There is a common-sense method for making money in any market. Within the past 25 years, a dynamic investment methodology has entered the U.S. investment arena: Japanese candlesticks. Not a sophisticated name, but don’t let that fool you. The inherent characteristics built into the candlestick signals carry huge investment knowledge.
What is the biggest bugaboo for most investors? Our own emotions! Have you ever sold a stock at the absolute bottom because you could not stand the pain any longer? Have you ever held a stock too long, after having good profits, because you were worried the price could go higher and you would give back most of the profits? Everyone has done that. The proverbial “fear and greed” is what inhibits most investors from making profits in the markets. Fortunately, candlestick analysis removes emotions from investing.
Candlestick signals are based on hundreds of years of profitable use by Japanese rice traders. Of the 50 or 60 candlestick signals, only 12 major signals require your learning efforts. The power associated with candlestick analysis is understanding what each of the signals represent. Most investors make investing a difficult process. It does not have to be. The simple visualization of candlestick signals greatly enhances an investor’s ability to analyze price moves. This is a relatively easy process to learn.
If you want to keep emotions out of your investment decisions, take the time to understand what candlestick signals are telling you. When is it time to buy at the bottom? When is it time to take profits? Candlestick analysis provides a clear depiction of when the buying and selling forces change. Using candlestick signals greatly improves your ability to invest by putting the probabilities in your favor.
The information conveyed by candlestick signals works extremely efficiently, otherwise candlestick signals would not be in use today. Two major advantages are produced by the signals. One is that they are easily visualized. Two is that candlestick charts, which are found on all computer systems nowadays, convey an immense amount of information about investor sentiment. Having the ability to witness where investor sentiment may be changing in a trend is a powerful investment tool. An investor’s profitability can be greatly enhanced by understanding the nature of the investor sentiment that created the reversal signals.
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Japanese rice traders not only recognized candle formations that point toward a change in investor sentiment, they also understood the investors’ thinking behind the reversal signal. Witnessing...