Candlestick Patterns — A Technical Analysis Tool

Candlestick PatternsWatching candlestick patterns is as old a trading technique as trading itself. According to Wikipedia, a candlestick chart is a style of bar-chart used primarily to describe price movements of a security, derivative, or currency over time.

It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity and currency price patterns. They appear superficially similar to error bars, but are unrelated.

But can you make money studying candlestick patterns? How do you know which trading products work and which ones don’t? Are automated systems better than manual systems?

The answer is yes AND no. Most systems will work some of the time and not work some of the time. Professional traders know that the best way to consistently conquer the market is to diversify — diversify your risk as well as your systems.

Professional trading coaches will advise their students to think in terms of winning half of their trades. The only way, then, to not just break even is to win more often or win more when you are right. So to avoid having to win more trades, you need to pay attention to your risk reward ratio and shoot for a reward that is twice what you are risking. In other words win the two dollars when you are right and only lose one dollar when you are wrong.

If you stick with just one trading technique or just one automated system, you could end up breaking even on the trades and actually losing money due to trading costs and margin interest.

Using candlestick patterns in your technical analysis is a tool you should become familiar with. To get up to speed on this valuable timing technique, pick up the Candlestick Crash Course.

  • You’ll improve your chances of winning by learning:
  • Intro – Be prepared for the trading day with a solid game plan
  • Technical Analysis – What does and does not work
  • Candlestick Charts – Get the basics
  • Types Of Candlestick – Your most effective patterns
  • Entry Signals – What signals get you in at the the most effective time
  • Continuation Patterns – The trend is your friend
  • Reversal Patterns – What does it mean to your bottom line
  • Exit Signals – When to get out
  • Filtering – Avoid traps and false signals
  • Time Frames – Which ones work best and when

If you are not already using candlestick patterns to diversify your trading systems, CLICK HERE to learn what professional traders know. Beginners and pros alike will benefit from the education by real traders.

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