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Candlestick Patterns and Signals:
Candlestick is one of the most important part of any price chart. Generally a candlestick has One body and two shadows, Shadows are not compulsory in every candlestick patterns.
Candlesticks are usually two types one is bullish candlestick and other is bearish candlestick.
Every candlesticks body shows the open and close prices. In bullish candles, The open price is lower than close price. That means price closed above the open price.
On the other hand, In bearish candle the Close price is lower than the open price.
The difference between bullish and bearish candles from each other, They are displayed with different two colors.
Generally the bullish candles are displayed in green and white color, On the other hand the bearish candles are shown in different in color in black or red.
Each of the bullish and bearish candles upper shadows shows the high price, And lower shadows indicates the low price on this chart.
This is the main anatomy of the simple words of a candlestick pattern. Not only this the candlesticks creates the different shapes and patterns. Each shapes and pattern has a different signals and price directions. Candlesticks are great indicator that tells the traders what to do.
All of the professional trader are use and follow the rules of candlestick patterns.
Doji
When the market price open and closed prices are virtually equal, then the Doji candlestick are formed. A Doji candlestick looks like a Cross, Inverted cross or plus sign.
Doji candlestick means that bull or buyers, and bears and sellers are equally mached, and none of them are stronger than the other one.
so doji means indecision. Doji formation we mean the trend can be continue, reverse, or moving sideways. if we have any position in this market should exit.
we are look how many doji candles we have on daily price chart of any market. all of them worked as a reversal signals. the price continued its way after many others or long time sideways.
The price was sideways because of doji, and reversed after this doji:
7 Ways to NOT Blow Your Account:
I have gotten a lot of complaints on how people blow their account so I decided to give this lecture to help know how to avoid blowing your account because I know it can be so frustrating, without further ado let’s dive into it:
1. Do Your Own Research– Don’t Follow Blindly
If you really want to be successful, you cannot just blindly follow others. That principal applies to any activity we do in life, be it sports, education or our 9-5 job.
If we just follow someone else, sooner or later we will get burned. This applies even more to trading because the person you are following might have a motive behind his actions which you may not be aware of. Another critical issue is the delay, if you are following a person into a trade; there is no guarantee that you will get the same price as that person did. So blindly following is inevitably going to get you burned. Swear after me if you are trader – Thou shalt not follow anyone blindly no matter who they are
Having said that, it’s okay to listen to people and take their advice, but at the end of the day while trading, you must be acting on your own.
2. Check Your Emotions
If you have been trading, you will gradually notice how important it is to keep your emotions in check. Trading with emotions is the biggest recipe for disaster. Let’s look at a case:
Imagine that you are holding 200 shares of Amazon and it gaps down 20 points. So you’re down 4,000 – is that loss too big for you to lock in? For most people it is and let me tell you that most people won’t book such a loss but wait for the stock to recover! Eventually that loss becomes wider and one has to take a much bigger hit in few weeks after waiting for the stock to recover.
Now on the other hand, sometimes people get captivated by greed. So let’s say you are holding 200 shares of Amazon and the stock goes up 50 points. Do you sell at that point? Most people will find 10k profits enough and they will sell out. But seasoned traders wait until the stock stops moving but they will continue to ladder out of their position. As it starts to stall out, they will exit from the stock. So if you can keep your emotions in check, trading can become a little easier. So rule number 1 in trading: Cut your losers and let winners run.
3. Be Consistent – Riches Don’t Come Overnight
Consistency is the name of the game in trading. If you want to be successful in the long term, you have to stay in the game for it. Most traders blow their trading accounts at least 2-3 times in their career and end up quitting trading for good.
The first requirement of trading is that you have to stay in the game, and the best way is to become disciplined and consistent. Figure out the position size and trading style that works for you and come up with monthly and yearly goals, and stick to them. There is absolutely no need to try to become rich overnight. So, if you target $10,000 a month, you can make $120,000 as yearly income, which is quite substantial. But if you try to make $50,000 a month
and sit on hands for the next 3-4 months, the whole game changes. Such risky trades usually carry a lot of risk and can potentially damage your trading account badly.
