How to Make Money Trading with Candlestick Charts

Re-visiting the previous
trade with technical analysis
The target point in this case is the extension
of the old support line. Notice the Head and
Shoulders formation beginning in October
and lasting till the end of November. The
market broke the neck-line and then tried to

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rally back above it, but failed.
So the candlestick trader, upon seeing the
buy scenario, should have waited to get into
the market until the new resistance was
successfully breached to the upside.
Otherwise the reward-risk ratio (described
in the next section of this chapter) did not
warrant the trade.
Also notice the stock failing to breach the
resistance in January 2007.
As emphasized in the previous chapter, the
concepts that “old resistance becomes new
support once breached” and “old support
becomes new resistance once breached” are
a very powerful tool in the trader’s arsenal.

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Hopefully, by now you have gained some
confidence in the stop loss procedures using
candlestick signals. Remember that the
signals convey all the information you need
to take a logical decision.

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Trading Tips from a Candlestick
Trader’s Perspective
This section will detail some of the nuances
that will help you improve your trading one
notch further. These are not hard and fast
rules, but a collection of my trading
guidelines. Some have been learnt from
observation and others of a trade from actual
trading experience.

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Always Work Out the Risk-Reward
Ratio
If you have read any trading book, you know
of the three basic price points you need to be
aware of even before placing the trade: