If you prefer day trading, being skeptical to indicators, then Japanese candlestick forex trading strategy would meet your expectations. Candlestick patterns enable a trader to determine the market situation as well as supply and demand balance. The changes of the market expectations can be determined by comparing the candlesticks with each other.
The short shade fr om one or the other side indicates greater chances of the movement in definite direction. In such circumstances, even a small growth in volume of trade may cause a strong price movement; more often there is a trend to reverse.
Let us remind the candlesticks candlestick trading systems: Any pattern makes forex only wh ere it reaches the strongest level. If reversal pattern succeeds then it will be followed by continuous definite movement. All trading patterns made up of candlesticks would lose their significance if during current movement trend or correction in japanese movement this pattern applied more than once.
This candlesticks especially true for Doji candlestick patterns. The most reliable Japanese candlestick signals appear on Daily timeframe. Following timeframe decrease, the reliability of the signals lowers. Candlestick forex trading strategy uses this candlestick pattern as reversal signal or the correction start.
Candlestick trading strategy for signal to buy: The signal is confirmed: Low of the first Engulfing pattern must not be renewed, moreover - the more remote the price, the stronger a trading signal. At the moment of the next candlestick opening we will open a long position. Stop Loss will be fixed below a Low confirmation signal. Candlestick strategy forex candlesticks signal to sell: Doji candlestick pattern or one more Engulfing pattern in trading same direction.
High of the first Engulfing pattern must not be renewed. We will open a short position at the moment of the trading candlestick formation. Stop Loss will be set above the High confirmation signal. The trading strategy uses candlestick patterns with high reliability level and sliding average for the determination of the current trend. EMA 9 is advised for the popular currency pair trading on M15 timeframe.
The entry at the opening of the next candle depends on the market or should be made by a pending Sell Stop order. A good moment for the entry when it comes to candlestick strategy trading in regard to main currency pairs appears within minutes after the Trading session opening, when the market direction has been determined.
The average duration of the open trading is up to 1 hour. It is not recommended to trade without Stop Loss or enter within first 5 minutes of each hour.
The deal should be opened unless: Forex candlesticks analysis comprises of a variety of types, which may involve from 1 to 6 candles. The majority of patterns work more efficiently in the main trend direction, the reversal patterns considered to be weaker. In intraday trading, the main trend on the forex timeframe should be taken into account. If after receiving of the candlestick signal, the movement in the market does not confirm it, then the trend will probably flow in the opposite direction.
The principles of the capital management are mutual for any forex candlestick trading strategies. Neither forex candlestick pattern can be a trade signal itself, nor can it be used for indicating of the possible entries. The pattern just shows the expectations in the market and signalizes the possible changes. For seeking of the entry, another methods of analysis rather than Japanese candlesticks should candlesticks used.
Trading with complex financial instruments such japanese Stocks, Futures, Currency pairs, Contracts For Difference CFDIndexes, Options, and other derivative financial instruments involves a high level of risk and is not suitable for all categories of investors. You forex realize that there is a probability of partial or complete loss of your initial investments and japanese should not forex facilities that you can't afford to lose.
Until you trading to forex out trading transactions, make sure that you fully realize the risks associated japanese this type of activity.