4. Develop Your Own Trading Rules
Like any other career, you must be constantly learning from your experience. The same thing applies to trading. Anything different that happens during the day, make a note of it. Over time, this trading journal will be your go-to place in times of crisis. Similarly, every trade needs to be logged or documented with a detailed explanation mentioning what worked and what problems you faced. You should make it a habit to go back to the journal and review it every other week. Overtime one can find trends from this journal that can lead to highly successful trading.
5. Analyze and Note down Your Performance
Measure, measure and measure!
Figure out what is working for you. Are you more of a short trader or long. Do stocks work out better for you vs. options? What kind of holding period works best for you? All these questions and many others can only be answered by analyzing your trades regularly and learn from the findings. Following are some interesting stats to monitor:
• Position Size vs % PnL
• Long / Short vs. % PnL
• Stocks / Options vs. % PnL
• Month by Month PnL % (to figure if seasonality plays a role in your bottom line)
• Day of Week % PnL
• Win Ratio
• Average Gain Size vs. Average Loss Size
• Holding Period for Gains vs. Loss
In order to calculate these stats, you can import your trades into any analytics software and generate a report. The site I mentioned for logging my trades provides an easy way to analyze your trades as well. There are many more stats that traders should track, but I think the aforementioned list is a good starting point. For more advance stats, please feel free to get in touch with me.
6. Be Connected with Successful Traders
No matter how good trader you are, the market is going to do its own thing. Sooner or later, you will feel the need to network with solid traders to exchange ideas and validate your trade ideas. The market requires traders to constantly adapt to market conditions and trading patterns. Being part of a successful trader network helps you adapt faster, as you can see other traders trying out various techniques so you don’t have to make all those mistakes. You can learn from others and shorten your learning curve.
7. Assess Your Risk Appetite and Plan Accordingly
Many new traders don’t know their risk appetite and end up trading in position sizes that are much larger than they’re able to handle. At any point you should be able to take 8-10% hit on your position. So if you aren’t comfortable with the potential loss, you should reduce your position size.
Risk is also increased by holding into various events such as earnings, as stocks tend to move wild after that event. So if you are holding the stock and it misses the earning, it might go down 10-20% easily. Why take such risks? Track these events and get out before the event. You can always get back into a stock. As a rule, I would rather wish I was in a stock than out of it.
With these 7 steps?
Different type of Reversal and Continuation Patterns
Hey Traders,
There are different type of Chart patterns which could be used for all time in forex trading main strategy. We would like to talk all about the different types of reversal patterns & continuation patterns, this can be whether you are a swing trader or a day trader we all must look for signals such as these as they are solid confirmations for our trading ideas.
Forex reversal patterns are on chart formations which help in forecasting high probability reversal zones. These could be in the form of a single candle, or a group of candles lined up in a specific shape.
Types of Reversal Chart Patterns
There are two basic types of trend reversal patterns; the bearish reversal pattern and the bullish reversal pattern.
The Bullish reversal pattern forecasts that the current bearish move will be reversed into a bullish direction.
The Bearish reversal pattern forecasts that the current bullish move will be reversed into a bearish direction.
Double Top and Double Bottom
We will start with the Double Top reversal chart pattern. The pattern consists of two tops on the price chart. These tops are either located on the same resistance level , or the second top is a bit lower. The double top pattern typically looks like the letter “M”.
The Double Top has its opposite, called the Double Bottom . This pattern consists of two bottoms, which are either located on the same support level , or the second bottom is a bit higher. The double bottom pattern typically looks like the letter “W”.
Head and Shoulders
The Head and Shoulders pattern is a very interesting and unique reversal figure. The shape of the pattern is aptly named because it actually resembles a head with two shoulders.
The pattern forms during a bullish trend and creates a top – the first shoulder. After a correction, the price action creates a higher top – the head. After another correction, the price creates a third top, which is lower than the head – the second shoulder. So we have two shoulders and a head in the middle.
Of course, the Head and Shoulders reversal pattern has its inverted equivalent, which turns bearish trends into bullish . This pattern is referred to as an Inverted Head and Shoulders pattern.
Overall
Reversal patterns are a key part in trading and especially useful for confirmations in your trade ideas. You may not always find reversal patterns but when you do you will know the best possible entries!
