Understanding Candlestick Patterns (Part III)

By Ahmad Hassam

Hanging Man & the Hammer: It is considered a hanging man if it appears at the top of the uptrend! You are looking at a hammer if you see this pattern at the bottom of a downtrend. The hammer or the hanging man is identified by the small candle that appears at the very top of the pattern and there is usually a pretty long wick at the bottom.

You wouldnt trade on it if the opening price on the next trading day is higher than the hammers close if a hammer appears in a downtrend. Similarly, you wouldnt trade on it unless it is confirmed the next day with an opening price lower than the previous close, if you think you have a hanging man appearing in an uptrend.

Double stick patterns depend on two days. The first day is called the set up day and the second day is called the signal day. Compared to single stick patterns, double stick patterns are difficult to come by. But these patterns can be very powerful and profitable if you put in the time and effort to monitor them.

Bullish Engulfing Pattern: The first double stick pattern is the bullish engulfing pattern. The name comes from the fact that the signal day engulfs the pattern day. Both the wick and the body of the second day completely cover the same ground as the first day. The setup day candle should be bearish and the signal day candle should be bullish bigger than the last day bearish candle.

Harami: A Harami is a two day candlestick pattern with the candle of the setup day longer than the candle of the signal day. Harami pattern can also be bullish or bearish. The first day is very bearish and occurring in a downtrend in case of a bullish Harami. However, on the second day bulls take over. This signals reversals of a downtrend that culminated in a downtrend. Likewise, a bearish Harami signals end of an uptrend.

Harami Cross: Harami Cross is a special variant of the Harami. It involves a Doji pattern and should always be considered an indicator of the potential reversal. A Harami Cross can also be bullish or bearish. Bullish Harami Cross appears during a downtrend. Its setup date is a black long candle. Its signal day is a Doji. Similarly, a bearish Harami is considered to indicate end of an uptrend.

Inverted Hammer: Inverted hammer can be bullish or bearish. A bullish inverted hammer pattern occurs in a downtrend. The first day is a bearish candle. The signal day is an inverted hammer. The bullish inverted hammer is a fairly rare pattern.

Bullish Doji Star: The bullish doji star is very similar to a bullish inverted hammer. It occurs in a downtrend and signals that the bulls have had enough. A bullish doji pattern is a two day pattern with the doji appearing on the signal day during a downtrend.

Meeting Line: Meeting line pattern is another indicator that a trend reversal is about to take place. Meeting line can also be bullish or bearish. In case of a bullish meeting line, the setup day is a long black candle. The signal day is a long white candle.

Piercing Line: A piercing line two day candlestick pattern can be bullish or bearish! The bullish piercing line consists of a long black candle on the setup day. It is followed by a long white candle on the signal day. The open of the signal day should be lower than the low of the setup day. Likewise, in case of a bearish piercing line, a white candle is followed by a black candle and this pattern must appear in an uptrend. - 23167

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know The Candlestick Patterns. Learn Forex Trading!

How To Use The Stochastic Oscillator

By Sam Nielson

The Stochastic oscillator will move between 0 and 100. Low readings mean an oversold market while high readings mean an overbought market. Oversold means the market over reacted on the sell off and is ready to bounce upward. Overbought means the market over reacted on the buying and is ready to turn down.

Buy when the Stochastic oscillator is low. Sell when the Stochastic oscillator is high. The idea is to take advantage of other traders when they are emotional: either fearful or greedy. Selling when the Stochastic is high is difficult because you'll want to hang on longer: greed. Buying when the Stochastic is low is difficult because you'll want to sit on the sidelines longer until the chart looks better.

New traders mess up by trying to over simplify trading. They pick just one indicator and use it because it's all they can conceptually understand. Don't do this. The Stochastic indicator needs to be used with other indicators. Why? Consider this. In a sudden buying frenzy, the Stochastic becomes overbought too quickly and will give a premature sell signal. In sudden panic selling, the Stochastic becomes oversold too quickly and will give a premature buy signal. Always use the Stochastic with other indicators.

Should you wait for the Stochastic indicator to turn up before buying? Should you wait for it to turn down before selling? No. If you wait until the Stochastic turns, you'll miss out on making a lot of money. What you are trying to do is enter as soon as the Stochastic indicator reaches an extreme. View very low or very high Stochastic readings as a measure of the emotion in the crowd that is trading your stock. The more the emotion, the better. It is easier to make money from emotional traders than it is from calm, rational traders.

Go long when the Stochastics traces a bullish divergence, that is, when prices fall to a new low but the indicator makes a more shallow low. Go short when the Stochastics traces a bearish divergence, that is, when prices rise to a new high but the indicator ticks down from a lower peak than during the previous rally. In an ideal buying situation, the first Stochastics low is below and the second above the lower reference line. The best sell signals occur when the first top of the Stochastics is above and the second below the upper reference line.

You should not buy a stock when the Stochastic is high. Conversely, you should not sell a stock when the Stochastic is low. This is probably the most accurate way to use the Stochastics. Reverse your thinking and look at it as telling you when NOT to trade a stock. Indeed, moving averages are superior to the Stochastic at picking up on trends, the ADX is better at catching entry and exit points, but the Stochastic is the best at telling you when you should NOT trade a stock. - 23167

About the Author:

May this lesson helps you understand how to use the Stochastic Oscillator better and make a lot of money. For more trading tips on the Stochastic go to stochastic oscillator

Explore The Secrets Of Forex Currency Trading

By Rudolf Brits

In the world of Forex nothing is so out of place. It appears that even robots have found their way into the technology. With new programs being developed every day should you be considering finding a robot counterpart? A program capable of sifting through loads of information each day? If it came down to it who would you're taking recommendation from, a robot or a human?

