Candlestick day trading is one of the most simple trading techniques used in the foreign exchange market. However, by straightforward we don’t definitely mean easy. As with any trading strategy, a beginner cannot jump in and expect to make money right away. There’s always risk. It still is important to practice the method in a demo account and become acquainted with all of its highs and lows.
Using the candlestick chart nearly on its own is simple as the trader isn’t needed to analyze a massive amount of information before making a trade. This is a gigantic advantage in day trading when decisions need to be made swiftly. Frequently a complicated system will trip up a trader who becomes impatient with all the indicators that need to be cross checked. He cuts corners and ends up shorting out his system, resulting in losses. It is common to blame the trader in this scenario but the system can be criticised too. A complicated system isn’t well suited to currency exchange day trading.
Doji reversal can supply one simple candlestick day trading system. A doji is a candle that has no body, because the open and close prices are the same. In fact it doesn’t look like a candle at all, but like a cross.
A doji is frequently a sign of indecisiveness or reversal in the market. In a volatile market without powerful trends or identifiable patterns, the doji will be common and not especially significant.
However, it is during either an upward or a declining trend the doji can be major for candlestick day trading techniques. In this situation , the doji is frequently a sign that a retracement could be about to happen, or even a full reversal of the trend. In an uptrend it means that buyers are losing confidence. In a downtrend, that sellers are losing confidence.
When you see a doji forming in a trending market, it is always worth checking against an oscillator such as the RSI (relative strength index) or MACD ( moving average convergence / divergence ) to find out whether the price is in the overbought or oversold range. If it’s not, then the doji may not be important. However, if the indicators do imply an overbought or oversold market, a doji could be a signal to become involved.
It is also feasible to use the candlestick chart itself for support for the idea of a doji reversal. Check whether or not it is roughly in line with recent support or resistance bands. The volume of trading in the currency pair might also be important. The amount of currency traded is likely to be tailing off if a reversal is about to occur. This is a measure taken from candlestick day trading in the stock exchange that is little used in currency exchange and could supply an edge.
