Trading Forex With Candlestick Charts

Chitika   Agustus 09, 2017

Trading Forex With Candlestick Charts

Trading Forex Candlesticks

This forex blog explains trading forex with candlestick charts, what specific candlestick patterns I look for to make some very profitable trades.

What is a candlestick pattern?
In technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern.

Candlestick charts are one of the most powerful technical analysis tools in the trader's toolkit. They are also one of the most prevalent. Most technical analysis programs use candlesticks as the default mode of charting. Used correctly, candlesticks can give a signal in advance of much other market action.

There are many Forex trading strategies a trader could use to profit in this business.

The Forex market is the largest financial market in the world and allows traders the opportunity to capitalize on currency trends to yield profits. There are many Forex strategies a trader could use to profit in this business.

Candlesticks in Forex Trading - There are a few things you need to know when trading candlesticks. In my experience, the 15 minute charts to 4 hour charts are the best ones to use when trading candlestick patterns. You must always wait for the candles to complete to make sure the candlestick pattern is complete. Do not guess where the candle will close and try to get into a trade early.

Which candlestick pattern is most reliable?
Top 5 Most Consistent Candlestick Patterns

• Doji Formations. Doji formations, such as dragonfly and tombstone, are widely regarded as strong indicators of a probable reverse. ...
• Piercing and Cloud Cover Formations. ...
• Engulfing Formations. ...
• Hammer and Shooting Star Formations. ...
• Harami Formations.

There are many other candlestick patterns, however some are more dependable than others. The ones I use are called engulfing patterns. Specifically "Bullish Engulfing" and Bearish Engulfing". Both of these are reversal patterns and are considered to be some of the most profitable candlestick patterns to trade. When the candle body engulfs the previous candles body, this is called an "engulfing" pattern. Bullish engulfing patterns are found at price bottoms and bearish engulfing patterns are found at price tops.

How to Trade Engulfing Candles - To trade engulfing candlestick patterns, we're looking for an end of an uptrend or downtrend. This does not have to be a strong trend but it does need to have some momentum that appears to be coming to an end. A good indication of a trend coming to an end is when the bodies of the candles are getting smaller in size. That means the momentum may be running out and this is when you should be looking for a reversal in price action. This could also be the beginning of a consolidation period, so we need to be aware of that.

In an uptrend, we look for an "up" candle immediately followed by a "down" candle, where the body of the "down" candle engulfs the previous "up"' candle. This is the setup we want to see so we take the short trade immediately following the close of this candlestick. Next, we count how many pips away the top of the highest last 2 candles are, including the wick, and add 5 pips. This is our Stop Loss. Our Take Profit target should be set to twice this value.

For example, if our stop loss is 40 pips away, then our take profit should be at least 80 pips. Money management/risk to reward ratio, are key in this business. A long trade would be similar to a short trade except we're looking for a downtrend reversal to get into a trade.

You can search around the web for forex candlestick patterns and learn all you need to know about them, but remember there are so many of them, you need to just focus on a few. As I mentioned, the engulfing patterns are some of the best ones to trade so if you stick with those, you'll do very well.

Trading Forex With Candlestick Charts

If You Are Tired Of Losing On Your Trades Then Follow This Simple Strategy To Buy Low And Sell High

Chitika   Juni 07, 2016

If You Are Tired Of Losing On Your Trades Then Follow This Simple Strategy To Buy Low And Sell High

Simple Strategy To Buy Low And Sell High

This forex blog about if you are tired of losing on your trades then follow this simple strategy to buy low and sell high. Here’s a great 'ten simple tips’ forex trading strategy which you can use to maximize your trading profits whilst at the same time minimizing risk to your trading capital. If you already do your own trading and can set automatic buy/sell orders then this strategy is perfect for you.

No matter which forex trading strategy you read about or try, they all share one fundamental principal  that is to buy low and sell high. Sounds simple enough, but then why do some 90% of traders manage to get in and out of the market at the wrong time, over and over and over again?

What over-powering force is in place which steers the 90% to do this? The answer is human nature and the counter-intuitive manner in which the forex market operates.
The 10% of traders who consistently make money in the forex market do so by buying when the masses are selling, and selling when the masses are buying.

They do this by following a dozen or so strategies, some simple, some more complicated. It is not in the scope of this article to go into each and every strategy, but here's one anyone can use.

I MAKE $300 EVERYDAY WITH SMA AND MACD FOREX STRATEGY 

The links at the end of this article point to the web page where you can see this strategy in the form of charts and graphs which make it much easier to understand. Take a look if you're finding it difficult to picture it.

The Ten Tips Strategy:

1. Study the 12 month charts of several reasonably well known companies and pick out forex that have been in a steady UPWARD trend throughout the period. There are always plenty of them, even in a falling market.
No stock is ever a sure thing, but give yourself a head start by choosing one which is going in the right direction! Fundamentals don't mean anything if the price of your chosen forex is trending downwards. Don't care what the company is or what it does. This is irrelevant, you are just here to make money, period.

2. Check out the trading volumes and eliminate any which lack decent liquidity.
Avoid forex with not much liquidity (not a lot of buyers/sellers) as you need to be able to get in and out easily and without effecting the price yourself.

3. Study the 3 month chart and check the recent levels of resistance. These are points where the forex price has peaked and then pulled back, before breaking new heights again.

4. Place a mental note to buy at a price just above the most recent top. Note you are not actually buying  at this point, just making a mental note to buy when it hits this price.
The forex will need to reverse upwards again and 'break through' that last resistance level to effectively 'buy you in'.

If the forex price does not reverse but instead further drops away, simply lower your 'mental buy order' to just above the resistance levels going down and wait for the stock to turn back upwards again.

The great part is the more it drops the better as you have still not bought in.
If it is a well known company and there's temporary bad news surrounding it (anything except impending closure) you can be sure this stock will eventually bounce back and catch up with (or even temporarily over-take) its long term trend.

When it does it will catch up quickly, over a few weeks perhaps. Follow the next steps and you will be sitting on it all the way up to next top. Gains as much as 30% are common.

5. When the forex price eventually reverses direction back up and passes up through your buy order, immediately buy at market price.

6. Now set your stop loss. Study the last couple of months of the chart and check the rising levels of support. These are points where the forex has resumed its upward direction following a pull back.

7. Place a 'note to sell' at a price just below a recent support level. Not too close but not more than 5-8% below your buying price. Your sell order is now your stop-loss.

I cannot stress more - you MUST use a stop loss. Your stop loss will protect your capital if the stock unexpectedly reverses down again. You can always get back in later when it recovers from a very deep pull back (and make even more money in the process).

8. As the forex price movies up, but as soon as reasonably possible, move your stop loss (sell order) up to your buying price. Your stop loss is now your break even. Don't do this too soon as the stock price may possibly test the support level above your stop loss before heading up again. Give it a few days to do that if it's going to.

9. As the forex price continues up, keep trailing your sell order up with it to just below the support levels going up.

10. When the forex price reverses direction and passes down through your sell order, immediately sell at market price. Your sell order is now your stop gain.

On a final note, one of the greatest obstacles to success will likely be you. One of the hardest things to do is to actually sell when your stop is triggered. There's always the voice in the back of your head telling you to hold on a bit longer if the price moves against you. This could be the death nell of your trading because if the price continues to fall it will erode your trading capital.

To counteract this danger you should try to automate many of these processes. Set your stops and if the stop is triggered you can find out why afterwards.

If You Are Tired Of Losing On Your Trades Then Follow This Simple Strategy To Buy Low And Sell High