Reader Questions Answered

Help Me Trade Forex With Candles!

I am a newbie forex trader. My greatest challenge is identifying entry and exit using candlestick. I’ll be glad if u can help.

Once upon a time, in my early days as a market analyst I used to write candlestick commentary – particularly on the fixed income (interest rate) market. The second article I ever had published was on the subject. I think the title was something about using candlestick real-bodies to identify support and resistance levels. It must have been fairly interesting because Steve Nison, who was the big mover in terms of introducing Japanese Candlestick Charting Techniques to the West actually called me to talk about it when the article came out in Technical Analysis of Stocks & Commodities.

Back in those days I could tell you about dark cloud covers, dojis, shooting stars, hanging men, and all kinds of other patterns with strange names. That was a long time ago. I’ve forgotten most of that stuff. I still use candlestick charts in my trading and analysis work, but that’s because I find the real bodies make them much easier to get a quick read on than bar charts. I do not use any of the candle specific methods, though. Sorry.

I actually have found it very interesting as an observer to see how popular candlesticks have become among retail forex traders. If you are a user of them, or trying to become one, just remember one thing. No matter what type of chart analysis you do it all comes down to pattern recognition, and the biggest part of that comes from repetition and experience. That means you need to look at loads of charts to develop an effective skil reading them.

By John

Author of The Essentials of Trading

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