Stock Trading using Japanese Candlesticks

Stocks and Shares - Stock Trading for Beginners using Candlestick Charts

What are Candlestick Charts ?

When trading stocks it is useful to have some sort of method on which to base your trading decisions. One method that many experts use is technical analysis using Japanese candlestick charts. Candlestick charting will allow you to spot market reversals relatively accurately. One problem that you come up against however when using candlestick charts is that there are around 50 different patterns that can be used.

Experts (such as Stephen Bigalow) however, say that there are only around 12 candlestick charting signals that occur regularly, which makes using candlestick charts more feasible.

The most common candlestick chart signals are :-

• The Doji
• The Bullish and Bearish Engulfing Signal
• The Hanging Man
• The Shooting Star
• The Hammer
• The Bullish and Bearish Harami
• The Dark Cloud Cover
• The Piercing Pattern
• The Morning Star and Evening Star Signals
• The Kicker signal.

The beauty of these signals is that they are, according to those that use them regularly, very accurate and also that they can be easily learned by beginners to stock trading. They cut through all the noise and conflicting signals and inofmration given out by the 'professionals and experts'. It is also worth bearing in mind that candlesticks have been around for centuries since they were invented by Japanese rice traders hundreds of years ago. Why have they stood the test of time ? Quite simply because they work !

A Japanese candlestick "buy" signal in an oversold condition will give an extremely high probability that the trade will be profitable, but adding other indicators such as stochastics around 20 or below, moving averages, Fibonacci numbers, trendlines and trading channels etc... will make them even more accurate.

For more details about the basics of Japanese Candlesticks - see Candlestick Charting
Other candlestick charts patterns : Piercing Pattern
See also : stocks and shares for beginners
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