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The
Candlestick Forum was established to decipher
correct signals from so-called false
signals. Over fifteen years of hands-on
experience has provided effective methods
for recognizing and identifying the false
signals.
Being
able to properly identify the true reversal
signals creates a very powerfulI investment
platform. The elements incorporated into
the formation of the signals have overwhelming
implications. They bring the analysis of
a price trend down to the bare basics. The
formation of the signals is the cumulative
decision making results of all the investors
that partook in the trading of that entity
during a particular time frame. Reread this
past statement. The assertion presented
in this statement is the most powerful thought
process for any analytical forecasting function.
This is the grass root of what investing
is all about. What is the investment psychology
of investors? How does the investment decisionmaking
processes affect the current direction of
the current trend? Hundreds of years of
visual analysis have identified which formations
are precluding or have changed the direction
of a price move. You now have the benefit
of being able to learn the formations in
a fast and easy process.
Proven
Results
The
important thing to remember about Japanese
Candlestick signals is that this analysis
was not done as a successful back test of
a proposed formula. The signals were developed
through centuries of actual trades. The
gains or losses were the results of live
positions.
As
the well known quote states, You
can fool some of the people some of the
time, but you cant fool all the people
all of the time. The signals reflect
that sentiment. A signal utilized for hundreds
of years is the result of successful, consistent,
profitable trading or else it would not
be in existence today. The key word is consistent.
The use of computers has provided a medium
for testing viable trading concepts. If
an investor comes up with a reasonable trading
method, it can be back tested for a period
of time to see what the results would have
been.
The trading method may show good results
for the past X number of years. However,
it may not work effectively in the current
market conditions because those conditions
never occurred during the back-tested period.
That phenomena is not a Candlestick concern.
Year after year, decade after decade, century
after century, the formations have worked
extremely well in all conditions. This research,
done without the benefit of computers, is
the result of traders relying on the actual
witnessing of trade results. Trade results
that warranted committing funds into the
next formation witnessed continued the success
process right up to today.
Candlestick
signals pinpoint reversals in trends. Unlike
most other technical trading programs, where
visual or formula based projection could
result in a possible change, the Candlestick
signal informs the investor as to what the
investors are doing right now. This has
very profitable ramifications. On its own,
direction can be evaluated. The probabilities
of a directional change can be accurately
calculated. However, the signal formations,
when properly deciphered, indicate the state
of investor sentiment NOW. To add more strength
to a trends directional probability,
overlaying the Candlestick formations onto
Western conventional technical analysis
gives stronger verification that the trend
is likely to move in a specific direction.
Having
the ability to pinpoint a change of direction
through the use of a Candlestick signal
has powerful ramifications. All other technical
methods become useful supplemental tools.
If the cumulative investment decisions are
indicating clear buying patterns, and this
is occurring at an obvious trend-line support
area, the buying analysis is further strengthened.
Support lines, watched by a large number
of technical investors, will create a self-fulfilling
result. The more investors there are watching
the same potential support level, the more
buying comes in when they have seen the
support line hold. They become the additional
fuel for profits for the Japanese Candlestick
investor who has established a position
upon the first signs of a buy formation.
Japanese
Candlestick trading incorporates the thought
processes of the majority of the investors
in the markets. Those thought processes
have not changed over the centuries and
will not change over the next century. Fortunately
for the Candlestick investor, there is one
major element that will always allow them
to extract huge profits from the market.
The Candlestick signals are the visual depiction
of investors greatest weakness
EMOTION. Somebody is panic selling at the
bottom. Somebody is exuberantly buying at
the top.
Making
money in investment markets has very little
to do with how well companies are doing.
Making profits in the markets is based upon
what investors perceive a company
is doing. This is a truism that eludes most
investors. The novice investor questions
why a stock price goes down when it reports
good news. The method for maximizing profits
is to recognize when the buying starts in
anticipation of the results of good news
being reported in the future. You can extract
huge profits using Candlestick signals to
spot opportunities.
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