I was watching a programme on candlestick charting.
Candlestick charts are thought to have been developed in the 18th century by Japanese rice trader Homma Munehisa.
The charts gave Homma and others an overview of open, high, low, and close market prices over a certain period. This style of charting is very popular due to the level of ease in reading and understanding the graphs. The Japanese rice traders also found that the resulting charts would provide a fairly reliable tool to predict future demand.
We should “study the past to predict the future,” the presenter urged the audience.
The great general, Suntzu, had said:
So it is said that if you know your enemies and know yourself, you can win a hundred battles without a single loss.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.
If you are serious in making some serious money from the stock and currency market, the ability to read charts is an important skill to pick up.
I would highly recommend that you start learning candlestick charting basics from Steve Nison. Check out his programme here.
Today we continue with “The Four Common And Costly Mistakes Almost Every Trader Makes With Candle Charts” by Steve Nison.
Candle Mistake #1: Not Using Western Indicators
Candle Mistake #2: Not Using Trade Management
Candle Mistake #3: Trading On Every Candle Signal
According to the article “Most traders don’t realize that each candle signal can have different trading implications, depending on the market situation. This is why trading or testing candles without using other considerations – such as adding Western technicals as discussed in Mistake #1 – is a financially dangerous misuse of candles. And will surely lead to unnecessary losses….”
Learn how to master candlestick reading with Steve Nison, click here.
To learn Candlestick Charting from the master, Steve Nison, please click here.
Today we continue with “The Four Common And Costly Mistakes Almost Every Trader Makes With Candle Charts” by Steve Nison.
Candle Mistake #1: Not Using Western Indicators
Candle Mistake #2: Not Using Trade Management
According to the article “Trade management includes risk-reward analysis, protective stops, looking at the overall technical picture and many other aspects….one of these trade management items is adapting to changing market conditions.”
The iPAD Syndrome
The iPADs are set to hit our shore this morning from 10am at the Apple retailers.
Will it be another record product launch for Apple in Singapore?
It would be interesting to see how the Apple iPAD Syndrome affects our local stock market today. Will the market players stay away because they are busy queuing up for their iPADs?
Why is Apple so successful?
This can be attributed to:
1. The vision and tenacity of Steve Jobs.
Do you know that Steve, one of the Founders of Apple, was actually asked to leave Apple? Yet through his vision and tenacity he bounced back and now he is back in charge of Apple. In stock trading, you might have suffered huge losses before. Are you still afraid of the market? It is important that we keep a trading journal, understand why we win and why we lose. We must have that spirit to keep learning and going on until we succeed. We must know the reason why we want to succeed in stock trading. This vision will drive us on to persistence and ultimately success!
2. Apple has learned to manage the psychology of the crowds.
Apple has to manage the psychology of crowds. Apple understands market behaviour. Do you know what is one of the key factor that drives Apple’s growth? APPS, otherwise known as Applications. Do you know what drives the stock market? FEAR and GREED. We need to understand the psychology of crowds. In addition, we need to manage the psychology of our inner voice. We must learn to accept that losing is part of the game of trading. We must replace the focus on winning and losing with the goal of following our trading plan.
3. Be simple. Be focused.
Do you know how many types of iPhones Apple has? 4? Since it has just released iPhone 4? Nope, there is ONLY ONE. Apple focused on developing it and developing it well. iPhone 4 is but an improved version of iPhone 3. iPhone 3 was an improved version of Generation 1 iPhones. In fact, iPhone has been said to be at least one year ahead in terms of technology compared to the rest of the smart phones. How many different types of phones does the Nokia have? How about Samsung, LG?
Likewise in your trading, it is very important that you follow and fine tune a trading plan instead of jumping from one Holy Grail to the next.
Stay simple and stay focused.
A good friend of ours, Dr Williams, from USA has just released a Teleseminar on How to Take Control of Diabetes Naturally, Painlessly and Without the Use of Drugs.
When Dr Williams was in Singapore a few years back, he was very helpful and took time off his busy schedule to visit an uncle who was hospitalized due to some kidney ailments. He also kindly visited another uncle at home who had suffered a stroke – massaging him to relief his muscle spasms and also teaching him some basic exercises to improve his movement.
Dr Williams is a Family Physician who is board certified in Family Practice. He is also very well versed in muscle spasm relief techniques. He had also been practising in Thailand for over 19 years.
If you would like to find out more about his teleseminar, please check out the following website: http://www.askdrrichardwilliams.com/take-control-of-your-diabetes.html
This article is from Steve Nison. For more info on candlestick charting, please click here.
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This section discusses only a few of the scores of candlestick chart patterns. There are many important candle patterns and trading tactics not discussed in this basic introduction. As such, do not trade based on the limited information. The goal of this section is to illustrate how candles can open new and unique analytical doors, not to provide a trading methodology. For example, there are many times candle signals should be ignored. This is where experience with candle charts comes in.
WHAT ARE CANDLESTICKS?
Japanese candle chart analysis, so called because the lines resemble candles, have been refined by generations of use in the Far East. These charts are now used internationally by traders, investors and premier financial institutions. Candle charts:
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Are easy to understand: Anyone, from the first-time chartist to the seasoned professional can easily harness the power of candle charts. This is because, as will be shown later, the same data required to draw a bar chart (high, low, open and close) is used for a candle chart. | |
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Provide earlier indications of market turns: Candle charts can send out reversal signals in a few sessions, rather than the weeks often needed for a bar chart reversal signal. Thus, market turns with candle charts will frequently be in advance of traditional indicators. This will help you to enter and exit the market with better timing. | |
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Furnish unique market insights: Candle charts not only show the trend of the move, as does a bar chart, but, unlike bar charts, candle charts also show the force underpinning the move. | |
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Enhance Western charting analysis: Any Western technical tool you now use can also be used on a candle chart. Candle charts, however, will give you timing and trading benefits not available with bar charts. This merging of Eastern and Western analysis will give you a jump on those who use only traditional Western charting techniques. |
On 19 June, we conducted a half-day workshop on how to make use of the Advanced Alert Training report. Here’s the training slides to help you understand the report better!
“Life is really simple, but we insist on making it complicated.” – Confucius (551 – 479 BC)
And Albert Einstein said, ” Everything should be made as simple as possible, but not simpler.”
Is your trading strategy affected by these two statements?
Yesterday I shared about the three trading roles. I also asked the following two questions:
1. Is trading an art or a science?
