Essential Candlesticks Trading Course

Published by MLCH on March 2, 2022March 2, 2022

Access the Essential Candlesticks Trading Course for ONLY $199 $15

The Size is 2.74 GB and Released in 2021

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Key Takeaways

• Candlesticks display market sentiment at a glance, and aid in decoding price moves across assets. Master bodies, wicks and colors so you can interpret open, close, high and low like a pro.
• Fundamental patterns such as engulfing, doji, and morning star can signal reversals or continuations prior to the majority of indicators. Verify signals with market context and volume for better dependability.
• Think of candlesticks as the market’s vernacular and monitor changes of hands between bulls and bears. Compare wick length and body size to pressure, indecision, and turning points.
• Don’t rely solely on memorization — integrate candlesticks with trend analysis, support and resistance, and indicators such as moving averages or RSI. Develop checklists to screen noise and time entries.
• Control risk on each trade with defined entry, stop loss and take profit rules derived from candle formations. Risk a small fraction of capital per position and examine false signals to improve setups.
• Backtest strategies on historical data, and record win rate, average gain and drawdown. Cultivate a strong mind–don’t be biased, patient, accept uncertainty as a way of trading.

An essential candlesticks trading course is a structured guide that teaches how to read, interpret, and use candlestick charts for trade plans. It covers essential patterns such as doji, hammer, engulfing, and shooting star, with obvious trend, range, and breakout guidelines. To develop dexterity, the course treats open high low close data and how bodies and wicks reflect buyer and seller dominance. Risk steps are stop-loss zones, entry timing, and 1% risk per trade. Powerful courses provide context with volume, time frames from 1 minute to daily, and connections to support and resistance. Case studies and quizzes aid memory. To keep honest and legit, the core chapters stroll pattern logic, typical pitfalls and an easy checklist to try out every setup.

Why Candlesticks Matter

Candlesticks chart price action in a condensed format, enabling traders to quickly observe market sentiment. Each candle reveals open, close, high, and low, providing a complete read on one time segment. Over time, these candles create patterns that help identify trend strength and turning points, essential for successful candlestick trading. In a candlestick trading course, you learn to interpret this “cheat sheet” with reliable patterns, combining it with volume or moving averages to verify signals across stocks, forex, crypto, and options.

Market Language

Candlesticks act like the market’s language, telling who holds power: buyers or sellers. Long bodies indicate conviction, small ones indicate hesitation, and wicks indicate aggression from the opposite camp.

Reading this language reveals changes of dominance. A long lower wick after a sell-off indicates buyers came in. A string of higher closes with diminishing upper wicks can demonstrate waning buyer momentum.

Basic’s matter. Without them, its challenging to decode psychology and price action in the moment. A course develops this foundation so signals are crisp and consistent.

• Body, wick (shadow), range
• Bullish/bearish candle
• Doji, hammer, shooting star
• Engulfing, harami, piercing line
• Morning star, evening star
• Support, resistance, break, retest

Predictive Power

Some patterns signal a probable reversal or continuation of the trend. A morning star near support can suggest a bullish reversal. An evening star by resistance can warn of a top. Engulfing candles frequently identify powerful turns when they close outside of recent ranges.

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Identifying which side is in control, candle by candle, allows you to time entries instead of chase them. Bullish hammers after a drop or bearish shooting stars after a rally can presage swings before lagging indicators respond.

Candlestick cues frequently predate moving averages, RSI, or MACD crossovers. Take them as an early tip, then verify with volume bursts, a 20-day average slope, a break of a recent swing level, etc.

Apply this edge to screen for better-odds trades in stocks, big forex pairs, and options plays. Example: buy the pullback when a bullish engulfing forms on EUR/USD at a prior daily support, with rising volume and the 50-day average below price.

Emotional Insight

Long red candles indicate panic selling. Long wicks indicate tension and resistance. Small bodies with long wicks indicate hesitation that can come before a breakout.

Wicks and bodies divide buying and selling pressure in full view. A hammer’s long lower wick signifies sellers were unable to maintain the low. A shooting star’s upper wick indicates buyers lost control close to the high.

