THE JOY OF CANDLESTICK TRADING - a Learning Experience

[tymen1]

Hello there :

Well this thread on candlesticks is now here as promised. Indeed it has had a long gestation period. I have prepared many charts beforehand from last year especially for this thread.

Now this thread is for all to post and all ideas are welcome. I do candlestick scalping but posts giving information about long term trading should also be very informative to interested traders.

Like everyone else, I started out with conventional indicators and soon became frustrated with many losses on forex. I already knew about candlesticks from my share trading and it was only a matter of time before I looked at and studied candlesticks because I was losing with indicators.

Candlesticks give up to the second information whereas indicators only tell you things upon the close of a bar. So candlesticks are completely up to date whereas indicators are basically delayed data.

Would you trade the sharemarket if your prices were delayed by, say, 20 minutes? NO WAY! So why do it with forex?

I have always believed in keeping posts relatively short - else the reader gets bored. So this post ends here.

Next post I will suggest one great advantage of candlesticks. Then charts will be slowly posted, one by one. Other posters are welcome to do the same so that we candlestick traders can all learn from one another.

LET THE CANDLESTICK TRADING BEGIN

[akeakamai]

This is my favourite candle setup. Downtrend, then a white candle with a long bottom shadow, then another white candle on the next day that closes above the last red candle of the downtrend.

You could call it a three inside up pattern, but its better because of the long shadow.

Bonus points if you know what Daily chart this is from! It sure highlights that candlestick pattern pretty well.

Bonus points go to Max99. Answer: USD/CAD in Nov. 2007

[tymen1]

Nice pattern there akeakamai.

However, the candles are very small and, although the trends can be seen, the pattern is difficult to see. Magnification is required for us readers.

What is the indicator below?

Also, for our benefit, what time frame is this chart using?

[Max99]

Originally Posted by akeakamai

This is my favourite candle setup. Downtrend, then a white candle with a long bottom shadow, then another white candle on the next day that closes above the last red candle of the downtrend.

You could call it a three inside up pattern, but its better because of the long shadow.

Bonus points if you know what chart this is from! It sure highlights that candlestick pattern pretty well

That's an easy one, daily chart of USD/CAD. Do I get the bonus?

Nice pattern but I like to add Bollinger Bands to go along with candle patterns. I'm looking forward to this thread. I think it will be very helpful for a lot people.

[jlmac27]

Glad to see you back!Can't wait to get down to business on this subject!!!

[tymen1]

Well, I think it is my turn to reply :

One great advantage of candlesticks as I see it is that you do not need to look at other time frames to trade. Of course you can do so if you wish but the candlestick patterns do tend to stand on their own.

Take the evening star pattern. It tells you to trade short - no ambiguities.

That does not mean that it will not fail, but the choice is clear.

With indicators, several time frames are needed to confirm the direction of the trade.

Now there is a qualifier to all this - I am writing from the perspective of a scalper.

But there is another condition that makes the patterns even more reliable ..............................next post.

[topgun]

I'm looking forward to this thread also since I love candlesticks trading. I like trading 4 hour charts though and nothing is better than a nice hammer "closing" @ the 200SMA . Or even a morning star on the daily at the 200MA, then a hammer on the 4 hour close.

Topgun

Originally Posted by tymen1

Well, I think it is my turn to reply :

One great advantage of candlesticks as I see it is that you do not need to look at other time frames to trade. Of course you can do so if you wish but the candlestick patterns do tend to stand on their own.

Take the evening star pattern. It tells you to trade short - no ambiguities.

That does not mean that it will not fail, but the choice is clear.

With indicators, several time frames are needed to confirm the direction of the trade.

Now there is a qualifier to all this - I am writing from the perspective of a scalper.

But there is another condition that makes the patterns even more reliable ..............................next post.

[akeakamai]

Originally Posted by tymen1

Nice pattern there akeakamai.

However, the candles are very small and, although the trends can be seen, the pattern is difficult to see. Magnification is required for us readers.

What is the indicator below?

Also, for our benefit, what time frame is this chart using?

Fixed, it's a regular old stochastic but I took it off, it wasn't important. It's a daily chart too

[lexzi]

i started forex wit $1000 and i lost $800 wht do i do i even but a softwear well recognised and i read well and apply the formular plz wht do i do or can u guys help me wit daily trade alert so i can know wht to trade................................lexzi

[tymen1]

To lexzi :

3 things I can suggest. Others will give further advice :

1) Demo trade only untill competant. Do not live trade.

2) Save up your money again untill you have at least another $1000.

3) Have you done Babypips school? If not, do it. Then, when complete, study the following hyperlink:

Japanese Candlestick Charting Explained