The candlestick pattern trading strategy is known as the price action trading method. This trading strategy is extremely powerful and it helps traders to execute quality trades without taking high risk.
Those who live in Hong Kong might be thinking trading with high risk is the only way to become a Forex millionaire. But this statement is not all true. With discipline and proper devotion, you can expect to beat the market and become a millionaire. Things are not as easy as they seem. Factors like the technical and fundamental analysis will make your life hard. However, if you can hit the core of the price action trading method, you might be able to secure consistent profit after spending a year in the trading business.
Candlestick pattern or price action trading method is based on a simple formula. You have to assess the different types of candles and execute the trades to earn more money. Though there are different types of candlestick used by the pro traders, we are going to highlight the top three candlestick patterns.
The pin bar
The pin bar is a reversal candlestick pattern and it gives a clear clue regarding the direction of the market. The body of the pin bar is very small and the wick should be at least three times bigger than the body. If you spot the pin bar at the critical support level, you should be executing long trades. On the contrary, if you spot the pin bar at the critical resistance level, execute the short trades. When you use the pin bar the selection of the time frame is very critical. Choosing the lower time frame to trade the minor support and resistance level is not going to help. You should think like a professional trader and analyze the data in a higher period.
Once you learn to use the pin bar theForex trading business will become easier. You will be able to deal with the complex market condition. But remember the fact, pin bar trading strategy is not going to give you the Holy Grail. You should be expecting a few losing trades even after following the core factors of the market.
The engulfing pattern
When the first candle is engulfed by the second candle, we have an engulfing pattern. The engulfing pattern is usually formed at the major support and resistance level. Look for the bullish engulfing pattern to trade the critical support and short the asset when you find the bearish engulfing pattern. The pattern works best when you trade the daily or weekly time frame. When you use a price action signal never forget you are dealing with probability factors. Never become overconfident by analyzing the candlestick pattern as it will cost you in the long run. Stay on the safe side even though you have the best trade setups.
Always try to trade the engulfing pattern when the market is stable. Avoid trading the major news or the extreme market condition. Stay in the safe zone when the market shows an unpredictable price movement.
The doji plays a critical role in the placement of trade. If you want to trade the doji, learn to deal with the major trend. Doji usually refers to indecision and it helps the traders to look for the best possible signals. Being a naïve trader, you might get confused with the concept of the doji. However, if you use a professional demo account provided by the reputed broker Saxo, you can start learning to deal with the candlestick pattern and learn the details without even risking a single dollar.
Try to trade the major market with the help of a candlestick pattern. Remember, the doji doesn’t give any confirmation about the trade setup. It just warns traders that the market is going to establish a trending move shortly. So, if you can take advantage of the doji, you can expect to trade like an elite trader.