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Thread: What is a candlestick and how to analyze market movements with a candlestick?

  1. #1
    Registered user Azis Muslim's Avatar
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    What is a candlestick and how to analyze market movements with a candlestick?

    Hi guys: hi:

    First of all, I thank you for all the staffs at RoboForex forum for organizing this extraordinary contest. I am very fortunate to be one of the clients here and become a member of this forum by sharing all of my experience from my early career started in forex till now.

    As we know in general, for a beginner it is very difficult to do this business because they do not know many things about this business. Beginners usually have some questions for them and they're trying to get the answer. As traders who have struggled and fought for years, we here should help them to find some solutions of their problems. Of all the important things about forex, I will personally explain 2 questions for the beginners based on my own story.

    1. What is a candlestick and how to analyze market movements with a candlestick?
    Candlestick is one of three charts available in metatrader4 which has a shape like rod - candles. Candlestick also can be used as a technique to map and read the price movements of stocks, commodities and forex. This technique belongs to a group of technical analysis and it is the oldest technique created by Munehisa Homma (Japan, 1724-1803).

    It is far easier to read candlestick's pattern than reading the price through bar charts and line charts. We can adjust the color of the candles, for example red color for bearish candles and green one for bullish. I will describe 2 patterns, they are bearish and bullish.

    a) Bearish Patterns
    If we look at some of the patterns below, it is a sign the market will move to follow the trend of bearish or declining. The patterns consists of:
    Bearish III, Bearish Harami and Cross, Dark Cloud Cover, Bearish Engulfing Line, Evening Doji Star, Evening Star, Gravestone Doji, Bearish Separating Line, Evening Window Star, 3 Bullish Soldier, Inverted Hammer, Shooting Star, Long Upper Shadow, Tweezer Tops and Hanging Man.

    b) Bullish Patterns
    If we look at some of the patterns below, it was a sign the market will move to follow the trend bullish or ascending. The patterns consists of:
    Bullish III, Bullish Harami & Cross, Piercing Line, Bullish Engulfing Line, Morning Doji Star, Morning Star, Dragonfly Doji, Bullish Separating Line, Morning Window Star, On-Neck Line, 3 Bearish Soldier, Inverted Hammer, Long Lower Shadow, Tweezer Bottoms, and Hammer.



    In addition, I would add some patterns that provides excellent results when I was trading using this technique about 1 year ago. Check this out.




    2. How to determine a suitable time for trading and what is market hour?
    Each time has different value of movements, depending on how many market participants were active at that time and the extent of the ongoing economic activities. Some countries have peak hours each of which affects the movement of its currency. For traders who likes a busy time, a suitable time is when economic activity is underway which led to high price volatility. While traders are more relaxed, they will choose a time when all activities reduced economic activity which caused sideways in the market.

    I think you got the answer, right mate? Yes, everything depends on our trading styles. For example, if we are scalper, we will trade in rush hours when market moves in high volatility. Here's the picture about market hour.




    I think that's all from me. If there is any error in the explanation of what I wrote and explained above, I apologize to you. Everything I shared here based on my experience and am still in the learning process. Because for me, learning is an endless process in my life. Thank you for your attention mate. Hopefully this can help the beginners to know this forex business well.

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  2. #31
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    Quote Originally Posted by malenge View Post
    I don't know why but like the Japanese candles in particular I like trading with haikenashi indictors for simple and very effective and powerful instrument of trades and if you have to adjust you can fix them to color that you think will work best for you this way trading becomes increasingly fun and functionality as a way of investment
    I think that candlestick can be combined with them naturally. Candlestick themselves have many use in fx trading and it will not be hard to combine them with those indicators at all. More likely, the japanese candlesticks will have a high chance of compatibility with the candlesticks too. But how you use this will depend on how you combine them first.

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  3. #32
    Registered user cutiekc's Avatar
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    I do follow the candle stick method, but then, at the same time, it fails a lot too and it is our duty to make sure that we are taking it the right way, furthermore, where the pattern forms is very much important, if we don't consider that before trading then we are likely to take a very wrong trade which could result to loss.

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    Registered user Hukam's Avatar
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    We have to take the candlesticks with the right and we have to also understand that candlestick along can't do all the help for us during trading, a trader should have good knowledge of technical analysis, fundamental anaysis, sentimental analysis, we should have also a good experience trend direction analysis of the market so that we can make much better anlaysis in forex by the adoption of candles.

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  5. #34
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    Quote Originally Posted by Hukam View Post
    We have to take the candlesticks with the right and we have to also understand that candlestick along can't do all the help for us during trading, a trader should have good knowledge of technical analysis, fundamental anaysis, sentimental analysis, we should have also a good experience trend direction analysis of the market so that we can make much better anlaysis in forex by the adoption of candles.
    Candle stick analysis is not the complete requirement of success but surely if it is doe properly it will be very helpful for all traders to earn profits in Forex. Of course other skills of management and all are also at work. There are many people who are getting benefits from forex and they earning good amount,but also many people face loss in forex due to their mistakes.

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  6. #35
    Registered user cutiekc's Avatar
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    They can be easily identify when you see them, but believe me it will not be easy for us to make use of it, unless we have learned and practiced. Most people would say that the candle stick trading pattern is not a good one and that could be true, because they have not given much time to learn and understand it.

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  7. #36
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    Don't know why people want to say that becuase the use of candlestick chart pattern is very useful in our analysis and this chart is the part of my trading strategy also like other's, those trader's who are not satisfy with candlestick chart they can focus on other chart patterns like line chart, bar chart, etc, but I still believe that candlestick is best for our trading analysis rather than others.

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  8. #37
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    The candle stick is one powerful trading tools which I am sure that when we have learned on how to make use of it when trading, it will really help one make money. You know it has got the real time movement of the market, trading with the candle stick method is a good way of trading, but one should know that it could make him or her profits after it must have been learned, else it will still make you loss.

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  9. #38
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    candlesticks is one of my favorite tools for analysis and trading, it is good indicator for trading and making of money, with some patterns of the candlesticks we can expect the future movement and this will let us to enter the market early and get more profits, it is better to use other tools with the candlesticks to get better confirmations.

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  10. #39
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    You have sensed right about the we can't use the candlesticks alone because in so many cases they could be wrong and the second thing would be the impact of fundamental events, those can occur time to time so its important to know some technical and trend terms before confirming our candlesticks signals, as we know that following support and resistance, trend would be best to go with the market flow, and some time market news can give good support to it furthermore it does not matter what patter we are using we can't negect technical anaysis and trend analysis from our business.

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    Registered user shambca7's Avatar
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    With one single candlestick? Nope I don't think that this is a good way to make any analysis. We should have a few confirmation otherwise one single confirmation would bring so many losses. Yes the use of support and resistance, candlesticks signals, and the trend these three can be used for the best trading confirmations. It does not matter what we are using but should be well confirmed with other confirmations.

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