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Russell Rhoads. Candlestick Charting For Dummies
Candlestick Charting For Dummies® To view this book's Cheat Sheet, simply go to www.dummies.com and search for “Candlestick Charting For Dummies Cheat Sheet” in the Search box. Table of Contents
List of Tables
List of Illustrations
Guide
Pages
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Getting Familiar with Candlestick Charting and Technical Analysis
Understanding Charting and Where Candlesticks Fit In
Considering Charting Methods and the Role of Candlesticks
Getting a feel for your options for charting
Realizing the advantages of candlestick charting
Understanding Candlestick Components
Working with Candlestick Patterns
Simple patterns
Complex patterns
Making Technical Analysis Part of Your Candlestick Charting Strategy
Trading Wisely: What You Must Understand Before Working the Markets
Trading can be an expensive endeavor
Paper trading costs you nothing but time
Develop rules, and stick to them
Getting to Know Candlestick Charts
BRIEF HISTORY OF CANDLESTICK CHARTING
Recognizing the Many Benefits of Candlestick Charting
WHAT MAKES UP A DAY?
Seeing is believing: Candlesticks are easy to read
Spotting bears and bulls quickly
Seeing into the future (sort of)
BULLS AND BEARS
Showing price patterns
UNDERSTANDING PRICE GAPS
SELLING SHORT, IN SHORT
Admitting Potential Candlestick Charting Risks
Comparing Candlestick Charts with Alternative Charting Methods
Line charts
Bar charts
Point and figure charts
Building a Base of Candlestick Chart Knowledge
Constructing a Candlestick: A Core of Four
Price on the open
Recording an opening price on a candlestick
Dealing with the challenges of pinning down an opening price
WHAT’S THE STOCK MARKET?
FOCUS ON FUTURES
High and low prices for the session
Incorporating high and low prices into a candlestick
How low (or high) can you go? Deciding on a high and low price
Price on the close
Recording a closing price on a candlestick
Trying to pin down a closing price
Considering Additional Information Included in Candlestick Charts
Volume
Open interest
Technical indicators
Fundamental information
Dividend dates
Earnings dates
Stock splits
Insider trading: The legal kind
Using Electronic Resources to Create Full Charts
Turning to the Web for Candlestick Charting Resources
Using Yahoo! Finance
OTHER USEFUL FEATURES IN YAHOO! FINANCE
Working with Barchart
Charting on CNBC.com
Creating Candlestick Charts with Microsoft Excel
Finding the data for your chart
Making sure that the data is in the correct format
Building an Excel candlestick chart
Adding a moving average to an Excel candlestick chart
Adding a trendline to an Excel candlestick chart
Adding volume data to an Excel candlestick chart
Formatting the data for your chart
Creating the actual chart
Selecting Charting Packages and Apps
Remembering a few key points when selecting charting software
Considering price
Determining data demands
Factoring in what you’ll be trading
Considering a few charting package options
eSignal
MetaStock
TradeStation
Working with Simple Candlestick Patterns
Working with Straightforward Single-Stick Patterns
The Bullish Long White Candle
Understanding long white candles
The long white candle signaling an uptrend
The long white candle failing as a long signal
Identifying the three variations of the long white candle
The white marubozu
The closing long white candle
The opening long white candle
The Bullish Dragonfly Doji
Recognizing a dragonfly doji
Trading based on a dragonfly doji
The Bearish Long Black Candle
Understanding long black candles
Identifying the three variations of the long black candle
Trading based on long black candles
Getting a good bearish signal from a long black candle
Seeing a long black candle’s failure as a short signal
The Bearish Gravestone Doji
Identifying the gravestone doji
Trading based on gravestone dojis
Single-Stick Patterns That Depend on Market Context
Understanding Market Environments
Recognizing the three market states
Identifying the market trend
Delving into Dojis
The long legged doji
Identifying long legged dojis
Using long legged dojis as buy signals
The long legged doji giving a good buy signal
A failing long legged doji
Using long legged dojis as sell signals
Seeing a good short signal on the long legged doji
