Candlesticks Applied for Good Trade

Candlesticks Applied 

“A man, although wise, should never be ashamed of learning more and must unbend his mind.”

What was the term most often used in the explanation of candlestick signal benefits? “Probabilities!” The primary factor for placing investment funds at risk. Having the probabilities in one’s favor for making good investment re­turns! Investments are made because they have a good probability to make money. Many investment methods promote favorable investing results. Many investment methods have elements incorporated into their system that im­prove investor probabilities. Some have been tested for a reasonable length of time, 10 years, 20 years, and 50 years. The trust in what candlestick signals provide is based upon hundreds of years of proven results. They do not work 100% of the time, BUT to ignore what candlestick signals are conveying is to go against the odds.

The information gleaned from the appearance of candlestick signals pro­vides immediate knowledge. Because results can be analyzed, with a high de­gree of accuracy, candlestick analysis contains important trading components. It provides a signal for when to enter trades. It also provides the graphic infor­mation for when a high-probability trade situation is not performing. Simple inferences can be made for what a price or trend should do, when candlestick signals appear in the correct conditions. Evaluation can be acted upon with some certainty. The ensuing price move has expected results. The price move, not performing as expected, should provide additional information. The high “probability” expectations were not occurring. Move the money elsewhere.

Patterns can be employed to further increase the probabilities of being in a correct trade. Patterns occur for the same reason candlestick signals form.

Human emotions involving investment decisions have recurring characteris­tics. The fear factor! The greed factor! Both become assimilated in the price as trends move. Visually recognizing a pattern increases investment probabilities. The reason a pattern can be recognized is because of the results it has produced many times in past trend situations.

The basis of technical analysis is the recognition of chart formations that perform consistently. The results of a chart pattern become greatly enhanced when applying candlestick signals into the pattern evaluation. This is nothing more than taking two “probability” oriented graphics and combining their posi­tive results.

This book was written for the purpose of training the eye to instantly recall profit ‘potentials.’ The ability to identify the graphic set-ups of having had high-profit trade situations in the past, becomes very advantageous. ‘Funda­mental’ reasons for a price to be moving may not be known to all investors. However, the educated eye can detect when price behavior resembles previ­ously witnessed price behaviors that have produced profits. Utilizing consistent investor behavior patterns provides a format that can increase investment re­turns dramatically.

Human emotion becomes the fatal flaw for most investors. Candlestick signals and trading patterns are a graphical depiction of those flaws. Being able to eliminate the presence of emotions in investment decisions is the discipline most investors should strive for.