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Did you know that a Japanese rice merchant trader name Munehisa Homma is the father of Japanese Candlestick Analysis?

 

Trading via Japanese Candlestick Analysis

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Japanese Candlestick Analysis original design was to help understand the price action that's often referred to as market context prior to the appearance of any trade signals. Simply, if you're going to properly use Japanese Candlestick Analysis...it was not designed to be a trade signal. Yet, traders today in the western hemisphere (e.g. United States and Canada) have been trying to use it as a trade signal method instead of as an analysis to understand the market context of the trading day. Therefore, there's a difference between analysis versus trade signal. The sooner you understand that difference, you'll be able to apply Japanese Candlestick Analysis as it was originally designed along with seeing its usefulness.

Therefore, to understand the price action (market context) that you're trading within, it's highly recommended that you download the free study guide WRB Analysis Tutorials @ http://www.thestrategylab.com/tsl/forum/viewtopic.php?f=5&t=180 even though WRB Analysis has nothing to do with Japanese Candlestick Analysis. Yet, they work extremely well together to get that market context prior to the appearance of whatever trade signal strategies you're using.

Uses of Japanese Candlestick Analysis:

More Info about #FuturesTrades  Trader A identifies (understands) the price action via WRB Analysis Tutorials and/or Japanese Candlestick Analysis. Next, the trader then uses a different trade signal method to time entries and exits in that price action. Thus, trade signal method is not based upon Japanese Candlestick Patterns.

More Info about #FuturesTrades  Trader B identifies (understands) the price action via WRB Analysis Tutorials or any other analysis for market context and then times the entries and exits into that price action via Japanese Candlestick Patterns.

More Info about #FuturesTrades  Trader C identifies a bullish candlestick pattern and concludes the price action must be bullish. This is not the proper approach to using Japanese Candlestick Analysis but it is marketed and promoted as such in the western hemisphere (e.g United States and Canada) via books and online forum discussions. 

Results: Statistically...using Japanese Candlestick Analysis as a tool in your trading plan will be more profitable, more reliable for trader A and trader B in comparison to trader C. Simply, trader A and trader B understands the price action (market context) prior to the appearance of any trade signals regardless if the trader is using price action only or indicators. 

With that said, listed below are other resources outside of TheStrategyLab.com that will help improve your understanding of Japanese Candlestick Analysis and you can determine if you want to be trader A, trader B or trader C as explained above. Yet, regardless if you're going to use it an analysis or trade signal...we provide the best support for using Japanese Candlesticks Analysis or Patterns. Therefore, to get you started, here's a list of resources we're recommending. 

TheStrategyLab.com:

Bearish Engulfing

Bullish Engulfing

Bullish Harami

Advance Japanese Candlestick Trading Report (AJCTR)

Free E-Articles:

Japanese Candlestick Patterns Create Beautiful Pictures

Japanese Candlesticks Can Predict Reversal of Major Trend

Japanese Candlesticks Books:

Candlestick Charting Explained

Japanese Candlestick Charting Techniques

Beyond Candlesticks

Encyclopedia and Dictionary:

Candlestick Pattern Dictionary

Encyclopedia of Candlestick Charts

Unfortunately, most traders using these free resources (online articles, forum discussions, magazine articles, online videos, library books et cetera) are the self-taught types along with having the belief in error that these free resources are providing a complete trading plan.

Simply, most traders are not profitable when using Japanese Candlesticks as their primary methodology or as a confirmation strategy that confirms their primary method mainly due to using information that was primarily design to only provide dictionary terms of patterns with chart examples.

In contrast, we do provide a complete trading plan (pattern rules, entry rules, stop/loss management, trailing stop management, profit targets, contingency plan and private member forum so clients can learn from each other) of custom Japanese Candlestick patterns that removes the subjectivity so that you can exploit changes in supply/demand, volatility along with being able to merge our strategies with other strategies you may be using regardless if your a price action only trader or a trader that's dependent upon indicators. 

Also, our trade management rules for these patterns can be profitably applied to any free resource or books you have access too about Japanese Candlesticks along with giving you the ability to design your own custom Japanese Candlestick patterns that fit your own personal trading style.

Further, if the self-taught route of Japanese Candlestick pattern recognition isn't profitable for you, we highly recommend our resources to help you traverse to a road of a more comprehensive understanding of Japanese Candlestick analysis along with improving their profit level in comparison to your trading before using our resources.

In addition, you'll get the big piece of the puzzle to profitably trading via Japanese Candlestick analysis via purchasing our Advance Japanese Candlestick Trading Report (AJCTR) strategies along with being able to converse with other fee-base clients that have stronger understanding of the price action involving candlestick pattern recognition via a private forum for members only.

There's more information about our custom Japanese Candlestick patterns at the below link...

http://www.thestrategylab.com/AdvanceJapaneseCandlestickTrading.htm

Last of all, contact us, if you want to improve your understanding or trading of the Bullish Engulfing (what works and what does not work ) via any of the following trading instruments that we trade or watch closely for our intermarket analysis to help develop that market context prior to the appearance of any Japanese Candlestick pattern:

  CME Emini Futures EMD, ES and NQ 

  ICE Emini TF Futures (formerly CME ER2)

  CBOT mini-sized Dow Futures YM

  Eurex Index Derivatives (futures) DAX and DJ Euro Stoxx50

  Eurex Fixed Income Derivatives (futures) BUND, BOBL and Schatz

  Euronext Futures FTSE-100 and CAC-40

  CME Futures EuroFX 6E and EC

  Treasury Futures T-Notes ZT, ZN, ZF and T-Bonds ZB

  Forex Currencies GbpUsd, EurUsd, EurYen and UsdCdn

  Exchange Traded Funds BGU, FAS, FAZ, TNA, DIA, IWM, QQQQ, SPY, OIH, XLE, GLD and VXX   

  NYMEX Energy Futures Light Crude Oil CL, Brent Crude Oil BRN, e-miNY QM and Natural Gas NG

  COMEX Metal Futures Gold GC, mini-Gold YG, Copper HG and Silver SI

  S&P CNX NIFTY

  Hang Seng Index Futures HSI and mini-Hang Seng MHI

Best Regards,
M.A. Perry
Trader and Founder of WRB Analysis (wide range body analysis or wide range bar analysis)
Price Action Only Trading (no technical indicators)  
Twitter @ wrbtrader@ http://twitter.com/wrbtrader/

http://www.thestrategylab.com
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"Once a trend starts, the odds are that it will continue. Every student of science or engineering will recognize that this is nothing more than Newton's First Law of Motion, which says, Every body continues in a state of rest or of uniform motion in a straight line unless it is compelled to change that state by forces applied to it. Simply said, it is easier for a market to continue its direction than to reverse its direction." --Gregory L. Morris

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