Click here to Download How to Make Money Trading with Candlestick Charts Book by Balkrishna M. Sadekar having PDF Size 1 MB and No of Pages399.
The Japanese art of candlestick trading has been around for nearly four centuries. Japanese rice traders successfully used these signal formations to amass huge fortunes. Since then, the signals have been refined, tested and utilized in a variety of markets. Wherever an instrument can be traded in an open market by traders, candlestick signals can be used to profit in such markets.
How to Make Money Trading with Candlestick Charts Book by Balkrishna M. Sadekar
|Name of Book||How to Make Money Trading with Candlestick Charts|
|PDF Size||1 MB|
|No of Pages||399|
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About Book – How to Make Money Trading with Candlestick Charts Book
Candlestick signals depict change in investor psychology. They visually show a trader the sentiments of the other traders in that particular stock or market. It does not matter if the signals are applied to commodities, stocks or futures. Candlestick signals work with all of them. It does not matter whether the market is the Nasdaq, the Nikkei, the German DAX or the Nifty.
All of these markets can be analyzed and traded using candlestick charting. There are more than fifty candlestick signals defined by Japanese traders. However, of these we will focus on the most common ones. You will find that these major candlestick signals occur often and repeatedly. Your time as a trader or investor will be well spent if you understand these major signal formations.
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There have been a handful of books written on candlestick charting so far. Most of these books have been written from the perspective of trading the US markets. This book is specifically written with the Indian trader in mind. All the included charts are of companies trading on either the National Stock Exchange or the Bombay Stock Exchange.
We are all slaves to these two emotions. They are also the trader’s worst enemy. If you are expecting that I am going to show you how to master these two, often overpowering, human emotions, you are going to be sorely disappointed. For that, please browse through the self-help section of your favourite bookstore.
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The fact is that experienced and successful traders know that they cannot master these two emotions. They know that all profits will evaporate into thin air if they fall in the trap of trying to master them. What they do, however, is design a system and abide by the system’s rules to execute their trades. They realize that the market is much bigger than them and their egos.
In order to win in the market, they have mastered the art of understanding the subtle hints of the market. This is where candlestick signals assert their dominance. Candlestick signals, by the very nature of how they are constructed, point out the messages of the market. These signals have been time tested for over four hundred years.
They would not have been around for this long if they wouldn’t have had strong underlying market logic. We could also compare bar charts with candle charts and come to almost the same conclusion. The candlestick chart incorporates everything that a bar chart does. In addition, it is visually more revealing. How to Make Money Trading with Candlestick Charts Book
The black (red) and white (green) colour bodies make analyzing a candlestick chart much easier and more intuitive. Once you start looking at candlestick charts, other charting techniques seem dull and arcane. By the end of this book, you should be able to analyze any candlestick chart within a minute. That is my goal.
The key is to find candlestick buy signals in oversold conditions and candlestick sell signals in overbought conditions. As you read the following chapters, you will notice that most of the charts will focus on the overbought-oversold conditions. For the beginner candlestick trader, these situations will be plentiful to take advantage of.
They will enhance your confidence level while simultaneously increasing your portfolio returns. Consider a stock moving down for a period of time. Investors start panicking at some point. They want to get out and accept the loss. Finally, as the sellers pile on the stock starts selling off heavily during the day. But then smart money moves in. How to Make Money Trading with Candlestick Charts Book
They are able to move the price all the way near where the stock had opened for that day. This gives the stock a hammer look. The Japanese call it hammering out a bottom. However, the stock needs to trade higher the next day to confirm that the bulls have actually reversed the trend. The candlestick trader should enter the market after seeing this confirmation.
Consider a stock in an up trend. Investors and traders are happy that their portfolios are showing green. Then, one day, big money decides to take profits. They start selling the stock. Novice traders, who have seen the stock rise for the past numerous sessions, see this dip as a buying opportunity. They start absorbing the supply and are finally able to take the price up towards the top of the day’s trading range.
However, the bulls are now getting nervous. Their confidence in the stock is dropping. Their greed is turning into fear — fear of losing their hard earned profits. If the stock closes lower the next day confirming their fears, the downtrend will accelerate from that point on. The bears will take control. How to Make Money Trading with Candlestick Charts Book
Imagine a stock in a downtrend. As portfolios start showing red, there is panic in the street. People want to get out. That is the time smart money likes to buy. One day, as the stock opens down or flat, the bulls start stepping in. They drive the price higher during the day. Eventually, the bears drive it back down and close it near the open of the day. The bulls have, however, shown their presence.
They can now sense that the bears are getting weaker. If the bulls manage to close the price higher the next day, the downtrend is considered broken. The key here, as was in the case of the Hammer, is that the bulls need to show confirmed buying the next day. Again, the Japanese candlestick traders have placed emphasis on the fact that the upper shadow must be at least twice that of the body size.
