Encyclopedia of Candlestick Charts this easy-to-read and -use resource takes an in-depth look at 103 candlestick formations, from identification guidelines and statistical analysis of their behavior to detailed trading tactics. Encyclopedia of Candlestick Charts also includes chapters that contain important discoveries and statistical summaries, as well as a glossary of relevant terms and a visual index to make candlestick identification easy.
Use this book as a reference work. Don’t try to read it from cover to cover. In the writing and publishing process, I’ll have to do that several times, so I know what I’m talking about. I’ve taken liberties to keep the text lively, just in case.
Most candle chapters follow the same format, so once you become accustomed to the layout, everything will become familiar. A “Glossary and Methodology” chapter at the end of the book explains each table entry in detail and defines terms. Back there you’ll also find a visual index with little pictures of all the candles to make recognition easier.
Here’s a brief snapshot of the good stuff I cover for over 100 candle patterns:
- Identification guidelines describe what to look for.
- General statistics include performance over time and where performance is best in the yearly price range.
- Height statistics explore the performance of tall versus short candles, tall or short shadows, and a measure rule to help set price targets.
- Additional statistics look at volume trend, average volume, and breakout volume.
- The reversal rates table covers three methods of confirmation to detect reversals, the likely breakout direction based on the existing price trend, and where reversals or continuations are most likely to appear in the yearly price range.
- Performance indicators describe which of three entry methods give the best trading signals, how a 50-day moving average can help improve performance, and whether the position of the closing price indicates better performance.
- All statistics cover both bull and bear markets using more than 4.7 million candle lines in the research.
The tested performance of a surprising number of candles is opposite popular belief. Many candlesticks perform little better than randomly.