Here is a list of repeated questions from our customers:
Q. Who is the Candlestick Shop service designed for?
A. Candlestick Shop service is designed to provide trading ideas as well as education for both novice and experienced short term market players. The ‘Play of the Day‘ service is designed for the novice trader, with daily examples of how candlestick charts can aid in identifying predictable movements in a stock. The ‘Daily Candlestick‘ section provides a more extensive list of plays for the more experienced player who desires a high quality, narrow list of plays to consider for trade each day.
Q. Why should I use Japanese Candlestick charting lines as opposed to other more traditional Western charting lines?
A.The Candlestick line is an extremely powerful charting technique, because it gives the trader an immediate visual summary of the underlying strength or weakness of a stock at a given time. By observing a green candlestick, for example, the trader immediately knows that the overall sentiment of traders toward the stock is bullish, because buying pressure is able to overcome selling pressure, resulting in the closing price being higher than the opening price. By seeing a red candlestick, the trader is able to visually see that selling pressure is able to overcome buying pressure resulting in the closing price being lower than the opening price. By reading the sentiment of other traders through observation of candlesticks, the trader can anticipate forthcoming movement and jump aboard before the rest of the market. This often results in big profits.
Q. How do I use the ‘Play of the Day’ section?
A. To view the play of the day, click on ‘Play of the Day‘‘. A candlestick chart will pop up with a plot of daily candlestick lines, the stock symbol, date of print, and 4 moving averages (10 MA, 20 MA, 50 MA, and 200 MA). Look below the chart, and you will see a brief commentary regrading the candlestick pattern observed, and other supporting factors found in the pattern (such as major or minor support, or resting on moving averages). This chart is intended to be used as an educational device for the trader who desires to learn how to interpret candlestick patterns in charts.
Q. How do I use the ‘Today’s Candlesticks’ section?
A. The ‘Daily Candlestick‘ section consists of an an extensive list of stocks that are setting up for play based on specific candlestick pattern criteria. The list is provided for the more experienced trader who is familiar with candlestick patterns, and knows how to play them. Our staff at CandlestickShop scans over 3,000 stocks daily to filter out only the best of the best high quality plays. That is not to say that every play on the list will turn out to reap huge profits, but we at CandlestickShop believe that selecting the best stocks to trade is one of the most important factors in successful trading.
Q. What criteria do you use to generate the ‘Today’s Candlestick’ list?
A. Our staff at Candlestick Shop scans over 10,000 stocks (both listed and NASDAQ) daily to provide you with only those plays that meet specific candlestick patterns (see glossary for detailed definitions of candlestick patterns). In addition to meeting the candlestick criteria, each stock is required to meet at least one other very strict supporting criteria in order to reinforce the probability of a successful trade. Some of these other strict criteria, include MAJOR or MINOR SUPPORT and RESISTANCE, resting against a MOVING AVERAGE, and trading at ABOVE AVERAGE VOLUME. By playing only those stocks that meet strict criteria, the trader increases the odds of having the stock follow through in the intended direction. Selecting stocks that form predictable candlestick patterns is reason enough to increase the odds of success; however, adding additional reinforcing criteria, such as moving averages, will significantly increase the odds even more!
Q. What is major and minor price support?
A. See Glossary for detailed definition of major and minor support
Q. What is a moving average?
A. See Glossary for detailed definition of moving averages.
Q. Isn’t day trading like gambling?
A. No, day trading (or short term trading) is not the same thing as gambling. If a short term trader randomly selects, enters, and exits a stock, without following any rational plan, then yes, trading in this manner would be equivalent to gambling. It is only when the trader formulates a rational trading plan, including selection of plays based on technical analysis of candlestick charts, that the short term trader greatly increases the odds of winning. CandlestickShop makes the greatest effort to provide the subscriber with only the highest probability setups. Each stock that we recommend not only meets specific candlestick patterns, but in addition, also meets other reliable criteria such as resting on MAJOR or MINOR SUPPORT, or one of the MOVING AVERAGES, or trading ABOVE AVERAGE VOLUME. By combining multiple criteria for a stock pick, the trader greatly increases the odds that the trade follows through in the desired direction.
Q. I am interested in your service but would like a little information please. Do you keep statistics on your daily, or weekly, % right calls or % return. Also , do you use just candles, or also western indicators ( price action, momentum etc) for your calls…
A. We do not post profits and losses for each pick, because these parameters are dependent on the market conditions of a given day, and also profit objective and stop loss objectives selected by the trader, which can vary from trader to trader. We do keep a history of our picks and make available for the trader to review help strengthen trading skils. See PLAY OF THE DAY Archives and DAILY CANDLESTICK Archives sections of our website.
Q. I was looking at the Candlestick Terms and Definitions and I was wondering if there were different interpretations for some of the examples. You have (Bearish) for Long Green Real Body and (Bullish) for Long Red Real Body. Couldn’t you look at the Green Body as Bullish and the Red body as Bearish? Also Three Crows (Bullish) and Three White Soldiers as (Bearish). Wouldn’t the Three Crows be Bearish and the Three White Soldiers be Bullish? Please help with an answer.
A. We agree that traditional Japanese Candlestick terminology would classify the Three Soldiers and Long Green Candlesticks as Bullish reversal signals for medium to long term time frames; however, in the context of short term day trading patterns, they are more suited for Bearish reversal signals. For example, if a particular stock closed on it’s high of day, after a very bullish session, and the stock were to gap down on the next morning, this would cause many long position holder traders to panic and sell their positions, causing a short term decline in the stock’s price. This play works particularly well when the bullish candlestick is against other forms of resistance, such as major price resistance and against declining major moving averages. The same applies in reverse for Three Crows and Long Red Candlestick patterns.
For more information on these particular plays, please visit our CANDLESTICK PLAY EXAMPLE area.
Q. Do you follow the indices such as the OEX with candlesticks in your service?
A. We have have found that the best indicators for anticipating price reversal are found in the actual visual price patterns established by the candlesticks. For this reason, we rely exclusively on visual scanning techniques for identifying our candlestick plays.
Q. I am a new member of your web site and I am complitely new to the technical analysis. I want to ask what is the best frequency or minutes per candlestick to use when trading intraday? i.e 1 min,5 or 15 minutes. In your profitable play section I noticed in some of the examples are used intraday-5 min and intraday- 15 min. Which one is recommended?
A. Candlestick charts are tools that help the trader analysis the psychology of other trader’s, and since traders trade in all time frames, (anywhere from 2 min charts to 1 year charts), the same techniques apply in all time frames. The time frames which are followed mostly by short term traders are the 5 min, 15 min, daily, and weekly charts. Which time frame you choose to trade with is mostly a matter of preference. In general, your profit objective, and risk amount (stop points) will be larger when trading with larger time frames. One strategy that we recommend, is to find a candlestick pattern set up in one time frame , and then use the next lowest time frame to target entry and exit points based on support and resistance. For example, you can find a Bullish Harami on the rising 10 MA, and minor price support on the Daily chart, and then switch over to a 15 minute chart, look for a level of resistance, and then enter when the stock price breaks that level of resistance. Similarly, you can look for a Bullish Harami on the rising 10 MA on the 15 minute chart, and then switch over to a 5 minute chart, look for a level of resistance, and then enter when the stock price breaks that level of resistance.