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Showing posts from October, 2016

Are candlestick charts reliable? Here is our take

A few days ago someone on Quora asked me what has been my experience using Japanese candlestick charting analysis. I love Japanese Candlesticks. In my opinion Japanese candlesticks are very effective when combined with other indicators (moving averages, volume activity, ichimoku) as well as key levels of support and resistance (horizontal and diagonal lines). Like anything in life, those who are looking for the magic pill, will have hard time finding it. Trading is the same. There is not one single method that works, but rather a combination of techniques and strategies that meets the trader/investor needs. Start by figuring one what kind of trading strategies work best for you (day trading, swing trading, position trading, long term investor…). Get some good quality trading education (articles, books, videos…) Learn good money and risk management. See what type of trading assets, or combination of trading assets, work best for your portfolio (forex, stocks, option

Where to place a stop loss

After a pullback, we expect price to rest right around a support area. We might see price dipping a percentage or two below the support area. We might also see lower shadows (buying signals). However we want to see price closing right around support level. So in this scenario, where would we put our stop loss? Stop losses are very personal. They vary depending on the type of strategies people use and the risk level they wish to take. Usually it is not recommended to risk more than 2% in any given trade. For example if you enter a position at 15.25, your stop loss should be somewhere around 14.90-14.95. Also bear in mind that you could have 1/2 position stop loss at one level and 1/2 position stop loss at a lower level. After you know what your risk is, you also want to pick a place where it makes sense to place a stop loss, not just a mere percentage. Look for an area of support and resistance. Then place your stop loss just a few pennies below the low price o