Candlestick Pattern

Author: Stock Market Investing Master

Candlestick Pattern

Learn how to profit using Candlestick patterns.  The author of this article has had much past success with forex trading and has reviewed some best forex trading accounts such as eToro and Easy forex. He is a savvy forex trader with years of experience in day trading and long term play!

Opinion is divided on whether the candlestick pattern of trading is a viable form of trading and whether it makes money for the trader. This form was used by the Japanese more than 500 years back for trading rice and now this technique is being used by foreign exchange brokers and traders to project price movements and accordingly take positions. They rely on the past and current price movements to make a forecast of the currencies they are interested in and try to make trading profits.

The foreign exchange market has made a lot of people rich and also robbed many people of their savings. You need to know to accurately interpret the currency movements and thanks to a lot of software, it is becoming easier to forecast movements and make money. One such software is the candlestick pattern software. You must however, know the software and its capabilities fully before attempting to trade and since there are different types on how it can be used, selecting the right one for your needs is important. Many have found the 30 minute candlestick chart as ideal for them and advise that a starter must ensure completion of this pattern before making his first move. It is not wise to take positions when the trend indicates a half way movement that is yet to complete.

Another pattern is the engulfing candlestick, which is also popular among traders and has been found to be profitable to many. In this, the reference is to the current situation emerging that threatens to submerge the previous pattern and is a combination of both bullish and bearish trends. These trends and patterns can inform traders about the possible movement of the currency in question once the pattern completes its movement. Normally engulfing patterns predicting a rise are formed when the price points are at the least levels and the engulfing bearish patterns are just the opposite.

The question is how to make use of these patterns to make money? Following the patterns give you a fair idea of the future movement and you can take a position either in agreement or contrarian to it. You need to wait for the trend to get completed and the chart is the only evidence of this kind of movements, which you can rely on. A diminishing candle indicates that the trend is about to complete.

Traders need to also look for the submerging of the up candle by the down candle and means there is the possibility of a bullish run and when the opposite happens, it indicates a bearish run. What exactly do traders need to see in the candlestick pattern that will let them start trading? When traders see an up candle engulfed by a down candle immediately following it, it means that there is an upward trend and a short trade is advisable. The downward trend works under the same principle.

You can be successful following the candlestick pattern with the right timing and correct analysis and that comes with experience.