Candlesticks: Silent Signals and The Speed of Trust

Transcription

1 Candlesticks: Silent Signals and The Speed of Trust The Japanese have a saying, "One seeing is better than a hundred hearings". That's the beauty of Japanese candlestick charting and today I'm going to share with you the most powerful communication tool that exists in every market (stocks, bonds, commodities, futures, currency, options), for every time frame, is easy to learn, simple to understand and eliminates the noise of other people's opinions. Candles, as they are referred to, communicate exactly what the bulls and bears, the buyers and sellers are thinking. Candles furnish us with unique market insights, which identify changes in market psychology, provide entry and exit points and confirm market direction. Japanese candlesticks are the ABC's of stock market language. Trading without this knowledge puts you at a disadvantage and needlessly places your money at risk when the signal was in front of you all the time. What do you see when you look at this image? Most folks see one of two things, either an image of what appears to be a witch or an image of a beautiful woman. Which of these did you see? Can you see both images? The Japanese have many proverbs, one is "if you want to see further, you have to go higher". Educating yourself on the use of Japanese Candlesticks will take your trading/investing to new heights. First though, let me help you see the witch and the beautiful woman by separating the elements of the single picture.

2 Often times, candlestick charting works the same way as the image above in that it is the combination of two candles that confirm one pattern. In a moment, I'll share with you one of my candlestick trading secrets that utilize the exercise above, seeing both the beautiful woman and the witch at the same time. Master this technique in the market and you will see further and go higher. But first, let's get to the basics of what a candlestick looks like. Every candle on a chart consists of a high, a low, an open and a close. The high or "upper shadow" is the highest price attained during the trading session represented by the candle. The low or "lower shadow" represents the lowest price attained during the trading session represented by the candle. The body of the candle represents where the stock opened and closed. A black body (red on the charts included in this special report will reflect that the close of the body was below the open, whereas a green body will reflect that the close of the body was above the open.

3 One of the goals of every trader/investor is to buy low and sell high. One of the best candle signals for buying low is the "hammer" candle. Hammer candles look like one of these four images. To qualify as a hammer candle on a stock chart, the market must be in a downtrend and have a lower shadow that is at least two times the height of the body. The color of the body can be black or white, red or green and can have a very, very small upper shadow, such as the black and white bodied candles on the far right. Hammer candles represent a pattern change in psychology. They occur after a last burst of selling, where clearly the bears (sellers) are in control (hence the long lower shadow) and at some point during the trading session the bulls (buyers) step in and push price higher (hence the small real body, either black or white). This rejection of lower prices during the trading session indicates a change in balance between the bulls and bears resulting in a lessening of the bears (sellers) confidence in the sustainability of lower price levels. This also gives the bulls (buyers) a reason to become optimistic. The low of the hammer shadow is support and the expression I like to use when price on any future candle closes below the shadow of the hammer is, "if you are long, you are wrong"! Meaning the bears (sellers) are back in control. So, let me show you the "Beauty and the Witch" in using the hammer candle. Master this and it will save and make you money!

4 It's called the next trading session, the next candle, or as I like to refer to it, the "second opinion". This technique is so subtle, yet so powerful; and when I put my money at risk, I like to get a second opinion from the market and that occurs on the very next candle, the very next trading session. The hammer candle in the chart above occurred on May 8th in the S&P 500. As you can see on that chart above, the trading session on May 9th successfully tested the low of the May 8th hammer candle, with price moving below the low/support line and then closing above the low/support line, what is referred to as a rejection of price. For all intents and purposes, this was a successful test, and most trader/investors would have bought or gone long by the close of the May 9th trading session. However, those traders only saw the "Beauty" and couldn't see the "Witch". In the Beauty and the Witch exercise, we broke the two images apart to see each image separately. With candlestick charting, the key is to join two candles together to see if the two joined candles are confirming what we first saw. This is what I refer to as our "second opinion". As you can see, when we join together the May 8th & 9th candles to form one candle, it no longer maintains the shape of the hammer. Remember a hammer candle will appear on a stock chart "only" when a market is in a downtrend (which it was) and have a lower shadow that is at least two times the height of the body (which it lost when we combined both candles). Are the bulls really in control when the two candles are joined together? Has there really been a change in psychology? The lack of follow through on the "second opinion" candle communicated to us that the bears (sellers) were still in control. Let's go see how this ultimately played out. Click here for your 30 day unconditional money back guarantee to Mastering Probability.

5 The bears remained in control and prices moved lower into the next bullish candle configuration, one that you won't find in any candlestick reference material and one that I will be teaching during my one day online workshop "Candlesticks: Silent Signals and The Speed of Trust" on Friday, October 19th. On a daily basis, I scan every S&P 500 stock, every Nasdaq 100 stock & every DOW 30 stock to locate "Hammer Candles". I do this on monthly, weekly, daily & 30 minute chart time frames. In a moment, I'll provide you with a current listing of hammer candles that I have located. But before I turn you loose on hammer candles, you should know that there is a special trading strategy that will increase your probability of success in trading these candles and you can access it for the next 30 days, risk free. Every other Wednesday, I provide my clients with a one hour training, education, and question & answer session that is archived on their member s page. At the present time, there are 28 hours of education sessions available for your review including the session on the "special hammer trading strategy". I can't imagine trading hammers without it. The cool thing is that you can access all of my training, receive 30 days of my newsletter service, all backed by a 100% unconditional money back guarantee refundable deposit. Click here to receive your free education and learn how to trade hammer candles and more.

6 As I mentioned earlier, I'm going to be conducting a one day, online workshop, "Candlesticks: Silent Signals and The Speed of Trust", on Friday October 19th. This workshop will be archived on your member s page for 30 days. If you are new to trading/investing, then this is absolutely the first place for you to start. Candlestick charting is the communication language of the market. It clearly defines whether buyers or sellers are in control and all candles are not equal. As an example, here is a series of candles that all have the same high and low, yet each candle has a different meaning. If you trade or invest, understanding the language of the markets is a must. Nothing moves faster than the speed of trust. Trust is a learned competency. Trust is a skill. Trust is something we can learn and learning to trust creates extraordinary rewards. Click here to join me for the one day on line workshop and increase your speed of trust in trading and investing in the markets. The bulls and bears are in the market each and every day. I'll show you how to find them, rid you of nightmares so that you can rest easy! Click here for a current listing of hammer candles.