The colour of the body does not matter, though a white body would be ideal. That would demonstrate the bulls managed to close the price higher than where the stock had opened up. Observe the large black candle showing panic selling by amateur investors. Smart money moves in the next day to readily take the stock from the panicky sellers. The up tick in volume also confirms the reversal. How to Make Money Trading with Candlestick Charts Book Download
As a trade, the probabilities are extremely high that the trend is now reversed. The bulls have stolen the thunder from the bears. What should a buyer look for after any bullish reversal signal? More buying! This sounds like a simple answer and the fact of the matter is that it is. However, most investors and traders do not use this simple logic.
The buyer should await some confirmation that the bulls are still in control of the stock. It is not uncommon to see some residual selling after a big bullish engulfing candle. Those sellers who had held on through the panic selling finally sell out after seeing the price higher than the last couple of days. For confirmation that he needs the buyer should make sure from the chart that such selling is not heavy
Consider a stock moving up. Things are rosy and investors are happy. Then one day the exuberance sets in forming a good sized white candle. The next day the price gaps up and smart money starts selling the stock to novice traders. The selling overwhelms the buying and finally the candle closes more than half way into the previous white candle. How to Make Money Trading with Candlestick Charts Book Download
As in the case of the Piercing pattern, the important thing to notice is that the dark candle closes deeply, at least half way, into the previous candle. Consider a stock which has been steadily moving down. Then one day panic grips the investors in that stock. They no longer want to hold on to the losing position. This panic selling creates a long dark candle. The next day there is a battle between the bulls and bears.
Smart money is buying and the final panicky sellers are happy to sell to them. This creates indecision. The bulls seize this opportunity to get control of the stock. The short sellers start covering their position leading to further upward movement. The signal is formed when bulls are able to close the candle half way up the dark candle formed two days back. Probabilities support trend reversal at this point.
After an up trend, the novice investors finally start piling into the stock. This creates the exuberant white candle at the top. The next day, the demand is consistently met with supply from the smart money. The indecision day is followed by a large down day, indicating the bears finally taking control from the bulls. How to Make Money Trading with Candlestick Charts Book Download
As in the case of the abandoned baby Morning Star signal, seeing a gap between the first and second day and also a gap between the second and third day shows a massive change in investor psychology. Traders should immediately cash out their positions, or go short. Thus far we have learnt the major candlestick signals and how to use them with common western technical analysis.
You have witnessed the high degree of accuracy of these signals in predicting reversals. The probability of the reversal is greatly enhanced when two or more signals confirm it. I have always put more weight on the Morning Star and Evening Star signals if the middle day is a one-day candlestick reversal signal, such as a Hammer or Hanging Man.
If a bullish engulfing signal is forming at the exact support level from where the stock bounced up the previous time, it brings that much more credibility to the reversal. This knowledge should put you way ahead of your competitors. The next time when you see a stock fall 10 percent, you will not rush to buy it because it looks cheap. You have probably heard of the saying, “Don’t try to catch a falling knife”. How to Make Money Trading with Candlestick Charts Book Free
That is very true. That stock which is down 10 percent can further go down another 20 percent. On the other hand, it could very well reverse and start a new leg up from here. You do not know which of the two might happen. All you know is the candle formation. Rely on the signals. Do you see a buy signal form? Are the stochastics in the right place? Is there confirmation buying?
These are the points you will be looking at. This is the most common mistake committed by traders. They see a good buy situation setting up. They notice the stochastics are oversold and can sense panic selling in the market. Then the buy signal is formed. They know their entry point, their target point and also their stop loss point. They enter the market feeling confident that the trend has reversed.
The stock moves up as expected. The traders are happy. Everything is good and rosy. Soon, however, the stock starts dropping. The bears start taking control of the stock and push it down past through the stop loss point. The trader hesitates at this critical juncture. Something inside his mind knows, now is the time to sell and accept the loss. But, then, hope crawls in. Hope, that ultimate trickster! How to Make Money Trading with Candlestick Charts Book Free
The trader convinces himself that the stock will rebound anytime now. He promises to himself to get out as soon as the stock comes to break even. Alas, the market is unforgiving to such “weak hearted” traders. By the end of the day, the stock is down considerably. This leads to the biggest mistake of all. Now the trader convinces himself that the company whose stock he just bought is fundamentally very sound.
The prospects for the company are great. He will keep holding and buying more, so he can average out the price. If the stock is in an up trend, it might not get to oversold conditions till the time it moves from the upper trend line to the lower trend line. Now, in such trending stocks you need to decide if you want to get out on a sell signal at the top of the trend and buy again when it gets to the bottom, or just keep holding the stock until it breaks the up-trending channel. This is a personal matter of choice.