Candle Stick Patterns

October 7, 2018 | Filed under: Stock

There are hundreds of Candlestick patterns. If you master just a few of them, it can make a major difference in your trading, and money in your account.

The first two candlesticks, you should be aware of are the Hammer and Doji. These are usually signs of a reversal in the market place. After a significant, up or down trend. If you have an up trend, and they show up, usually it means, the next period of time the market will go down. The reverse is true as well. If you have a down trend, and one of these patterns show up, the market is likely to reverse the next period of time.

Now a couple of cautions:

  • These are not absolute. So don’t bet the farm. Never guess. Know.
  • If you are going to trade them. Wait for confirmation.
  • Confirmation means, Wait till the next day (or period of time), don’t guess, and see that the market opens in the direction you anticipated. You will not get the price you want, but will be right more often.
  • Being Right (winning) is more important, than getting the best price.
  • If the next day, when waiting for confirmation, you see another doji or hammer, it is the beginning of flag pattern (sideways action). Maybe good for a Flag trade. Play both sides.
  • They can happen any day, or time. But you should always wait for the next day (confirmation).
  • In a sideways market, you can have them happen a lot. It is a sign of indecision for the market. The bulls and bears are fighting it out and no one winning.

Here are some examples, from my Cheat Cards. 70 flash cards. To teach you candlesticks.

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