Candlesticks trading forex king
August 26, by David Penn. When it comes to trading with Japanese candlesticks, the first name that comes to mind is Steve Nison. Author of two of the best-selling books on Japanese candlestick analysis, Japanese Candlestick Charting Techniques and Beyond Candlesticks: New Japanese Charting Techniques RevealedNison is widely-recognized as the authority on this method of charting that has truly revolutionized the way that trading have come to look at price charts. Who needs to be looking at price charts—and why should those price charts be in Japanese Candlestick form? First of all, I think the fundamentals are important the longer the investment time horizon is. But the forex the time horizon is—and candlesticks are mostly used by traders—the more important the emotionalism of the market becomes. I mean how many times have we seen, for example, the overall trading fall off and even sound, fundamental stocks get dragged down because the markets falling down. So prices have two components. PE ratios, and so on. But the emotional aspect is also very important, and the only way to gauge the emotional aspects is through technical analysis, the price chart. It really shows you the psychology behind the market. The Japanese used to use bar charts, and they switched. But the closest I was able to find was probably around the s when the Japanese stock market began trading. Before then, the Japanese used to use bar charts. But they switched over to candlestick charts. We in the West have been using a less visual form of charting for too long a time. Candlesticks of all, you know, there are other books on candles, and I have no idea where king of those authors forex those patterns from. So traders need to be very careful where they get their candlestick information from. What I have now is what I call my trading triads. The triad has three components. And of the three legs to very successful trading candlestick charts are the first leg. When properly used, candlesticks are very helpful for getting early reversals. When candlesticks are properly used, you avoid bad trades and losing trades. The second leg of the triad is Western technical analysis. In the courses I teach, if you have a candlestick signal confirming a Western signal, you increase the likelihood of a market turning. And king third leg forex trade management. Can you give an example? You have a beautiful candlestick signal. Say you have a hammer, which is a single candlestick line. But sometimes you use that hammer to initiate a new long trade. So the main misuse of candlesticks is, yes, a king of people know how to recognize the candlestick signal. But the real challenge and my teaching is about what to do with the candlestick signal. You buy, you sell, or you stand aside. And what do you look at to let you determine whether or not you should be buying, selling or standing aside. You mentioned time horizons. In which time frames are Japanese candlesticks most or least effective? And are candlesticks used the same way in different markets? Candlesticks can be used in all markets, and all timeframes. Intraday, daily, weekly… In fact, in a lot of the original books I had translated from Japanese to English, king charts were weekly charts. There are some nuances between using candles on intraday charts, and constructing them on intraday charts. And also with foreign markets. And also in the indexes. But essentially all the strategies can be used in all markets in all timeframes. When I began to do the research into candlesticks, when my first book came out in the s, this was when the stock market was buy and hold and that was it. So the candles became very popular first in the futures market because that was the most active market. Then, in the s with the advent of short term forex, online trading and day trading, candlesticks became trading, very popular in every market. So over the last three or four years there was been the explosion of interest in the forex market. Candlesticks are probably the most popular form of charting in forex. You talked about technical indicators as part of your trading triad. Are there some technical indicators that work better with candlesticks than others? Or can you pretty much treat them as you would have treated prices on a bar chart? Right, you treat it the same as you would a bar chart. There are so many technical indicators. I have a few of my favorite ones. I have an indicator that worked really well. I like using oscillators. But the point is that traders will have their own favorite Western technicals based on experience. So my suggestion, my strategy to them, would be to stay with the Western strategy they know best. For example, if you have a candlestick forex, say, with a bullish candlestick signal like a morning star, or a bullish engulfing pattern at the bottom of a Wave 5—which you recognized as a Wave 5—then a forex could be much more aggressive on the trade. So, again, my suggestion would be to use those Western signals you are most comfortable with. If you were to pick three candlestick patterns that traders should master—if no more—what might those three patterns be? To start with, what I would suggest is learning the basics of how to draw the candlestick line. So, in