Use it to maintain your scheme. If your emotions surge when you see a broad-range red candle, observe, resist, wait for the next candle to close, check volume and the moving average rather than react from panic.

Follow your own responses. Record what patterns make you panic or stall, what the result was and how confirmation (volume or moving average) assisted or didn’t.

Anatomy of a Candlestick

The body plots the spread between open and close, while the wicks plot high and low, providing essential candlestick trading insights. Color offers rapid context, facilitating candlestick analysis from individual candles to three-candle patterns.

The Body

The body is the region between open and close. It indicates who was in control at the time and the extent they drove price. Real body indicates distinct separation of open and close. Open and close being the same or nearly the same creates a no real body candlestick, known as a Doji.

Long bodies indicate powerful momentum in the direction of the close. Long green (white) body says buyers drove price, long red (black) body says sellers led the move. On any time frame, from 1 minute to 1 day.

A bullish candle closes above open. A bearish candle closes below the open. Follow a streak of sizable white bodies to denote trend potency. Collapsing frames can signal fading power.

Compare body size to recent candles to gauge the move’s strength. For instance, a big body following a quiet range typically signals a breakout. A wee body following a broad swing can indicate hesitation or tiredness.

The Wicks

Wicks (or shadows) are thin lines above and below the body. They represent the shadows that extend beyond the real body, representing the intraday extremes before closing back within the body range.

A long upper wick frequently indicates selling pressure close to the high. A long lower wick frequently signifies buying support in the vicinity of the low.

Use wick action to identify potential reversals or false breakouts, like a pierce above resistance that closes back inside. Contrast wick length to body size – long wicks with small bodies are the best signals of volatility and a tug-o-war.

Relative wick position is important. Upper-only wicks near resistance indicate rejection. Lower-wicks-only near support indicate demand.

The Colors

Color coding—green/red or white/black—indicates bullish or bearish at a glance. Maintain a uniform scheme from platform to platform for quick pattern recognition, particularly when perusing clusters of similarly hued bodies.

Watch for clusters of green bodies in an uptrend or red in a selloff to get a feel for momentum. Color tweak for clarity, eye comfort and contrast on light/dark backgrounds.

Core Candlestick Patterns

Candlestick charts, which date back to 18th century Japanese rice markets, have guided traders for more than a century. Steve Nison’s 1991 book introduced them to Western practice. In studies, those engaged in candlestick trading identified profitable signals over 25% more frequently than bar traders. Core candlestick patterns act as the base layer for advanced trading strategies: entries, exits, risk control, and context. Construct a pattern ID reference, maintain a quick failure cases list, and drill pattern recognition on past charts to enhance your trading experience. During live sessions, keep a small reference nearby.

1. Reversal patterns: bullish/bearish engulfing, hammer, doji, three inside up/three outside up.
2. Continuation patterns: bullish/bearish harami, rising three, falling three, bullish continuation setups.
3. Indecision patterns: doji, long‑legged doji, spinning top.
4. Complex formations: morning star, evening star (and evening star doji), harami cross.
5. Use in strategy: trend context, support/resistance, volume, and follow‑through confirm signals.
6. Practice: replay charts, tag examples, and review outcomes to build recall.

1. Reversal Patterns

Bullish engulfing occurs when a sturdy green candle completely envelops the previous red body. Bearish engulfing is the reverse. Hammers form when price opens, trades lower, then buyers push it back up to close near the high – the long lower tail indicates lows were rejected. Doji indicates balance. During strong trends it can indicate fatigue. Three inside up (64% bullish reversal efficacy) and three outside up (70%) indicate momentum shifts through several candles and are popular in futures and options, where other multi‑candle patterns register around 70% statistical significance.

These signals indicate possible reversals at support/resistance areas. They are most effective following prolonged swings, close to support/resistance, or at round numbers.

Confirm with volume spikes, higher low after a bullish cue, or a break above the pattern’s high. Set stops beneath the formation’s low to limit risk.

Shoot recent market snapshots of every pattern by asset class and time frame. Pay attention to context, volume and next­-day follow­-through.

2. Continuation Patterns

Harami (bullish or bearish) reveals a small body contained within the previous candle, typically a pause that preserves the trend. Rising three or falling three sprinkle in a quick hook between two solid trend candles.

