Stock Investing Basics of Japanese Candlesticks

Candlestick trading analysis does not require knowing intricate formulas or ratios. Candlestick analysis does not require massive amounts of education to effectively utilize the signals. The stock investing basics of Japanese Candlesticks result in clear and easy to identify patterns that demonstrate highly accurate turns in investor sentiment. The average investor does not have to be dependent on the investment professional, a professional whose recommendation does not always have your interest at the forefront. Whether totally unfamiliar with investment concepts or very sophisticated in investment experience, the Japanese Candlestick trading formations are easily utilized. The signals and patterns are easy to see. As illustrated, a stock price closing higher than where it opened will produce a green candle. A stock price closing lower than where it opened creates a red  candle. The boxes formed are called "the body". The extremes of the daily price movement, represented by lines extending from the body, are called "shadows or tails."

A hollow candle forms when the stock closes higher than its opening price.We are using green for that ....
A solid (or filled) candle forms when the stock closes lower than its opening price. We are using Red for that.

Memorizing the Japanese Candlesticks names and descriptions of the candlestick trading formations is not necessary for successful trading. Reading about the Japanese Candlesticks signals is interesting and it aids in remembering them.


 The Japanese viewed patterns developing over a number of centuries. The patterns produced predictable results. Learning the patterns is a simple process. Utilizing the underlying knowledge built into the signal formation provides an immense advantage for amassing wealth.



The magnitude of your profit potential is limited only to the level of leverage you want to partake.  Become educated in trading practices that eliminate destructive emotional intervention.

Take advantage of the benefits that Japanese Candlestick trading provides. Opportunities are easily identified, Somebody will take advantage of the information the signals provide. Once you learn the valuable benefits revealed by Candlestick formations, the rewards will be overwhelming.

Doji



What is the best method for making big trading profits?
 Knowing the direction of a trading entity and the strength of that move, Candlestick analysis perfects the trading strategy. Candlestick formations reveal high probability profitable reversals. Hundreds of years of investing refinement have proven that point.

A stock price closing where it opened or very close to where it opened is called a 'doji."

The Doji is one of the most revealing signals in Candlestick trading. It clearly indicates that the Bulls and the Bears are at an equilibrium, a state of indecision.  The Doji, appearing at the end of an extended trend, has significant implications. The trend may be ending.  Just this fact alone creates a multitude of investment programs that can produce inordinate profits. What is the best method for making big trading profits? Knowing how to read the stock charts!  Knowing the direction of a trading entity and the strength of that move! Candlestick analysis perfects that trading strategy. Candlestick charts reveal high probability profitable reversals.  Hundreds of years of investing refinement have proven that point.

The Japanese say that whenever a Doji appears, always take notice. A well-founded rule of Candlestick charts followers is that when a Doji appears at the top of a trend, in an overbought area, sell immediately. Conversely, a Doji seen at the bottom of an extended downtrend requires buying signals the next day to confirm the reversal. Otherwise, the weight of the market could take the trend lower. Knowing how to read the stock charts reveals the parameters that make a major signal most effective.
The Doji signal is comprised of one candle. It is formed when the open and the close occur at the same level or very close to the same level in a specific timeframe.  In candlestick charting, this essentially creates a cross formation. As the following illustration demonstrates, the horizontal line represents the open and close occurring at the same level. The vertical line represents the total trading range during that time.
DOJI STAR

Upon seeing a doji in an over-bought or oversold conditions, (over-bought  or oversold conditions can be defined using other indicators such as stochastics), becomes an extremely high probability reversal situation.  When a doji appears, it is demonstrating that there is indecision now occurring at an extreme portion of a trend. This indecision can be portrayed in a few variations of the doji.

The Long-legged Doji is composed of long upper and lower shadows. Throughout the time period, the price moved up and down dramatically before it closed at or very near the opening price. This reflects the great indecision that exists between the bulls and the bears.
Long-legged Doji



The Gravestone Doji is formed when the open and the close occur at the low end of the trading range. The price opens at the low of the day and rallies from there, but by the close the price is beaten back down to the opening price. The Japanese analogy is that it represents those who have died in battle. The victories of the day are all lost by the end of the day. A Gravestone Doji, at the top of the trend, is a specific version of the Shooting Star. At the bottom, it is a variation of the Inverted Hammer.



The Dragonfly Doji occurs when trading opens, trades lower, then closes at the open price which is the high of the day. At the top of the market, it becomes a variation of the Hanging Man. At the bottom of a trend, it becomes a specific Hammer. An extensively long shadow on a Dragonfly Doji at the bottom of a trend is very bullish.


Doji that occure in multi-signal patterns make those signals more convincing reversal signals.
        
Having the knowledge of what a Doji represents, indecision, allows the Candlestick analyst to take advantage of reversal moves at the most opportune levels. Regardless of whether you are trading long-term holds for day trading from the one-minute, five-minute, and fifteen-minute charts, the Doji illustrates indecision in any time frame.

Criteria

1.  The open and close are the same or nearly the same
2.  The length of the shadow should not be excessively long, especially when viewed at the end of a bullish trend.

Signal Enhancements

1.  A gap away from the previous day's close sets up for a stronger reversal move.
2. Large volume on the signal day increases the chances that a blowoff day has occurred, although it is not a necessity.
3. It is more effective after a long candle body, usually an exagerated daily move compared to the normal daily trading range seen in the majority of the trend

Here  in this chart u can locate Dojis at both highest peaks