Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Investing in the METAVERSE Stocks Universe - 8th Dec 21
Stock Market Sentiment Speaks: I Expect 15-20% Returns For 2022 - 8th Dec 21
US Dollar Still Has the Green Light - 8th Dec 21
Stock Market Topping Process Roadmap - 8th Dec 21
The Lithium Breakthrough That Could Transform The Mining Industry - 8th Dec 21
VR and Gaming Becomes the Metaverse - 7th Dec 21
How to Read Your Smart Meter - Economy 7, Day and Night Rate Readings SMETS2 EDF - 7th Dec 21
For Profit or for Loss: 4 Tips for Selling ASX Shares - 7th Dec 21
INTEL Bargain Teck Stocks Trading at 15.5% Discount Sale - 7th Dec 21
US Bonds Yield Curve is not currently an inflationist’s friend - 7th Dec 21
Omicron COVID Variant-Possible Strong Stock Market INDU & TRAN Rally - 7th Dec 21
The New Tech That Could Take Tesla To $2 Trillion - 7th Dec 21
S&P 500 – Is a 5% Correction Enough? - 6th Dec 21
Global Stock Markets It’s Do-Or-Die Time - 6th Dec 21
Hawks Triumph, Doves Lose, Gold Bulls Cry! - 6th Dec 21
How Stock Investors Can Cash in on President Biden’s new Climate Plan - 6th Dec 21
The Lithium Tech That Could Send The EV Boom Into Overdrive - 6th Dec 21
How Stagflation Effects Stocks - 5th Dec 21
Bitcoin FLASH CRASH! Cryptos Blood Bath as Exchanges Run Stops, An Early Christmas Present for Some? - 5th Dec 21
TESCO Pre Omicron Panic Christmas Decorations Festive Shop 2021 - 5th Dec 21
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Trading Markets - When Is A Candle Not A Candle?

InvestorEducation / Learn to Trade Jun 19, 2016 - 11:07 AM GMT

By: Chris_Drinkwater

InvestorEducation

When it's a bar?  When it's a line drawing?   Mountain?   A candle is never a candle, it is a representation of a group of people buying and  selling.   Further to that, you could say it is a representation of thousands of people's hopes and dreams as they try to make this thing called trading work for them.

It seems so obvious when you write it down like this but I don't think the average trader gives it a moment's thought.  A candle to them is one in a series that makes a pattern that will ultimately lead them to a buying or selling decision.  Ignore the truth of what the candle represents at your peril.


Behind the Candle
I am always very keen to look behind the candle to see who's there.  Is it a bank or other Institution, savvy private investor , or inexperienced traders?
Why do I bother with these thoughts?  Because in my experience it is difficult to beat the banks and the smart money but  it is quite easy to beat the inexperienced trader.


A Contrarian Approach
It is an unpalatable fact that for every winner there must be a loser, the so called zero sum game.  As I would rather be on the winning team, that means taking a somewhat contrarian approach to trading.

Most of my buying opportunities are afforded by the novice trader's selling signals and my selling trades are based on their buying patterns.  To get this right means taking a peek behind the candle to try to determine the novice from the expert and it's not as easy as you think.
In our course we teach a specific trade to take advantage of these traders, at first glance it seems a simple strategy but it requires patience and discipline to become regularly successful.  To give you some idea let's take look at the following two charts.

Fig 1                     

Fig 2

What do these charts have in common?  Can you determine more information from  Fig1 than Fig 2?
They are both exactly the same price action!   Fig 1 is a 10 minute chart and Fig 2 is a one hour chart.  After all my time in trading I am still surprised by the reluctance of many traders to analyse more than one time frame.

This is one way we can easily get an edge over such traders who are making decisions based on only a 5 or 10 minute chart.  With so many more candles printed, it is easy to come to a decision to buy  or sell when a higher time frame is contradicting this.

My Trading Toolbox
My  trading toolbox is empty of all indicators that are so much beloved by the newbie trader.  No adx for me, I live without macd and rsi and get along just fine without the aid of Ichimoku clouds.  All that remains are measuring tools like moving averages, trend lines, Fibonacci lines and my trusty calculator.
War

Trading is a war.  You must become a predator of weaker prey and be ruthless in your hunt and the kill.  We are daily teaching weak prey to become the Lion and I am comfortable with that,  I don't mind the competition, and the jungle is full of quarry.

Chris Drinkwater

www.Animusfx.com
I am a successful Day / Swing Trader and Partner in a local business in the South West of the UK.
I have been trading now for 10 years and in that time have accumulated a huge amount of screen time and experience, with many thousands of trades taken in that time.
I am acutely aware how difficult it is for anyone starting out in this trading business and how much information in the public domain is inaccurate, out of date or just plain wrong.
We started our website with the intention of educating newcomers and giving them the tools they need to increase their confidence, consistency and discipline in trading.
We now have over 250 students in 49 countries across the world and we are growing fast!

© 2016 Chris Drinkwater - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in