details involved with successful candlestick analysis allows an investor to move from making good money from the markets to making their career income from the markets

Are you the investor that seems to be able to get into good positions but do not know the correct time to exit a trade? Do you seem to be losing more money on bad trades then you should, offsetting the gains of the good trades? Do you get caught up with nursing a bad trade and letting the rest of the trades flounder around? The Candlestick Forum boot camp allocates extensive time in into to each of the aspects of candlestick analysis that allows an investor to trade successfully. Knowing the correct manner to enter and exit trades, positioning stop losses, and taking profits at the appropriate times, dramatically reduces the emotions that sabotage most investors mental thought processes.

Do not miss this opportunity to gain insights into successful investing techniques that you will utilize for the rest of your investment career. The boot camp provides actual  hands on analysis. Each training is limited to only 15 people. This allows for better interaction with each participant, dissecting and formulating corrections into each persons investment technique. Seating is limited, only a few spaces left.

Chat session tonight 8 PM ET for members.

Good investing,

The Candlestick Forum Team

Candlestick Analysis Technician

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