Strategy Japanese candlesticks are the Grail that people don’t want to notice.

Every day, traders are trying to find new schemes for making a profit on the stock exchange, assuming that the secret lies in them.

Various indicators, Forex trading strategies, advisors, mathematical models and simply intuition, all of this is quite small for trading successfully.

Sometimes new sophisticated methods simply don’t fit into your head, and what’s even worse is that these would-be inventors create trading schools and try to teach you how to trade, not to mention the money and time you waste.  

Having worked in the market for a long time and used a bunch of technical analysis methods, I understood one, but the most important and simple truth.

No indicator or trading strategy can give me more information about the state of the market than the price and its chart.

Moreover, it does not matter what instruments you trade and on what markets, be it Forex or the stock exchange, only the price and its behavior on the chart conveys a complete picture of what is happening. No indicator can show you that the market has begun to run out of steam, that buyers have doubts and decided to dump all their assets, that there will be a reversal in a couple of points.

All indicators work on the analysis of historical data, so you see a buy signal not at the moment of its origin, but when a new movement has already formed and has passed a certain distance.
For some reason, our psyche has developed in such a way that we simply cannot see obvious and simple things; we always want to complicate everything, while having the good goal of getting our hands on the free cheese that only comes in a mousetrap.

Just think about how much money we lose by entering not at the bottom of the movement but in the middle? What kind of stops do you and I set, and for some reason, as if out of luck, the price catches them? The answer is very simple - we do not look at price as a source of information, but as a simple line that moves up and down. In order to always understand the situation on the market and be aware of possible price changes, it is enough to simply analyze Japanese candles.

A lot of books have been written on various patterns and candlestick combinations, how they affect the market and, most importantly, why they are formed and what the crowd hints at when they suddenly want to buy this or that asset. You don’t even need to buy any books, just go to the “ Japanese Candlesticks ” section of our website and spend literally a couple of hours studying the material presented. Now, in order not to be fabulous, let’s look at some example patterns and compare entries using indicators and candlestick models.

Strategy "Japanese candlesticks" in the trading terminal.

First, switch your chart to Japanese candlesticks. A very popular reversal pattern used by most experienced traders is “Engulfing”. Its essence is that if the price moves up and a candle appears that is directed in the opposite direction and has a size so that the previous one would fit into it, then this is a signal for a market reversal. Look at the example in the picture with a possible entry point into the market:

 Now let’s consider the same situation, but under the condition that you were trading on a breakdown of the moving average. The most popular moving period, which traders actively use in their trading, is 21. It doesn’t matter what type of moving average, the main thing is to look at the example of the same situation, if you entered using the moving average:

 If we compare two different approaches, then if you entered the market using the Absorption pattern using the Japanese Candlesticks strategy, your profit would be 115 points with the risk of losing only 35 points in the form of a stop. In the second option, you already risk 55 points in the form of a set stop order, but you can only take 100 points from the market.

And now if you compare, you will understand that in the first option you would have entered at the bottom of the movement, and the ratio of profit to stop order would have been 3 to 1, which simply justifies any risks. In the second option, there is not even a 2 to 1 ratio, which calls into question whether it is worth entering the market with such a large stop order.

Now let's look at the situation with the common Doji pattern . I think you have all observed such a picture when, during a price movement, a candle appears that has practically no body but only two tails. Among themselves, stock traders call it a candle of doubt. At the moment of its appearance, we must understand that those players who so ardently bought or sold assets doubted their actions and may try to exit the position and throw everything back into the market.

Moreover, those who worked with this pattern noticed that it appears before the news is released, which can tell us in advance about a change in trend. This pattern has a warning function, so the appearance of the Doji should be your first signal that there may be strong changes in the market. This will always help you exit the transaction on time without losing your hard-earned profit.  
 

An example of the appearance of a Doji and an option for exiting a position when an opposite signal appears on the moving average can be seen in the picture below:

 If we consider the example of exiting a position based on the Doji pattern and exiting based on the indicator’s Reverse signal, we can conclude that if we had taken the pattern into account, we would not have had to lose the 130 points of profit that we took from entering the trade.  

In conclusion, I want to assure you that I am not convincing you to trade only using candlestick analysis and no other way. On the contrary, I strongly recommend having your own trading tactics, but ignoring the clues that the price chart gives us is simply stupid and absurd.

The Japanese candlestick strategy allows you to get a lot of information using a regular chart of a currency pair, because there are various patterns and combinations that can both warn you of an impending storm in the market and give excellent signals for entering a position . Thanks for your attention, good luck!