3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022

This article is focused on teaching every reader the 3 ultimate guides to candlestick patterns or losing money in 2022. This brings to you answers on why you have been losing money trading forex and why you have not been making a profit with your asset in the financial market. To every problem there is and there exists a solution. This article has brought your way the golden opportunity to learn and master how to trade the financial market with this 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022 and beyond gambling with your asset rather than you trading excellently well.

What is a Candlestick?

Trading the forex or financial market with the use of candlestick has been a powerful tool in history. Having known that history they say always repeats itself! Mastering these 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022 will guarantee you also powerful trading experience while making a profit.

Candlesticks are a visual representation of the happenings in the financial market. Candlestick was invented by Homma Munehisa a successful Japanese trader. He was known to be the most successful trader in history. This trader was considered to be the most successful trader in history; referred to as the God of markets while alive and trading. Trading the candlestick makes trading profitable, consistent, easy, and makes room for more daily activities asides from forex.

For a married individual or a busy personality, you would have to read, learn and master these 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022. The candlestick is based on a system in which the Japanese candlestick pattern is used with other technical analyses.  

Learning to read the candlestick is synonymous with learning a new skill, a new language, a new approach to a particular problem. And for you to learn effectively you have to adapt to the totality of the teachings. These easy-to-follow steps will guide your day-to-day trading and provide you with profit-making techniques and strategies that can make you become a Pro. Candlesticks focus on both the psychology and methodology of all market occurrences. This is an educational piece that will teach you the fundamentals while constant practice will guarantee profit.

Candlestick has four basic features which are-

High

Low

Open and

Close

The open and close of a candlestick differentiate the two types of candlesticks: bearish and bullish candlesticks.

4 Major Candlestick Patterns

There exist 35 major powerful candlestick patterns but for the benefit of this topic 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022, we shall focus on these 4 powerful candlestick patterns.

• Hammer
• Bullish engulfing
• Shooting star
• Bearish engulfing

The first two patterns mentioned above are used for the bullish reversal patterns and the last two patterns are used for bearish reversal pattern trade. As rightly said a list of candlestick patterns comprises 35 patterns. The 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022 can be regarded as the candlestick pattern cheat sheet.  

Hammer

Hammer has little or no upper shadow (wicks) but a long lower shadow and the closing price is closer to the opening price. It is also referred to as a pin bar. When it occurs at the bottom of a downtrend it indicates a reversal. Hammer is interpreted as a market strategy for that particular time frame where it was formed that sellers took over the market and pushed the market downwards and they suddenly pulled out of the market making buyers take over.

Bullish engulfing

The bullish engulfing pattern consists of two candlesticks, the first one has a small body, and the second one is the engulfing (covering) candle. This pattern tells us that sellers are no longer taking full advantage of the market longer for that particular time frame bullish engulfing pattern is formed.

Shooting star

The shooting pattern is formed when all candle features; high, open, low, and close are roughly the same price, this candle also has a small and a long upper shadow as seen in the hammer. It is referred to as the bearish kind of hammer pattern. It is learned that a shadow should be twice the length of the real body for a unique pattern formation. When this pattern is formed in an uptrend, a trader should look to sell at that time of shooting star formation. The shooting star pattern is also referred to as a bearish pin bar or inverted hammer.

Bearish engulfing

The bearish engulfing pattern consists of two candlesticks. The first body is smaller than the second body and the second body must fully engulf (cover) the body of the first candlestick. When this pattern occurs in an uptrend the pattern tells us that buyers got engulfed in the uptrend and sellers took over the market. The first candlestick must be a bullish candlestick and the second a bearish candlestick.

 3 Basic Market Movement in The Financial Market

• Upward movement – indication of price going up called uptrend
• Downward movement – indication of price going down called downtrend
• Ranging move – up-down movement of price like a ball bouncing from the floor to the ceiling top of an enclosed area.

Never go against the trend of the market. A market is in an uptrend, always look to BUY, a market is a downtrend, always look to SELL. This brings us to the 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022.

Ultimate Guide to Candlestick Patterns

1. Trending move
2. Retracement
3. Break of structure

The highlighted points above make our trading unique and it needs to be strictly adhered to for any trader to make the optimum use of it. To determine whether the currency pair is trading in an uptrend, the higher time frames (month, 1 week, or 4 hours) are considered, the direction of the market is not determined by what you see on the lower time frame. So many noises on the lower time frame hinder a trader from seeing what is happening per time in the market.

Once you know the trend of the market on the higher time frame do not go against the trend. Say a market is in an uptrend, you only look to buy. You need to wait for the price to retrace then you buy to benefit from maximum profit. What is retracement?  Retracement – for an uptrend or downtrend there is a retracement move that is a pullback from the initial direction.

When the retracement candlestick gets larger it is an indication that such a trend might no longer continue. And trending candlesticks could get smaller and then the price goes into a ranging structure before a continuation or reversal takes place.

What is a break of structure or how can you identify a break of structure?

Say, price is moving in uptrend and you noticed the big candlesticks in the uptrend gets smaller while the retracement candlesticks get bigger and price has broken down below the initial rise of the uptrend then we say there exists a break of structure and hence price never gets to the previous high but down to the lower side of the trend then we should expect a ranging market before the price continues in the most favorable direction. These are the little secrets of a professional trader, read in-between the lines to understand perfectly the 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022.

3 Unique Ways of Setting SL and TP

These are secrets of the 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022.

1. Use ATR value – Average True Range

Set your ATR settings to 20, in a buy order go to the previous candlestick to the ATR value then check for the price of the low of that previous candle, subtract the ATR value of that candle from its previous low, and use that value for your SL. Do the same for a sell order by adding the value of the previous candle plus the high of that same candlestick.

• Use of nearest supply zone or demand zone as either SL or TP

Locate the nearest supply zone and use it as TP for a buy order or use the nearest demand zone as TP for a sell order. Both can be used interchangeably. Mark up supply and demand zones ONLY on a 4-hour time frame.

• Use of nearest support and resistance lines.

Mark up support and resistance lines ONLY on the monthly time frame.

Conclusion

This article has revealed to us the 3 Ultimate Guide to Candlestick Patterns or Lose Money in 2022. This ultimate guide will totally change your trading skills and it will definitely increase your profit. Kindly practice all you have learned here on a demo account, master the skills, and then trade your real account when you know you are ready for the task. We will be writing a new article to get you trading like a pro anytime soon. Trade our free signals also and make the best use of our page.