How to Make Money Trading with Candlestick Charts

Stop out level for an
Evening Star signal
The key point is to analyze what price action

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is shown by the signals once you have
entered the market. The price action should
follow your expected path. This analysis
should be done daily for all the positions
held in the account. It should not take too
much time to do this analysis once your eyes
are trained and the signals are properly
understood. That is the reason I have
emphasized the importance of understanding
the psychology behind the candlestick
signals.
Figure 11.13
shows the chart of Jaiprakash
Associates.

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Figure 11.13:
Failed Bullish Harami
You can notice in this chart that the first
Bullish Harami would have given the trader
a small loss. The trader should have got out
as soon as the bears drove the prices below
the open of the white Harami candle. A
couple of days later, the trader should have

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got back in on another Bullish Harami signal.
This trade would have made a very good
profit. You have to cut your losses short and
let your profits run!
Some of you might be thinking — Why did I
need the stop loss? Even if I would have
held on after the failure of the first Bullish
Harami, I would have not had much loss. The
stock eventually rebounded.
Yes, you are correct that the stock
rebounded. But would you have known that
when the stock came down through the open
of the Harami? How would you have known
the extent of the downward slide from that
point on? In reality, there is no way to know
that. Hindsight is always 20 / 20. Then why

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risk your money. Take the small loss and find
another high probability signal. If you like
this stock, then keep monitoring it. You have
already witnessed one buy signal. The
stochastics are oversold. Just wait for
another buy signal. You would have been
handsomely rewarded in this case if you
would have entered on the second buy signal.
Figure 11.14
shows the chart of Grasim
Industries Ltd.

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Figure 11.14: