Understanding Candlestick Formation � Part 3: DOJI & LONG-LEGGED DOJI

Apart from the major candlestick formation discussed in Part 1 & Part 2, there is one more candlestick formation that is important in candlestick chart analysis: �Doji�.The following are some forms of Doji candlestick:1) DojiBasically, Doji is formed when the opening and closing prices are virtually equal. (The open and close ideally should be equal, but not necessarily). The length of the upper and lower shadows can vary. Hence, some doji can look like plus sign, a cross, or inverted cross.Doji represents indecision or tug-of-war between buyers and sellers. The stock was trading higher and lower than the opening level during the session,...

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Understanding Candlestick Formation � Part 2: LONG SHADOWS, HAMMER / INVERTED HAMMER & SPINNING TOP

The following are some common & important candlestick formation (Cont�d):(Please refer back to Part 1 for the pictures of each of the following formation)3) Long ShadowsUpper shadows of a candle represent the session high, whereas lower shadows represent the session low.Candles with a long upper shadow and short lower shadow (the 1st candle in Picture 3) imply that buyers at first dominated at the beginning of the session and push the price higher from the opening. However, towards the end of the session, sellers became more aggressive and forced the price down from their highs, creating a weak close near the opening.Candles with a short upper shadow and long lower shadow (the 2nd candle in Picture 3) imply that sellers dominated at the beginning of the session and push the price lower...

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Understanding Candlestick Formation � Part 1: LONG CANDLES & SHORT CANDLES

One of the reasons why candlestick chart gain popularity among traders is because its formation can provide visual analysis of other traders� sentiments. Hence, in candlestick chart reading, it�s important to understand what the candlestick formations imply.The following are some common & important candlestick formations:1) Long Candles / Wide Range CandlesA long candle represents a large price move from open to close. Basically, the length of a candle body indicates the intensity of buying or selling pressure. The longer the body is, the more intense the buying or selling pressure. Long candles with high volumes normally imply high volatility...

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Understanding Implied Volatility (IV)

Just want to get more organized�.As you know, understanding volatility is very critical in options trading.I�ve previously written some posts on IV & HV. I�ll put the links of all posts on this topic below, and place this on the top left corner for easier future reference.Click the following links to read each of the posts:1) Historical Volatility (HV) vs. Implied Volatility (IV): Definition2) How To Get Historical Volatility (HV) vs. Implied Volatility (IV) Information:a) How To Get HV vs. IV Info � Part 1b) How To Get HV vs. IV Info � Part 23) Relationship between Historical Volatility (HV) and Implied Volatility (IV)4) More Understanding About Implied Volatility (IV)5) How To Determine If An Option Is Cheap (Underpriced) Or Expensive (Overpriced):a) How To Determine If An Option Is...

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How To Read Candlestick Chart � The Basic

Candlestick charts have been widely used & popular among traders.I personally also prefer candlestick charts to bar charts, although both charts contain the same information: Opening Price, Closing Price, High Price & Low Price, over a given time interval.In a stock price chart, you can select the time interval for each candle: weekly, daily, hourly, or even minutes.Each bar / candle represents the range of price movement over the selected time interval.The hollow (white) or filled (red) portion of the candlestick is called Body, which represents the Opening & the Closing Price.The long thin lines above and below the body is known...

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Reading Links

Recent Market Analysis* CNNMoney.com:. Why the credit crunch may deepen.* Hans Wagner at Financial Sense.com: Do Investors Really Want The Fed To Lower Rates?* The Big Picture: Employment Population Ratio & Recessions.* Bispoke Investment Group: The Business Cycle -- Expansions And Recessions: 1900 � 2007.* Mattew Rees in American.com: The Hunt for the Black October.Trading Education* How to be consistently profitable in the markets by Richard from Move The Market.* Multiple Timeframes Can Multiply Returns by Joey Fundora a.k.a. Downtown Trader.*Using Emotion To Change Emotion by Dr. Brett Steenbarger.* Market Timings and Emotion by Stockb...

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Reverse Psychology For Success

I came across a great motivational article that is related to trading on the importance of Goal Setting (Part 1 & Part 2) by Dr. John Eliot in the Weekly Newsletter of Dr. Van Tharp�s International Institute of Trading Mastery.I truly recommend you to read the full articles.In this post, please allow me to quote only a part of the article that I personally find very inspirational. It�s about the �Reverse Psychology For Success�.Here they are:REVERSE PSYCHOLOGY FOR SUCCESSIn the five areas below the opposite of what we normally think may work in our favor.Having ConfidenceThe best in every business are likely to strike most people as irrationally confident, but that's how they got to the top.Richard Branson, Bill Gates, Michael Dell � they first believed in themselves, utterly, and let...

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Stock Watch: KLAC, JAH, NTAP, ASCA

The following stocks look bearish to me. They could be good potential for bearish plays should the market continues its downward moves in the short term. So, for options traders, get ready with your put options, or other bearish (options) strategies that suits your trading style.KLAC: Just broke down a triangle pattern.JAH: Just broke down a bearish pennant.NTAP: Bounced down resistance at 50 MA.ASCA: Broke down support at around 28 � 28.5 at early Aug. After testing the resistance at 28 � 28.5, it looks like it may continue its downward move in the short term.High volatility is still expected in the near future. So, trade careful...

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Weekend Reading Links

Recent Market Analysis* Dr. Brett Steenbarger from Trader Feed: Credit concerns have not gone away.The stock market has behaved quite well lately, today's drop notwithstanding. But the credit markets continue to tell a different story, one that could have negative implications for some banks and the economy overall. That's worth keeping an eye on.* Adam from Daily Options Report: Upon Further Review: Options Acting Even Stronger Than Meets the Eye.No matter how you slice it, there is real fear out there of another September shoe to drop.* Corey from Afraid To Trade: Brief Index Overview.Let it also be stated that all major US indexes are STILL in a confirmed downtrend on the Daily Charts. Traders may be missing this if they�re not careful with their interpretation of trends.Price has not made...

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More Understanding About Implied Volatility (IV)

In options trading, it�s crucial that one must understand the impact of volatility on options pricing. Because it�s possible that the stock price has moved profitably, but the option�s price did not.Options Pricing & Implied Volatility (IV)In options pricing, it is the Implied Volatility (IV) that affects the price of an option, not Historical Volatility (HV).IV has a huge impact on the option price. However, it is important to highlight that IV affects only the time value component of an option's price, not on the Intrinsic Value. Therefore, ATM (At-The-Money) and OTM (Out-of-The-Money) options are the ones that will be greatly affected...

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The Best Trading System For You

In previous post, we discussed the components & the importance of a trading system.There are many trading systems / strategies around. No trading system is right for everybody. Often we heard that one trading system is working very well for some people. They can trade for a living with that, and even have made them millions. However, it is also very possible that the very same system can lead others to lose money. Why? Because although people learn exactly the same system even in every component of it, there is always one component that is different � the trader itself, with his personality & emotions.So, now the question is: Which trading...

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