Employ these to ride trends — not call tops. Enter on break of the pattern’s trigger with stops beyond the pullback range.

Create a checklist: clear trend, shallow retrace, low‑to‑average pullback volume, trigger break, risk/reward at least 1:2.

3. Indecision Patterns

Dojis and spinning tops indicate a stalemate. By themselves they offer no guidance.

They frequently appear prior to breakouts or brief consolidations. Observe for compression against previous highs/lows.

Follow them at support/resistance. A breakout candle closing outside the level can provide timing.

Record each occurrence with position, spread, result to hone identification speed.

4. Complex Formations

The morning star doji and evening star doji couple three candles to illustrate a change in control, with the evening star doji boasting a 68% success rate in bearish calls. A bullish harami cross merges a doji inside the previous candle, indicating potential reversal. Understanding candlestick trading involves recognizing that context rules: trend strength, location, and volume matter. By exploring multi-market case studies, traders can observe how follow-through differs between indices, FX, and commodities.

Beyond Pattern Recognition

Profitable candlestick trading requires more than just shape memorization; it involves understanding candlestick patterns in conjunction with trend, levels, volume, and timeframe. Reliability increases when such signals align with higher timeframe bias and significant support/resistance levels, confirmed by momentum or volume. A successful candlestick trading strategy often favors intricate, multi-candle arrangements over simplistic ones, with risk rules and discipline tying it all together.

Market Context

Candlestick signals are more significant when they occur at obvious support or resistance levels. For example, a weekly support zone bullish engulfing pattern indicates a stronger potential for successful candlestick trading than a middle-of-the-range bullish engulfing. It’s essential to map trend direction ahead of time; uptrends bias long setups while downtrends favor short positions. On shorter timeframes such as 1-minute or 5-minute charts, market noise diminishes your trading edge, making daily or weekly charts generally more reliable for analysis.

Before acting on any signals, verify recent price action and volatility. A hammer candle following a sharp decline may need a second check of the lows, while after a slow slide, it can indicate a reversal. Viewing patterns with an ATR-based perspective helps determine whether candlestick signals are significant or just noise. When multiple patterns emerge, prioritize them based on complexity, proximity, validation, and confluence from higher timeframes.

Incorporate trendlines and key levels from higher frames, which include regions of significant reactions. Complicated patterns like morning stars or three-candle reversals typically take precedence over single-candle wicks if they occur at the same level. To enhance your trading experience, maintain a market context journal where you record the trend, level, timeframe, and volatility when a pattern develops, tracking the results over time.

This practice will allow you to observe which contexts maximize your chances of success in trading. By understanding candlestick patterns and their implications, you can develop a strong foundation for your trading journey, ultimately improving your skills and strategies in the financial markets.

Volume Confirmation

Volume screens out weak signals. A bullish engulfing with above average volume near support has better odds than the same candle on light trade.

Compare volume spikes to the 20 period average. Search for obvious follow-through on breakouts or reversals. Increasing volume on follow-through sessions gives it conviction.

Add volume checks to your pre-trade list: average vs current, confirmation on close, and whether large orders appear to push price.

Failed Signals

There are disingenuous signs everywhere. News shocks or big institutional orders can break clean setups, even in strong environments.

Put stop-losses past rational points of invalidation and size trades to risk a constant percentage. Crowd entries on noisy short frames.

Audit bad trades. Keep causes such as countertrend entries, low volume, poor location and no higher time frame alignment.

Keep a failed-signal log to tune filters and drop crappy patterns.

Building a Trading System

Candlestick trading introduces pinpoint accuracy, but it works miracles when implemented within a comprehensive strategy. A successful candlestick trading approach should be designed around market psychology, risk control, and trading experience. Anticipate liquidity, volatility, and trend strength to adapt rules for effective candlestick analysis.

Indicator Synergy

To master candlestick trading, match patterns such as hammers, shooting stars, and engulfing with popular trading indicators to screen noise and time your entries effectively. Moving averages can signal trend bias, while tools like RSI, MACD, and ATR assist with momentum, confirmation, and volatility-aware stops, respectively. In a good trend, a pullback hammer near a rising 50-day MA with RSI bouncing from 40 will often outperform the same pattern in a flat range.

