Power Trading With Candlesticks

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.

All information provided by forexwatchers.com and Navin Prithyani are for informational purposes only and not trading advice. The reader/trader/investor will be solely responsible for the profit or loss made using the information provided on this report. Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.