adminWe know that candlesticks are very helpful for traders because they help in developing trading ideas and decisions. We know that trading may tend to be subjective, and we all have our techniques and skills in trading. However, here are some unsolicited tips and advice that can further help maximize the use of candlesticks.
Do not give every candlestick that appears on the chart a special meaning
Yes, each candlestick may suggest many meanings, but some are not too essential. There is no need to check and observe every candlestick on the chart. Here is what you can do: look for the candlesticks where the price is trading near essential support and resistance levels at the moment and then focus on that. Once you have identified where the support and resistance level are, it is time that you can interpret the meaning of that specific candlestick.
Yes, these candlesticks help us develop sound trading ideas and decisions, but forex will always be forex at the end of the day. It will always be unpredictable. These technical tools and indicators are there to guide us. They do not guarantee anything. So, if a candlestick suggests a reversal or continuation, know that these will not always happen. They are just possible scenarios.
Do not imagine too much.
If you are planning to buy, then focus on finding strong evidence of buying pressure. You can do the same if you want to sell. Try to find proper evidence that points out an intense selling pressure. It is good that you have good gut feelings towards a chart but do not stress too much. Again, do not give meaning to every candlestick that appears on the chart just because you think there may be something there. It is nice to put in many efforts in trading but know where to exert your effort. Do not let it go in vain.
Think outside of the box
A while ago, we said that you should not imagine too much. That is true, but do not imagine too less as well. Yes, the textbook may say that Japanese candlesticks may be single, dual, or triple, but that does not mean that five or six total candles formation will not happen. If the candlestick pattern has five candles in total, this also means something. Try to analyze and understand the candlestick and the price action that comes behind it. Memorization is good, but it still means nothing if you do not know how to apply it in the real world of trading.
Do not forget about the bigger picture.
It is nice to analyze and observe what happens in the short periods to get more specific details. However, remember to look at the broader picture. Focus on the small and big things.
Our last advice would be to be patient.
While it is true that some candlestick patterns can confirm on their own, a considerable percentage of these patterns do not! Be patient and wait for the candlestick to close and form before making actions. Do not rush too much so that you can confirm where the price is really headed.
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Paul Watson
Clare Louise