One of the most powerful technical analysis tools available to traders on the market today is no doubt the Japanese candlestick techniques. The history of candlestick techniques goes back to 1700 century in Japan when a futures rice trader who discovered that although prices are determined by supply and demand, when emotions or market psychology of the traders are taken into account, it could play a major shift in prices actions and this is seen across different market such as stock and option market, not just the futures market.
Even though this tool has been around for a few centuries and regarded as a very important technical indicators among any traders arsenal, it only aroused the interest of traders around the world about two decades ago when the first book – Japanese Charting Techniques written by Steve Nison in the late 1980s, grabbed the centre stage in the western world of technical analysis.
The principle behind this ancient technique is that it can capture market sentiment more accurately than any other form of technical analysis tools on the market. Many traders have tried to forecast or predict the stock market using traditional techniques or indicators in the past, and needless to say many have failed along the way. What distinguishes candlestick techniques from other form of technical analysis is that due to its unique patterns with the emphasis of the relationship between open/close and high/low, the market emotions which is regarded as one of the most significant factors in moving price action in the short term, is priced or formed into the patterns and it is the basis of the candlestick techniques which can be used to form an opinion of what the market is thinking at this moment.
So why trade Candlestick? The answer is already very obvious. It not only can help traders or speculators alike to profit consistently in the short term, it also gives traders an edge over those who is still relying on traditional form of technical analysis to try to beat the market. One of the most important signals within candlestick is the reversal patterns signal. It is one of the most powerful patterns and what most professional traders rely on to make a killing on the stock market, or currency market, etc. Reversal patterns can be very powerful when used correctly, however the same reversal patterns can happen during an uptrend or down trend, if a trader interprets the signal incorrectly, he or she might end up burning his/her money quite a few times before they can see real profits. Therefore any traders who is really looking to learn this form of ancient art should really sit down and take the time to learn it or they can seek help from some one like B.M Davis who teaches traders online how candlestick techniques should be applied in your day to day trading and what patterns give the most accurate signals and what ones tend to be invalid signals, so that you too can also be a profitable trader using this technique.
Still thinking whether you should use candlestick techniques over other type of technical indicators? Then you should study this article how candlestick techniques alone can beat other technical indicators
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