Technical Analysis with Japanese Candlesticks
How does a trader gain profits when trading stocks, commodities, Forex, or options on any of these? In order to make money in this endeavor a trader needs to be able to predict future prices with a reasonable degree of accuracy. He needs to be right more than he is wrong. Technical analysis with Japanese candlesticks is the first choice of many successful traders. Prices are driven by fundamentals or rather the anticipation of fundamentals. Sound fundamental analysis gives a trader a heads up as to where the market is going and especially where an individual equity is headed. However, many traders as well as long term investors are buying and selling equities based on their own analysis. There evolves a market sentiment for any stock, commodity, or currency pair. Technical analysis with Japanese candlesticks is an excellent tool for understanding and predicting changes in market sentiment. Because the market immediately discounts known fundamentals, and immediately seeks to forecast the future, traders use technical analysis with Japanese candlesticks to earn profits.
Technical versus Fundamental Analysis
Having a firm grasp of the fundamentals that drive equity prices typically leads to profits. However, knowing when the market will react to changes in fundamentals, how it will over react, and how perceptions will change commonly leads to higher profits. When traders use technical analysis with Candlestick patterns they gain insight that is not found by doing fundamental analysis. Just what do we look for with technical analysis?
Price Fluctuations, Price Patterns, and Price Trends
Take a look at any stock chart. Prices do not move smoothly up and down. They rise and fall during any given day, week, or month. Although an equity price may rise or fall a few percentage points in a month the sum total of equity price fluctuations may well equal the price of the equity or even more. Using technical analysis with Japanese candlesticks a trader can profit from a lot more price variation than the difference in price from the beginning of the month to the end. Using technical as well as fundamental analysis helps traders spot potentially lucrative price trends as well as market reversals.
When to Buy and When to Sell
The point in using technical analysis with Japanese candlesticks is to decide when to buy and when to sell. By using Japanese candlestick trading signals traders can spot opportunities. These signals help predict future equity prices based on two things, current market performance, and historic market performance. Equity price patterns tend to repeat themselves. In using technical analysis with Japanese candlesticks a trader spots a known candlestick signal. This signal indicates that the equity price will likely rise or fall. The trader will commonly use this technical cue to buy or sell the equity. He will have done his fundamental analysis of the equity in question. He will follow sound money management principles in his trading. And he will learn to use the predictive value of technical analysis with Japanese candlesticks to enter and leave the market with a profit.