1. The Essentials

Question 1

in this section you will learn

Answer 1

• Background of candlestick charting techniques
• Markets and time frames in which candles are utilized Limitations of candle charts
• Importance of risk/reward Significance of using other technical tools with candle charts
• Significance of using other technical tools with candle charts

Question 2

key terms

Answer 2

• Reversal signals
• Candle lines
• Price targets
• Risk/reward

Question 3

fondamental vs technical

Emotinal condition

Answer 3

There are many times when the emotional conditions of the market overwhelm the fundamentals. For example, how many times have we seen the appearance of a positive fundamental only to have that market ket descend? Even if we have a strong stock based on the fundamentals, what is likely to happen to that stock if the overall market is down sharply? Of course, the negative psychology of the overall market will influence that stock even if its fundamentals didn’t change.

Question 4

Important

Answer 4

The shorter the time frame, the more important the psychological component of the market becomes.

“What is important in market fluctuations are not the events themselves, but the human reactions to these events.”

The most potent way you can gauge the emotional state of the market is through candlestick charts

Question 5

Reversal signals

Answer 5

The greatest advantage to using candles on your charts, instead of bars, is that single candle lines and multiple candle patterns offer more reliable, earlier, and more effective reversal signals.

Major trend reversals represent the territory where the most gains are pocketed eted (and lost).

Question 6

risk/reward

Answer 6

Before initiating a trade with a candle signal, always consider the risk versus the reward (risk/reward) of that trade.

I repeat:

NEVER PLACE A TRADE WITH A CANDLE SIGNAL UNTIL YOU HAVE CONSIDERED THE RISK/REWARD OF THE POTENTIAL TRADE.