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

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    Rookie 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. #651
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    Having the experience and then being able to follow the pattern so much is important, the candlestick gives us good signals, but not all the time frame signals should be taken, I think we really have to consider the signals on the higher time frame the more, those are the signals that we will get to trust and have more confident with.

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  3. #652
    Trader cutiekc's Avatar
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    Knowing what the candlestick pattern is all about is important, but then again, we shouldn't just rely on that alone, in the sense that one is knowing what the candlestick is all about then another one is the trader's ability to really put it into work and then know how to make use of the candlestick when they are trading. candlestick is one great approach of trading, but knowing it is not enough.

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  4. #653
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    Quote Originally Posted by cutiekc View Post
    Knowing what the candlestick pattern is all about is important, but then again, we shouldn't just rely on that alone, in the sense that one is knowing what the candlestick is all about then another one is the trader's ability to really put it into work and then know how to make use of the candlestick when they are trading. candlestick is one great approach of trading, but knowing it is not enough.
    When we have the knowledge of the chart pattern we want to use, we can use it effectively to pin point high probability trades and forego the lower ones. So we need to focus to strengthen our knowledge of chart patterns and SOR levels. When we are getting loads of losses we need to improve our analysis and management skills in trading. Forex trading has not any big secret and it only requires logical decisions and proper management from traders.

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  5. #654
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    Candles are good strategy on their own, but for me, I get to make use of it with the price action trading method so that I can have a lot more increase success rate with it. Apparently, there are rules to be kept to as well if we want to make money with the use of the scalping trading strategy, understand that the higher time frame is where the trader should start the learning from.

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  6. #655
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    Quote Originally Posted by Abhishekwala View Post
    When we have the knowledge of the chart pattern we want to use, we can use it effectively to pin point high probability trades and forego the lower ones. So we need to focus to strengthen our knowledge of chart patterns and SOR levels. When we are getting loads of losses we need to improve our analysis and management skills in trading. Forex trading has not any big secret and it only requires logical decisions and proper management from traders.
    The candle is just a way of seeing the market and then being able to make good decisions in that regards, we have a lot of the patterns, but I don't think we are to make use of all of them because as a matter of fact, the patterns that are quality are among them and then we should focus on more of them like the pin bar and also engulfing patterns they are more stronger.

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    Rookie Lyon's Avatar
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    Success is always ours when we have taken time to learn the strategy that will be simple, like when we learn the candlestick pattern. I have known of so many trading strategies that the traders can really get to make use of when trading, the candlestick pattern is one of them, one of the simple approach of trading but yet very effective I personally make use of it in following the trend and it has a great good return.

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    The candlestick is really good but you can't make use of it alone in trading, you need to learn on how to make use of indicator in trading, because that will determine how you can become successful. Only indicator from what I have learned will not make the signals to be strong, a trader needs to make use of the right indicator to make the signals more better and stronger.

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    Rookie layigold's Avatar
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    Candlestick is one of the charts you can easily find on any trading platform which can be used to analyze the market to see what the market has done in the past and what is most likely to next. There are some patterns that form on candlestick chart that could provide traders with signals on the next move of the market and some of these patterns could be bullish , bearish , reversal or trend continuation as you can see through the chart attached to this thread.A good mastery of this would drastically improve the way you trade if you can manage the risk of trading properly as well.

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    Rookie Sascha's Avatar
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    Quote Originally Posted by layigold View Post
    Candlestick is one of the charts you can easily find on any trading platform which can be used to analyze the market to see what the market has done in the past and what is most likely to next. There are some patterns that form on candlestick chart that could provide traders with signals on the next move of the market and some of these patterns could be bullish , bearish , reversal or trend continuation as you can see through the chart attached to this thread.A good mastery of this would drastically improve the way you trade if you can manage the risk of trading properly as well.
    for news trader like me i only take candlestick as a common chart and i'm using it for my usual trading. i don't use any patterns included in any candlestick strategies because i don't know how to use them well and failed many trades with them. i analyze market movements through news and use market behaviors to help me decide my entry and tell me about where should i place my exit.

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    Personally I pay little attention to various chart patterns as I like to trade near support resistance levels and analyse the market from the side of support resistance levels if market will brake the level or it not will brake the level and there should be a reversal. There are traders who like to trade chart patterns but this strategy is not for me.

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