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Candlestick Charting - Discover The Art Of Japanese Candlestick Charting

Dec 23, 2007
In the eighteen hundreds a certain Japanese gentleman was very popular when it came to rice trading. He is supposed to have acquired over a hundred trades, and the secret to his success lay in candlestick charts.

Most people have never heard of a candlestick chart. It is nothing but something like your regular bar graph, made in two dimensions on x and y.

The basic attributes of the candlestick charts:

1. The Real Body - this is the basic body of the graph that speaks of the open and closing of the markets and can itself be divided into two classes. Black Body and White Body.

The Black body, which is also called the fill-in body tells us that the close was lower than the open of trade. The White body, also called simply the open, tells us that the close was higher than open.

2. Shadow - this is a thin line which tells us about the change in prices in a given time span. It can be divided further into the upper shadow and the lower shadow.

Candlestick charts are made using the following six kinds of patterns:

1. Hammer pattern - it has a somewhat small real body and a long lower shadow. This is usually used when the market is undergoing a down trend.

2. Engulfing pattern - the market trend is well displayed thanks to the white real body of the candlestick around the real body of the previous day.

3. The Dark-cloud - it is seen when the first market day's pattern is made up of a resilient and white real body in a form which is top reversed.

4. Hanging man pattern - its features resemble those of a hammer pattern, the difference being that there is an uptrend form on the framework.

5. Bearish pattern - here, a black real body surround the previous day body in place of a white real body.

6. Piercing pattern - it is the opposite of the dark-cloud pattern but a downtrend exists rather than an uptrend.

Every one of these patterns is unique. You could use two or more patterns to suit different needs as well. Finally it is up to you what pattern you feel works best for you.

This article only introduces you to candle stick charting. There is in fact so much to learn about the topic that there are courses out there especially designed to train one in this Japanese graph form. If you are serious about learning more about it, a course can be a great idea. You could also invest in books that teach you how to make effective candlestick graphs. In the long run, these graphs will help you make better profits no doubt.
About the Author
Abhishek has an uncanny insight into Trading! Visit his website www.Trading-Masters.com and download his FREE Trading Report and learn some amazing Trading tips and tricks for FREE. His tips would save you thousands and make you better at Trading! But hurry, only limited Free copies available! www.Trading-Masters.com
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