that sense, the taller the real body the area between the open and the closethe more the momentum is in that trend. So a tall white real body means bullish momentum. The long black real body is bearish momentum. What I trading also suggest is not only to look at the real bodies. People forget king the shadows the lines representing the spaces between the real body and the high and the forex body and the low. Those are lines above and below the real body, those little lines candlesticks the candlesticks, those thin lines. And a long lower shadow, for example, tells the trader that the market is rejecting lower levels. So long lower shadows, a candlestick like a hammer with a long lower shadow… the real body is usually showing us that the market is rejecting lower levels. That is the power of the candlesticks. By looking at the candlestick line, for example, the hammer, we see that long, lower shadows mean that the market is rejecting lower levels. And that reflects the psychology of the market. As you were saying before. What it means is that the bears are getting a little bit more candlesticks about the ability of the market to hold lows. And the bulls are getting a little bit more confident because they can see that the market is rejecting lower candlesticks. So, essentially, as an introduction, just look at the size of the real bodies and look at the shadows. The first part of the triad is knowing and understanding the candlestick. Yes, you could have a great candlestick signal. But is it confirming a Western signal? Does it look like a good trading opportunity? First, recognize the candlesticks. But then know trading to do with it. Using the candlesticks in isolation is the quickest way to get burnt with the candlesticks. Just a few other questions. You mentioned that candlesticks could be used in all timeframes, forex is there something in the makeup of candlestick lines that makes them less effective as the timeframes get longer? You know they candlesticks have 20 undervalued stocks, and which ones do you buy? You buy the ones that are either at support or have a bullish trading signal. So those are for trading term investments. From my perspective, the vast majority of those who use candlesticks are going to use them on daily or intraday charts, and get those very short turning signals. So traders who are looking for those quick turnarounds are mainly going to be geared toward the shorter term charts. You can still use candlesticks on weekly charts. But the downside is that you need a close to get a candlestick signal—open, high, low and close. So king a weekly chart, by the time you get it… Say you have a bullish engulfing pattern candlesticks a white candlestick wrapped around a black candlestick. So whether you use candlesticks or not, become knowledgeable about the strategies, and know the pluses and the minuses. So, just, really, become an educated trader. You know, I first read you first book maybe five, six years ago, when I started writing seriously about technical analysis. I tell people, the books will take you to about a 2. I got a quote a few years ago, and it kind of echoes what you said. The book will let you recognize the candlestick signals. And this all goes back to the emphasis you put on both the training and the triad. Candlesticks, Western technicals, and trade management. All three, really, have to be incorporated to really fully harness the power of the candlesticks. Thank you very much for giving me a little bit of your time this afternoon. Steve NisonCMT is the founder and president of www. Steve has the distinction of introducing the previously secret candlestick technique to the Western world. He is also an expert on Western technical analysis with over 30 years king real world experience. He has presented his trading strategies in over 20 countries to traders from king every investment firm and been a guest speaker at numerous universities as well as the World Bank and the Federal Reserve. To learn even more valuable ways to improve your trading results with the help of candle chartsI invite you to subscribe to king FREE video newsletter. ConnorsRSI is the first Quantified Momentum Indicator -- the next-generation improvement to candlesticks RSI indicators. At Connors Research, we are using it as an overlay to many of our best strategies forex make them even better -- now you can, too. Enter your email trading to get your FREE download of our Trading to ConnorsRSI - 2nd Edition - Trading Strategy Guidebook with newly updated historical results. The Connors Group, Inc. About Careers Contact Us Testimonials Link To Us. TradingMarkets PowerRatings Connors Research. ConnorsRSI Learn More About ConnorsRSI Recent Articles Store Books Free First Chapters Free Newsletters Trading Buy forex PowerRatings Algorithm Recent Articles. Home Articles Connors Research ETFs Options Stocks Volatility Contributors Larry Connors Kevin Haggerty Matt Radtke Education Connors Research Glossary Moving Averages Options Options Trading VIX Interview Archive Trading Lessons Videos Guidebooks Courses Newsletters Store July 4, The Big Saturday Interview: Steve Nison, King of Candlesticks August 26, by David Penn. Have You Switched To ConnorsRSI? 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