As you embark on your trading journey, take the table below as a starting map, then test and tweak per market—stocks, forex, or options all have unique quirks.

For beginners, try small changes first: shift MA length, adjust RSI thresholds, or swap MACD for Stochastics. Record results across market regimes to check longevity and solidify your understanding of candlestick analysis.

Risk Management

Risk rules keep you in the game when patterns don’t. Set stop-loss below the candle’s low for longs (or high for shorts), padded by 1–2 ATR to account for noise. Place take-profit at nearby structure or a fixed risk-reward, like 1:1.5 or 1:2, and trail if trend strength improves.

Keep your risk to 0.5–2% of equity a piece. Position sizing connects to stop distance – wider stops equals smaller size. Track metrics: max drawdown, win rate, average win/loss, and risk of ruin. If volatility soars, decrease size or widen stops with a diminished stake.

Backtesting Rules

Try it out on pristine historical data before you go live. Log win rate, average gain, average loss, expectancy, and drawdowns per pattern and per market. Employ software or spreadsheets to speed runs, verify slippage and spreads, and change parameters.

Tweak entry, stop, and exit rules when tests reveal soft spots, then forward-test on a demo. Keep experimenting. Historical performance provides direction, not certainty.

The Trader’s Mindset

Candlestick trading skills alone are not enough; a trader’s mindset is vital for ensuring focus and emotional control remain in check. This discipline, patience, and steady self-checks lay the foundation for successful candlestick trading. By tracking progress and setting personal growth goals, traders can forge habits that enhance their trading experience, extending beyond any individual trade.

Avoiding Bias

Bias lurks in the open. After a big win, it’s easy to view a hammer as a sure sign. Following a loss, even a clean engulfing setup is easy to doubt. Both cloud our judgment. Follow objective rules for entries and exits: define what a valid signal looks like (close above/below key levels, volume confirmation, risk-to-reward minimums), then act only when the chart meets those rules.

Use a checklist to bring order when emotions spike: pattern criteria, trend context, level validation, risk size, exit plan. Audit trades weekly to identify common pitfalls such as confirmation bias, recency bias and loss aversion. Mark where gut calls supplanted the plan, then scribe the correction. New traders try out dozens of communities or techniques, this review accelerates that search and minimizes drift. A trader who optimized rule precision on entries and exits increased win quality and, within seven trading days, hit solid returns—evidence that process, not intuitions, fuels results.

Cultivating Patience

Wait for complete setups. A pin bar at a strong level without follow through is NOT a trade. Allow the candle to close. Verify trend, momentum, and risk. Patience slashes overtrading and prunes commissions and slippage.

Delay gratification. Hold to the plan when price tempts with partial signals or feeds inflame FOMO. Lots of times patience rewarded–such as jumping over a doji cluster that subsequently broke against the bias. These notes condition the mind to believe in discipline.

Embracing Uncertainty

No candlestick pattern is a sure winner; uncertainty is the entry fee. Losses provide valuable information. Tag them by cause: late entry, poor level, news shock, or pattern misread. Tweak rules, not feelings. In the world of candlestick trading, markets change, and what works in a quiet period may not work in a volatile one. Remain nimble. Cut size, switch targets, or sit out when ranges crack or spreads stretch. A comprehensive understanding of candlestick analysis is essential as you learn, observe, and reflect over months and years—mindset develops as much as method.

Conclusion

To trade candlesticks, clear things up. Read the open, high, low, and close Trend map first. Gauge the depth. Then read the bar. Trade with a strategy, not a gut feel.

Employ a limited pattern set. For instance, a pin bar at a key zone. Or engulf bar with strong range. Track risk in points. Put a stop. Place a take profit. Record every trade. Check stats weekly.

Cool in furnace. Cut size in chop. Stand down around big news. Stick to your rules. Small victories pile up.

Time to level up. Open a drills schedule for the following 10 days. Select a pattern and select a market. Trade it on a demo! Keep a record of 10 trades. Post your notes and questions.