Creating stock charts by hand was an onerous task in its day but it’s been simplified over the years through the use of modern day computers. In fact today most chart readers use an online charting site that does most of the work for them. Personally I like to use StockCharts.com when I want to review a particular chart. Unfortunately the automated development of charting software has led to an explosion of capabilities that didn’t exist just a few years ago. One of these is the type of price plotting that can occur when laying down the markets daily price swings. Options include OHLC (Open, High, Low, Close), Line, Dash, Dots, Area, Histogram, CandleVolume, EquiVolume, Kagi, Renko, Cumulative, Performance, and others. It can all be way to confusing.
I use Candlesticks. I like to research hundreds of stocks daily so I have to standardize on a particular type of stock chart and specifically one that provides me with as much visual information as quickly as possible. Otherwise I’d spend the whole day reviewing charts only to start over again the next day. What a tremendous waste of time that would be.
Candlestick charts are especially helpful in identifying reversal points and signals. They display an extremely large amount of detailed information in a simple colored candle. They pictorially display the supply/demand balance and quickly show if the stock is being pushed up or down. They can also reveal the force or indecision behind the day’s activity. Candlesticks also reveal information in a more timely fashion and allow for a quicker realization on my part of a change in market sentiment.
Candlesticks use all of the same information found in bar charts so all the rules and tricks that apply to bar charts pertain to candlesticks as well. In addition, candlesticks contain so much more useful information.
I don’t presume to be an expert in candlestick charting and I really don’t have the desire to use this ancient theory of Japanese Charting as my single set of rules for my trading plan, but there are a lot of ideas behind the rules of Candlestick Trading. If you want to learn more about candlestick trading I highly recommend Steve Nison’s book “Japanese Candlestick Charting Techniques” since he was the individual that studied this method and brought it to Wall Street. For me personally I have incorporated the logic behind candlesticks into my own trading plan and I use it every day to screen charts.
I use Candlesticks. I like to research hundreds of stocks daily so I have to standardize on a particular type of stock chart and specifically one that provides me with as much visual information as quickly as possible. Otherwise I’d spend the whole day reviewing charts only to start over again the next day. What a tremendous waste of time that would be.
Candlestick charts are especially helpful in identifying reversal points and signals. They display an extremely large amount of detailed information in a simple colored candle. They pictorially display the supply/demand balance and quickly show if the stock is being pushed up or down. They can also reveal the force or indecision behind the day’s activity. Candlesticks also reveal information in a more timely fashion and allow for a quicker realization on my part of a change in market sentiment.
Candlesticks use all of the same information found in bar charts so all the rules and tricks that apply to bar charts pertain to candlesticks as well. In addition, candlesticks contain so much more useful information.
I don’t presume to be an expert in candlestick charting and I really don’t have the desire to use this ancient theory of Japanese Charting as my single set of rules for my trading plan, but there are a lot of ideas behind the rules of Candlestick Trading. If you want to learn more about candlestick trading I highly recommend Steve Nison’s book “Japanese Candlestick Charting Techniques” since he was the individual that studied this method and brought it to Wall Street. For me personally I have incorporated the logic behind candlesticks into my own trading plan and I use it every day to screen charts.
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