Amazing Video on Stock Market Openings And Closings.

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If you are a day trader, your goal is to profit from market price fluctuations on a daily basis. Using candlestick charts for day trading is one way to stay on top of what is happening. You need every possible advantage to keep one step ahead of other traders.

Intraday candlestick patterns provide a warning that something is happening right now. As high volume traders buy or sell, this affects the price and forms an observable candlestick pattern.

When you start studying candlestick charts, rely on metrics you are most familiar and comfortable with at first (e.g. support, resistance, and pivot points). Simply use the candles as added confirmation for your decisions while you learn to understand their meanings. On the most basic level, you can calculate what the daily average was for any particular day and observe the prevailing trading bias.

- A bullish candle is one that is white with the close higher than the opening

- A bearish candle is one that is black and has the close lower than the opening

Tools of the Trade

To be a winner, you have to lead the crowd in the market – not follow it. This means you must know your charts well and understand what they mean. Prices on the market can change minute by minute. To stay abreast of these fluctuations, try using candlestick charts for day trading based on 15 minute intervals. Use even shorter intervals for periods of high volume of trading.

Keep an eye on several different time intervals at once to get a better feel for what is happening. Monitor support, resistance, trends, volume, moving averages, stochastics or similar metrics, and chart patterns (including candlesticks) on a real time basis. Fortunately, you can overlap much of this data on one screen with today’s sophisticated trading software.

After Market & Pre-Market Activity

If you spot a significant opportunity or critical candlestick pattern near the end of the day, you may have the option of ‘after hours trading’. This occurs for just a few hours after the regular close of business. However, the significance of any price movement after the market closes is discounted or ignored by most traders because of its low volume. That makes information from this time period somewhat unreliable. Don’t include this data in your daily candlestick charts.

Many traders start closing out all their positions during the last half hour of regular trading and stay away from the after hours market altogether. If there is significant news overnight, investors usually take advantage of this during pre-market trading before the regular business day opening the next morning. However, as a day trader you aren’t committed to working before the normal trading day begins if you haven’t taken any new positions yet.

Instead, use the early morning to plan your day. Review the daily and weekly candlesticks charts on many candidate stocks. You should actually be conducting this research on an ongoing basis to compile your list of potential candidates. This way, you can identify opportunities quickly and decide which positions to take. Often, breaking news will put a particular stock in play in your portfolio.

What Should You Look For?

First of all, look for trends. Next, estimate the likelihood that the trend will continue during the upcoming day. Then evaluate current candlestick charts as they relate to this trend. Remember that the specific meaning of a candlestick pattern can differ from the norm if it appears in combination with a trend that it isn’t usually associated with.

Positive or negative news will generally predominate and create additional volatility. The more volatile a stock’s price, the more profit potential it offers. However, candlestick pattern analysis tends to be more profitable with stocks that are volatile regardless of news.

Calculate the “immediate trading bias”. Nearly all professional traders and market makers use the following formula to find the intraday pivot point. Add the High of the current day plus the Low of the current day along with the Close of the previous day and divide it by 3. That gives you the daily average or pivot point (H + L + C / 3 = DA).

If the current price is higher than this daily average, it is a bullish bias signal. If it is lower than this average, that’s a bearish sign. The fundamentals of candlestick interpretation are based on an idea similar to this daily average. These charts offer an immediate indicator of the nearest support and resistance price points. That’s why using candlestick charts for day trading is so effective.

If you truly want to master the art of trading with candlestick patterns then visit our site for free and detailed resources. http://www.candlestickgenius.com

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