How to Make Money Trading with Candlestick Charts

PART II
This part of the book concentrates on the
practical aspects of using candlesticks for
investing as well as trading. It is assumed at
this point that you can visually recognize the
major candlestick signals described in the
first part. I also sincerely hope that you are
analyzing the “behind-the-scenes” action
whenever you look at a chart. Bears and
bulls, supply and demand, greed and fear,
these are the key metrics you need to think
about when analyzing a chart.
The following chapters will sharpen your
candlestick skills. You will learn that when
you combine the high probability reversal

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candlestick signals with western technical
analysis, 
the 
combination 
generates
explosive profits. You will learn the
different stop loss scenarios, in case a signal
goes sour. This is part of money management
that every person invested in the financial
markets needs to get disciplined about.
Growing a portfolio is not just about making
great profits. It is also about cutting your
losses on bad investments. What is the use of
making two good trades, gaining 20%, and
then losing it all in one bad trade?
Candlestick signals and your new mind-set
about reading the charts will empower you to
cut your losses and retain more of your
profits.
Again, please read and re-read the chapters

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that follow. Do not jump in the river without
learning to swim. The river is unforgiving.
But once you master swimming, you will
enjoy being in the water for the rest of your
life.

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10
Combining Candlesticks with
Technical Analysis
In this chapter we will look at candlestick
signals in combination with other technical
indicators. As you might have noticed, thus
far in all the charts we have always used
stochastics and volume in the lower portion
of the chart. We will be consistent in doing
that. If you are familiar and comfortable with
RSI, MACD or any other oscillator which
shows overbought / oversold conditions, that
is perfectly fine. The key is to find high

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probability trades utilizing candlestick
signals when a security is in these extreme
conditions.
We will discuss candlestick signals in
conjunction with the following:
Support / resistance trend lines; and
Moving averages.
Every trader must read as many technical
analysis books as possible in order to gain
more and more in-depth knowledge of this
field. Education is the most essential weapon
in your trading arsenal. It takes years of
education and training to become a
successful doctor, an engineer or an
architect. Please do not think trading is

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otherwise. Trading might seem very easy
when looking at it from the outside. But in
reality it is not. A trader has to be armed
with knowledge, patience and discipline if
s/he wants to succeed long term in the
marketplace.

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Support and Resistance
The stock market is a dynamic arena. Prices
fluctuate up and down, sometimes on news,
other times seemingly with no justification.