Personally I am a large believer in the androids. You'd be stunned at how smart robots are. The explanation for this I feel is kind of easy because androids don't count emotions they count numbers. They put the odds in your favor with no doubt.

The currency exchange is just one huge game, it's you one guy attempting to make a living a market of millions. It's hard work and I have met only a few folk who can claim to have made their living through foreign exchange.

This of course is changing, every day more and more people are ditching the standard approach of reading books and taking courses and taking a fresh way out. They're buying to 10 screens and connecting them to programs. Programs which are built to take advantage of market issues and can spot them far faster than their human opposite number.

The thing is that folks just can't sieve threw information fast enough, androids see numbers where we see words. They see values where we see meanings. It's no surprise that folks can't beat androids in chess. A robot makes no mistakes just because he is as good as his programmer.

This is the reason why I think the top-notch programs are actually quite the steal. It's almost as if folk are selling personal 'get rich' schemes. Take your probabilities and purchase a program or do your research and buy something attempted and proven.

No matter how I look at it a robot just beats a human. Sure he'd lose you some money but with the odds in your favor do you actually believe your robot won't pay himself off? He is's a machine made for making you money, and I bet it's going to be the most successful investment you'll ever make. currency exchange robots can make it easy for you, they can make it as simple as comparing some numbers and seeing where you need to earn money today. They will relay all of the info that is relevant to you and do it with such precision and accuracy that you will be completely amazed.

Don't involve emotions in business, let a robot do the thinking for you and let the money start pouring in. Quite overtly I think you'd be nuts, absolutely nuts not to invest in one of these. It's what we call a wonder of modern technology or at least that's how history will remember them.

So there is no debate and there never will be. Robots are the future, robots are faster, smarter and better then we will ever be. Get a robot and start watching the money pile up. - 23167

About the Author:

Johan Brits finally became successful at trading forex after he learned the secret of the trade. Follow him on Be Share Wise were he explores some of his secrets.

Prosperous Home Based Business Opportunity With Currency Trading

By Richard U. Olson

An increasing number of people are choosing to go to work for themselves by becoming involved in home based businesses. These businesses allow people to ditch their long commutes, work for themselves and achieve personal autonomy and make more time for their families in the bargain. There are also the financial rewards to consider. Whole there are a lot of different possibilities when it comes to home based businesses, one of the most lucrative of all is online currency trading in the Forex market.

With almost every household in the nation now online, there are more home based business opportunities than ever before. The Forex market is of course one of these opportunities and is more popular than it has ever been, offering the potential to generate a very large income to almost anyone.

Investors can track the currency trading market online with software. Now more than ever before, various individuals are accessing the powerfully unique Forex trading marketplace daily and nightly. All that is required is a computer and an internet connection, something nearly every modern household contains.

There are some tools and strategies you'll want to make use of if you want to get serious about making money via the Forex market...

You have to do your homework! It will take research and study to understand the parameters of trading that you will apply. Some investors permit a great decline in an assets price before the kicking in of a stop-loss order. Some of them want to see 38 percent retracements, yet others wait for the 50 percent before buying or selling. In order to succeed one must control their selves while not being carried away by their emotions.

If you are a beginner in the Forex trading world, you should give some serious consideration to a mentor. Your mentor has been there, done that; you can learn from him so that you don't have to make all the mistakes he did, or so you can increase your profits faster than you otherwise would be able to.

Rather than taking shortcuts in your learning process, you should work to master your automated Forex trading software.

Learn about trading strategies used by master currency traders so that you truly understand what you are doing--even if you do plan to make heavy use of your software.

Once you determine your trading discipline, never waiver from its use. You may need to adjust it occasionally for refinement after deep contemplation, making it more suitable to you. However, once it is in place you should never take any type of action in the marketplace that leads you away from your discipline.

You can build your bank account, while fulfilling your need for satisfaction and excitement when making money with online currency trading as a home based business. There are some great Forex trading software available to you and there is a multitude of good research material to learn from while online. - 23167

About the Author:

Richard U. Olson uses the state of the art Forex Robot Software and he recommends it to make consistent profits in the Forex markets. Grab his FREE e-course on The Crucial Facts On Forex Trading to realize your financial dreams.

Making Money with Computerized Stock Trading Software

By Michael Swanson

Stock trading software can be a helpful tool for the experienced stock trader. You will need to have some basic experience and knowledge to get the most from any software program, because you need to determine the criteria for the software.

Many traders agree that using software benefits them in their trading endeavors. The advantages of stock trading software include helping you to manage your portfolio and to monitor the stocks that you have. Software also assists you to have control over your risk reward ratios.

Human emotions control stock trading with the fear and greed syndrome, and decisions made when being pulled by your emotions often have less than desirable results. Stock trading software helps you to be in control of your emotions and limit the number of emotional trading decisions you are tempted to make.

Trading software also saves you time when searching for new stocks in which to invest. The software is able to scan faster and more thoroughly through the available stocks than you could do yourself. The search is based on the criteria you have already entered, so the results are in accordance with your goals and strategies.

How does trading software actually work? It scans the available stocks in line with your pre-determined criteria, finds suitable investments and indicates buying or selling signals. The software can place the orders or you can order manually. A basic knowledge of investment concepts and technical analysis is necessary before you can truly benefit from the software, so that you can decide the criteria for your software to use.

Take the time to research the different stock trading software available to find one that both suits you budget and your trading goals and criteria. If you can try before you buy, so much the better, but do look for software that offers a money back guarantee for your own protection. - 23167

About the Author:

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