Most candle stick patterns will show the same thing so it is best to
stick with a few and learn them. Learn just a few such as the basic
and most common of them all, the Shooting Star, Hammer, Spinning Top
and the Doji. These are the best when found at the end of an uptrend
or a downtrend in price movement. Look at the long wicks that are
present on the candles sticks. This is a key sign of hesitation in the
market, with a battle of sellers and buyers. Traditional technical
analysis of traders would use these candle patterns for signals to go
long or short, buying at the start of the new emerging trend, and in
many cases these work out and become a winning trade. Traders will
look for reversal patterns to place a trade.
Most traders need to use a stop market order as a stop loss
because it is used to predefine the maximum loss one is willing to
take on any given trade. This is why candle stick chart patterns are
good to use.
For a long position a "sell stop market" would be placed below the
market, and for a short sale, a "buy-to-cover stop market" would go
above the market. Once the trade is in place, stops can then be used
in the trade to manage profits. Especially when trading reversal
patterns from candles.
Traders use a stop limit which works by triggering a limit order
at a certain price when the stop price is touched. One problem with
this type of order is that since a limit order is not guaranteed to
trigger, there's a chance that market conditions the stock position
will not be sold, thus defeating the purpose of "stopping losses."
By keeping an eye on your candle stick charting you can set your stops
and make money on the trade. Stock traders must decide which strategy
you are willing to undertake to become a profitable part of your
trading.
|
