Candle Stick Pattern Secrets

Price Action

I have become a big believer of Price action after failing to find constantcy with trading indicators. I started to trade on smaller timeframes with out indicators and studied the behavior of price movements. From what other traders say, they often call smaller timeframes noise as I call it accuracy. Most experienced traders are moving away from complicated systems and more are focusing on price action and candle stick patterns because that is what successful traders are doing. Now, there is still a lot of misconceptions in regards of price action and candle stick patterns. Most traders believe that price action is candle stick patterns and I would have to disagree. Candle stick patterns are not important. The price action within the candle (noise) is what is important. Let me explain this misconception of candle formations, before traders start throwing Candle Formation Books at me..

Candle’s are derived straight from pure price action(tick data). The candle is Only a small block of data and yes, the candle has value, it does tell us a few things.

OHLC
• O-Open
• H-High
• L-Low
• C-Close

However, the details inside the candle are what are important and what will improves your accuracy if you knew what to look for. And, this is where my experience shows you the light at the end of the tunnel.

For example if you pick a 4 hr candle. The price action(tick data) within that 4 hour candle has more value and has more accuracy then just looking at the OHLC. Right? Are you with me?

Typical Candle Stick Trader’s Advice

“” However, this breakout is not strong enough and if there was only the Doji, we should have ignored the signal, but as I said, that hammer which is completely formed out of the Bollinger Middle Band, has strengthen the signal. Then a strong confirmation candlestick formed after the Doji and as you see EUR-USD went up for hundreds of pips after the confirmation candlestick. The long position should be taken after the confirmation candlestick close. Stop loss should be placed several pips below the lower shadow of Doji, or in this case, below the lower shadow of hammer. The first target should be the same size as the stop loss size. You can collect a portion of your profit at the first target and move your stop loss to breakeven. Your second target can be twice of the stop loss size.”" Quoted source

Price Action Advice

Dont get me wrong, people can trade candle stick patterns. However, you will be concentrating on Risk/Reward and probability to turn a profit at the end of each month, instead of focusing on the price action patterns that can improve your accuracy. “A better approach is to use larger timeframe candles to determine the market sentiment. If you see several large caffeinated candles with small wicks, you can determine there is high volume and you can expect a developing trend. Use the smaller timeframes to determine where support is and wait for the retracement to enter in the direction of the caffeinated larger timeframe candles.” Unfortunately, this statement is vague and can not provide enough evidence to prove our methodology. That is why we encourage our members to watch our live trading sessions to learn our method. Reading a passage from a website compared to seeing price action is the experience that will make a significant difference in your trading career. We make our trading decision based on the movements in the market and this is how we teach you. We are implementing our strategy and earing pips while sharing our recorded trading sessions with you. And, since every trading day offers something different, each trading session will have a new scenario that allows us to explain our strategy live. We rarely forecast movements, as we spend our time monitoring current price movements to give us our signals. Now lets get back to Candle Stick patterns. Let me explain the misconception of candle stick patterns and why the majority of traders lose.

Misconception

You must use a combination of timeframes to determine how price is moving. You can not sit there and stare at a 15min candle stick and say “”We got a doji, lets go short for the reversal…”" when in fact, that doji is actually telling us.. “”Momentum has slowed down and now we are sitting on Support… So lets look for a Bounce LONG…..”"

Are you a struggling Candle Formation Trader?

Do you often find yourself with a correct analysis to only discover that your position hit your fixed stoploss before going in the direction of your analysis?

Do you find yourself using a larger stoploss to prevent frequent stopouts?

Do you rely on the closing of a candle before entering your position?

Do you flip through several timeframes before you feel that your analysis is worthy of entry?

Do you limit yourself to only using the larger timeframes?

Do you have a selected trading indicator that you use on a daily, weekly basis, in relation to your trading plan?

Are you a struggling trader who lacks the strategy to achieve profit on a consistent basis?

Is it your dream to become a successful day trader and you only lack the direction/discipline/confidence to achieve your goal?

If you have answered yes to any of these questions, then you should consider studying Price action on range bars from a Futures trading platform.