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Using Candlestick Charts – Tips in Stock Market Trading


If you want to explore the opportunity to make money by trading stocks, it is important that you have enough knowledge before going into this risky venture. Indeed, you can make money out of stock trading but it is important that you also know the tools of the trade.

Candlestick charts for example is one of the easy tools you can use in trading stocks. Especially if you are a beginner or just starting with stock trading, using candlestick charts can be a good and easy tool to start with.

Candlestick charting has been around for years and it is one of the best tools for beginners as it is easy to comprehend and you can get lots of information with just one look. Using candlestick charts also allow traders to look at trends and prices in a very visual presentation and provides a clear picture on the market situation which helps a trader in making decisions.

The candlestick chart appears to be a combination of a line chart and a bar chart and it shows the trends of market factors in the stock market. Each bar-line structure resembles that of the candlestick and most probably why it is called as such. The line or the ‘wick’ represents the highest and the lowest traded prices and the body of the candlestick represents the opening and the closing trades. You may also find some black and white candlesticks as well as colored ones, which indicates the direction of the candlesticks.

There are different candlestick patterns that you need to familiarize in using candlestick charts and in understanding market trends, but the top patterns that you need to familiarize are the Dark Cloud Cover, Doji, Hammer, the Evening Star, the Morning Star, the Hanging Man and so many others. These easy-to-remember names of patterns also makes this particular tool an easy one for beginners and for pros alike.

Learning to read these patterns allows you to draw an analysis on whether it is profitable to buy or sell today or not. Of course, getting involved in the stock market trading is not just about prices, demand and supply and their trends. It is also about the emotional attitude of the traders. Thus, if you want to be a successful trader, you have to learn how to manage risks as well and take control of your patience and impulse.

Aside from learning how to read the candlestick patterns, it is also important to learn from expert ones. Observe their decision-making. Analyze their strengths and attitude that brought them success. To be successful in trading, one thing you also have to learn is to train yourself to manage risks and uncertainties and be comfortable dealing with them.

New traders are often disappointed if they lose money and may not even get over it fast. One thing that you can do to avoid these stages is to invest according to what you can afford to lose. Trading stocks are risky and it may be inevitable to have some losses at times but you can manage this by starting with the amount you are willing to lose. Even if you lose you can still go ahead and start trading again.

Work on being comfortable with risks as this is an important part of being successful in the investments market.

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