The Power of Japanese Candlestick Charts: Advanced Filtering Techniques for Trading Stocks, Futures, and Forex
The Power of Japanese Candlestick Charts is about applying the popular time-tested Japanese candlestick technique to spot market turning points. After all, making money from the markets is all about predicting correctly when the market is about to turn, and the Japanese candlestick technique does this job superbly. Japanese candlestick charting is a highly effective method for timing the market for short-term profits. Unlike most western techniques—moving average, relative strength index, MACD, stochastic, Bollinger bands, or Elliot waves—candlestick charting signals are based on very close analysis of product price, producing accurate buy or sell signals between two and ten periods earlier than other techniques. In The Power of Japanese Candlestick Charts, noted author and futures trading expert Fred Tam offers a full and sophisticated range of charting techniques using candlestick methodology.
This book is written for the beginner as well as for the advanced trader. Part I takes you through, from the technique’s historical background, to the construction of the candle chart to defi ning and interpreting single to multiple candles. It not only explains the psychology behind each pattern, but also off ers suggestions on the proper action to take as well as a stop-loss point to exit if the signal fails. As the candlestick technique prides itself on spotting market U-turns, I have devoted many pages in this book to describe popular reversal patterns and how to apply them to enter and exit the markets. Continuation patterns are also covered to alert the trader when a trend is only pausing momentarily but will continue with its run after a rest.
Part II of this book covers the more advanced aspects of trading with candlesticks. It emphasizes the importance of using candlesticks together with Western technical indicators to improve the accuracy of candle signals. Several popular Western technical indicators are covered in this book with examples drawn from widely traded financial instruments like forex; U.S., European, Japanese, Singapore, and Malaysian stocks; and stock indices, as well as from the futures markets to illustrate that this technique works for all markets. This technique, however, will not work if the instrument traded is controlled by a small group of players in a thinly traded environment.
The Japanese candlestick technique is a very powerful short-term trading technique if it is used on 1-minute, 5-minute, 15-minute, or 1-hour charts, as markets exhibit rallies and declines between 5 and 15 cycles on every time frame. It is therefore very suitable for use by remisiers, stockists, scalpers, day traders, and short-term position traders.
- Single Candle Types
- The Umbrella Group
- Reversal Patterns
- Continuation Patterns
- Filtering with Western Indicators
- P.I. System Trader
- Sakata’s Five Methods
- Computerized Candlestick Forecasting
- Conclusion: Facts about Candlesticks