Trading Basics Part 1:How Candlesticks Work!

22 de mai. de 2021

Hello,Traders!

Japanese Candlesticks are thought to have been invented by the Japanese rice traders
And then made their way into the West where they were used for stocks, forex and commodity trading.

Reading candlesticks is quite easy: the body represents an area that indicates the price distance between the open and close of the candle, while wick’s ends indicate the full magnitude of the movement in-between open and close. Thus, when picking the timeframe for your chart, you are deciding on how much time will be contained between open and close of each candle.

If open is below the close, the candle is bullish, and if open is above the close, the candle is bearish, which is usually represented by different colors of the bodies and wicks on the chart, typically, green and red.

Some of you might ask me, why am I explaining things that seems to be obvious and self evident, yet my experience of Coaching, paints a different picture, with the candlesticks being undervalued and misunderstood by many, despite them being the staple of technical analysis.

In my trading strategy, which is based on multi timeframe top-down technical analysis,
we examine multiple timeframes, from 1 week to 1 hour, going from higher to the lower timeframes. Looking for strong levels on weekly and daily and for patterns and confirmations on 4 hour and 1 hour charts. Which means that we are opening 1 week/1 day candle like a Russian doll, finding multiple candles inside the other. We enter the trade only if we are getting the same bias on all timeframes that were of our interest!


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