How to Make Money Trading with Candlestick Charts

Failed Bullish Harami in
Grasim
If a candlestick trader had bought this stock
on 27 February 2007, right after the Bullish
Harami in oversold condition, s/he would
have been following the rules. The
probabilities indicated that the Harami might
have stopped the selling and the gap up next

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day might have indicated some bullish
sentiment. However, the trader should have
sold out as soon as the stock breached and
closed lower than the open of the Harami
day. The probabilities were no longer in his
or her favour. The stock can go down 10
more points from here, or 50 more points.
Always trade with the probabilities!
Figure 11.15
shows the chart of Syndicate
Bank.

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Figure 11.15:
Trading the candle signals in
Syndicate Bank
At the beginning of July 2006, we notice a
bullish Harami Doji being formed. The next
day there is confirmation buying (Point 1).
The candlestick trader would get in at this
point. There were two more conditions

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which made this a good buy point:
1. Stochastics were in an oversold
condition; and
2. The bullish Harami Doji formed near the
same level where the stock found support
in mid-June 2006.
As you can see from the chart, things did not
go as anticipated. The candlestick trader
should have sold out his position as soon as
it closed below the bottom of the Harami
(Point 2). Getting in the stock again after the
Bullish Engulfing signal (Point 3), would
have yielded a very profitable subsequent
trade.
Figure 11.16
 shows the chart of L&T Ltd.

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Figure 11.16: