Doji Candlestick Trading Secrets
Doji candlestick trading is most likely 1 with the simplest methods to make money with either stock or foreign exchange buying and selling
. Trading systems based on candlestick charts could be simple to implement and yet extremely efficient.Doji candlestick methods use the chart without too many other indicators. The doji leaps out on the eye extremely clearly so you can see your initial buying and selling signal at a glance. Needless to say, you'd then look across the previous candles to check that the market is in the right position for any commerce. We will cover that inside a moment.
Finally, you would normally check against at least one other indicator prior to really opening a trade. Nevertheless, a lot of this could be done very fast. This is a large advantage in day trading, and it is a day buying and selling technique referred to as doji reversal that we will be searching at here.
So first, identifying the doji. The doji candlestick marks a period where the open and close costs are the same. This means that there is no candle body, just the two wicks to the highest and lowest costs, plus a horizontal line at the open and near price.
Therefore the doji is in the shape of a cross. It is usually a signal of indecision or reversal in the market. It happens often in a very volatile market and is not so useful then. However, when it occurs in an upward or downward trending market it can predict retracement or reversal, which the trader can revenue from.
When a doji candlestick is spotted in the market, first appear back to see regardless of whether there has been enough movement for you to revenue from a retracement. A retracement may only be about one third with the distance because the final low. If that provides you enough space to cover your spread and allow for a little slippage, you can go on to step 2.
Step 2 entails checking an oscillator to make sure that the present price is shown as overbought or oversold. Either the RSI (relative strength index) or MACD (moving average convergence/divergence) can be used for this purpose. An overbought or oversold marketplace plus the doji is a great indication that you simply can get involved.
You are able to also look at the buying and selling volume. If trading is trailing off, then that is another sign that a reversal might be about to happen.
When you open a trade, be prepared at first for any retracement. Both set a limit order at the point that you would anticipate a short term retracement to reach, or watch and do this manually. At that point, you might want to close just half with the commerce. With the other half, you may move the stop to a no-lose place close to your opening value, and let it run in case a major reversal occurs.
Needless to say, there's usually a risk, as with any form of speculative buying and selling. You do require to know what you're doing and this type of trading requires a great deal of practice, although it is a easy program. As a result we recommend trying out these doji candlestick trading strategies in a demo account so that you know how you can operate them successfully before going reside.
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