Trading With Candlesticks Made Easy
We all know candlesticks. And we all know how trading with candlesticks is one of our most powerful tools. It's hard to imagine techinal chart analysis without candlesticks. So for that reason alone it clear that understanding candlesticks and knowing how to use this tool, is of the utmost importance to you.
The Basics Of Trading WIth Candlesticks
The first to use trading with candlesticks were the Japanese. There was a man named Homma, who traded the rice futures in the 1700s, discovered that besides there being a link between supply and demand, the market was also heavily influenced by emotional decisions of the traders. He understood that he could gain a benefit from understanding the emotions of the traders. He saw that there could actually be a difference between the value and price of the rice. This difference between value and price is still relevant in every market today, including forex.
There are two ways to look at price. There's fundamental analysis and technical analysis. Technical analysis and candlesticks are of the psychological or emotion sort. The technical analysis is seeking to answer the question "how are other traders viewing this and how will that effect the price in the immediate future".
When they are used in the correct way, candlesticks can give a signal of market direction before most other indicators. They can be created for any time period you want: Monthly, weekly, daily, hourly, per minute and even per an odd number like 52 minutes (if that's your kind of thing). Regardless of the time frame, candlesticks should not be viewed as a sole entity in your trading approach. Even when candlesticks are viewed in a pattern, be sure to incorporate other signals and indicators into your trading as well.
Candlesticks As A Tool
There are heaps of candlestick patterns and it can be daunting to recognise and take advantage of all the different patterns. Ofcourse some patterns are more useful than others and some suit your trading personality much better than others. But when the right patterns are used correctly, they are a great tool to increase the accuracy of your trades. And having the ability to recognise these patterns will provide for plenty of trade situations for trading with candlesticks.
As always when it comes to tools. Treat them as just that, a tool. Never rely on just one tool and gather confirmation from other tools as well. This will decrease the risk of the trade not working and it will improve the accuracy of your forecasts greatly.
Once you understand your set of patterns, you will be reading the story of the price as told by a sequence of candlesticks, like a pro. You will be able to make forecasts with decent accuracy and acting on confirmation once they show up.
Watch the video above for the full lesson so you can continue to enhance your skills and be better everyday.
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Editors’ Picks
EUR/USD eases below 1.0850 on renewed USD strength
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GBP/USD drops below 1.2700 on notable US Dollar demand
GBP/USD is extending the downside below 1.2700 in the European trading hours on Tuesday. The ongoing bullish momentum in the US Dollar, despite sluggish US Treasury bond yields, undermines the pair. Mid-tier US housing data are coming up next.
Gold price struggles to lure buyers, holds steady above one-week low ahead of FOMC meeting
Gold price ticks lower amid reduced Fed rate cut bets, elevated US bond yields and stronger USD. Geopolitical tensions could lend some support to the safe-haven XAU/USD and help limit losses.
Why is the crypto market crashing?
The two most important contribution to the ongoing bull market is the meteoric rise in Bitcoin due to the ETF approval and the sudden interest spike in Solana ecosystem. But the recent move suggests that the upward momentum is dissipating and a correction looms.
Canada CPI Preview: Inflation pickup could scale back bets on early interest-rate cut
The Canadian Consumer Price Index is expected to have risen by 3.1% YoY in February. The BoC shows no rush to lower its interest rate. The Canadian Dollar maintains its multi-day lows against the US Dollar around 1.3540.
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