The one distinctive feature of using Japanese candlestick charts is that the vision of the beholder could grasp the entire panorama of the price action like viewing the opposing forces on a battlefield.
To the beholder, the distinctive color variation in candlestick charts, at once encapsulates the ever present Yin and Yang forces against once another in a days trading action between the longs and the shorts. Usually candlestick charts portray - green - where a day's trading range is where the close is greater than the opening price, or red - where the day's trading close is lower than the opening price. The particular shapes, formations and shadows of a candlestick may represent the sum total of the market action and where its fears and expectations lay in the days before the present for analysis.
Knowledge is key. In warfare, a general advancing his troops in the field will always have an advance corps conducting reconnaissance and survey; to study the terrain and distinctive features of the landscape ahead and mark its distinctive features with maps and plans.
Seventy five percent of the greatest battles in history were fought out of the choice of terrain, to use landscapes to the greatest advantage for the coming battle. At the battle of Waterloo in 1812, the Duke of Wellington chose the hills and surroundings of the Belgian Waterloo, and chose its soggy terrain particularly to annul the cannon of Napoleon and render the French advance uphill as totally ineffective.
Thus in studying the market terrain, the candlestick chart offers a great advantage in the analysis of the market psyche; where has it been? where does it stand now, and most importantly, where do we perceive the next battle to be drawn out?
The great advantage over the use of candlestick charts over other linear diagrams is the panoramic vision that the chart portrays in summing the market psychology of the moment.
Assuming that the student is already aware of the basics of candlestick charts then we shall jump straight into the market action in the weeks to come and analyze how different signals within the charts can lead to certain results with a great degree of probability. Since risk management is the very essence of any trading plan, it therefore becomes imperative to drawn up any workable format of probability. For human emotion and its behavior is not a science. But if given A then B, deductive logic can reinforce a mathematical probability of a pending market action. And that would be a game changer, were we were to be able to harness such charts, such as the candlestick chart, and come to terms with the human psyche and where it may be heading with a greater force of deductive reasoning.
To be continued.... candlestick charts in action.
Pieter Bergli - DeLoren Trust Holdings
Forex education for all
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