Thanks for taking the time to read our learning section.
Please check out our other trade ideas in our blog.
Order Types in the Forex Market
Why Orders
are Important in Forex Markets ?
There is a requirement to have some sort of automated system
within these Forex markets. This is due to the fact that the market
operates 24 hours a day, 7. Thus the value of the investor's holdings and
thus their net worth is constantly changing all day, every day. So if a
position that is open is not properly managed for a couple of days the value of
its money can drastically shift. It is also impossible to control the
positions round-the-clock manually until you're a large multinational company
and have employees working throughout the day.
In this scenario market orders can are a great
option. These are instruments that traders and investors on the Forex
market employ to handle their position open. These tools permit traders to
make sure that the amount of their trades stay within certain limits even when
the market fluctuates 24 hours seven!
Market Order
The most popular kind of order that is that are used on market orders
in the Forex market. In simple terms, it's simply an order to
purchase something at the market price. If you've previously
purchased something online you will notice that"Buy Now" is the way
to go "Buy Now" button kind of does what the market order is doing
within market. Forex market.
Thus, it could be stated that the market order will be executed in
real-time when it is placed. This order searches for the most affordable
price on the market and then books your order at the price you are looking for. Because prices in
the Forex market fluctuate quickly, it's possible that your order will be
executed at a price that is slightly different than you planned to! This is referred to
as slippage in the language of market. Slippage can
sometimes work in the favour of investors however at other times it could be
detrimental to the investor.
A market order is an open position from the moment it
is made. Therefore, the profits and losses that result from
this trade must be realized once you close your position.
Pending
Order
The term "pending" refers to an instruction
to carry out an order to buy or sell i.e. an
order to market only when certain conditions are met. Thus,
one could consider it an order that is conditional. Pending
orders can therefore be considered to not performed and are not considered to
be element of margin calculations until they actually are executed. Pending
orders do away with the need to continuously monitor the market in order to
trade. Instead, it allows traders to make automatic orders
that make trades instantly once the specific conditions are satisfied. The
use of pending orders can reduce the requirement for manually manipulated
trading.
Profit Booking
Order
Orders for profit booking are generally orders to
close an open position that is long i.e. to
sell. These orders define the requirements that must be
fulfilled before the square off can take place. For
instance, an instruction to make a trade when the profit is greater than 10
percent or there is an increase of 12% is known as a profit booking request. These
orders allow traders to take profits from an environment where prices fluctuate
quickly, and manual placing of orders could take a long time.
Stop Loss
Order
Stop loss orders are the opposite of an order to book profits. However, it is
utilized extensively in markets than the profit booking one. It specifies the
lower limit which the buyer is prepared to pay. If the price falls
below the threshold, the buyers sell their shares with the goal of reducing the
loss.
So the order to square the long open position in case
prices fall is referred to as the stop loss order. This
order also acts quickly and stops losses because it acts much more quickly than
manual intervention might.
Trailing
Stop Order
The trailing stop option is comparable as a stop-loss. This implies that
the order can also be sold off from an open position once the price reaches a
certain floor. In this instance, the floor is moved upwards
in the event of the possibility of making a profit. Let's suppose you
set up an order to stop a trailing stop 10% lower than the market price. The following day,
the value of your position has been boosted by 15 percent.
If you place an order for stop loss the price floor
will stay exactly the same i.e. 10% lower than the price at
which you initially initiated trading. But
a trailing stop order is a stop order that trails an exchange price. In
this scenario the price floor would be 10% lower than the current prices i.e. once
the price reaches an all-time high.
Dependent
Orders
There is also the option of creating dependent order. Forex market also
permits traders to place dependent orders. This means that an
investor is able to put two orders in one go depending on the conditions of the
market, only one is executed. Additionally, the placement of one order can
result in the creation of another order later on. Dependent orders can
be utilized to develop complex algorithms that can execute trades without any
human involvement.
It is evident that the Forex market is shifting ever more toward the
use of artificial intelligence to execute trades. Many believe it is
the sole method to successfully trade in a volatile market like the Forex
market, which is moving all day, every day on a 24-7 basis!