The long legged doji sells signal failing
Other dojis
Using regular dojis to trade long
Using regular dojis to short
Looking at Other Patterns: Spinning Tops
Identifying spinning tops
Using spinning tops for profitable trading
Recognizing a buy signal with a spinning top
Looking at an example of a failing spinning top
Getting a nice short signal from a spinning top
Seeing a failing spinning top short
Discovering More about Belt Holds
Spotting belt holds on a chart
Buckling down for some belt hold-based trading
Belt hold that serves as a long signal
Belt hold that fails on the long side
Bearish belt hold that works out
Bearish belt hold that fails
Deciphering the Hanging Man and the Hammer
Spotting the hanging man and the hammer
Trading on the hanging man and the hammer
Going long with a hammer pattern
Shorting with a hanging man pattern
Working with Bullish Double-Stick Patterns
Bullish Reversal Patterns
Bullish engulfing pattern
Spotting the bullish engulfing pattern
Using the bullish engulfing pattern for savvy trading
A failing bullish engulfing pattern
Bullish harami
Identifying the bullish harami
Trading based on the bullish harami
Bullish harami cross
Recognizing the bullish harami cross
Using the bullish harami cross for profitable trading
A nice buy signal from the bullish harami cross
Failing to give a good buy signal
Bullish inverted hammer
Spotting the bullish inverted hammer
Understanding how to trade on the bullish inverted hammer
Checking out a successful bullish inverted hammer
A failed inverted hammer on confirmation day
Bullish doji star
Identifying a bullish doji star
Wishing (and trading) on a bullish doji star
Failing on a long signal
Bullish meeting line
Recognizing a bullish meeting line pattern
Making a successful trade using bullish meeting lines
Bullish piercing line
Identifying a bullish piercing line pattern
Trading on the bullish piercing line
Bullish Trend-Confirming Patterns
Bullish thrusting lines
Recognizing a bullish thrusting line pattern
Trading on a bullish thrusting line
Failing to indicate the continuation of an uptrend
Bullish separating lines
Singling out the bullish separating lines
Understanding how to trade on the bullish separating lines
The bullish thrusting lines and a trend that comes to an end
Bullish neck lines
Identifying bullish neck lines
Trading on the bullish neck line pattern
Bullish neck line fails to signal a trend continuation
Using Bearish Double-Stick Patterns
Understanding Bearish Reversal Patterns
The bearish engulfing pattern
Identifying the bearish engulfing pattern
Trading on the bearish engulfing pattern
Recognizing a failing bearish engulfing pattern
The bearish harami pattern
Spotting a bearish harami
Using the bearish harami pattern for a clever trade
Recognizing a failing bearish harami pattern
The bearish harami cross pattern
Recognizing the bearish harami cross
Trading on the bearish harami cross
Signaling a losing trade
The bearish inverted hammer pattern
Identifying the bearish inverted hammer
Using the bearish inverted hammer in your trades
Recognizing a losing trade
The bearish doji star
Spotting the bearish doji star
Understanding how to trade using the bearish doji star
Failing to give a good short signal
The bearish meeting line
Understanding how to identify the bearish meeting line
Trading on the bearish meeting line
Recognizing an unsuccessful bearish meeting line
The bearish piercing line or dark cloud cover pattern
Identifying the bearish piercing line pattern
Making trades based on the bearish piercing line
Falling short with the bearish piercing line
A QUICK NOTE ON TREND STRENGTH
Making a Profit with Bearish Trend Patterns
The bearish thrusting lines
Understanding how to spot the bearish thrusting lines
Trading on the bearish thrusting lines
Recognizing a disappointing bearish thrusting line pattern
The bearish separating lines
Identifying the bearish separating lines
Understanding how to trade on the bearish separating lines
Recognizing a failing bearish separating line
The bearish neck lines
Recognizing bearish neck lines
Using the bearish neck lines for profitable trading
Noticing an unsuccessful bearish neck line
Making the Most of Complex Patterns
Getting the Hang of Bullish Three-Stick Patterns
Understanding Bullish Three-Stick Trend Reversal Patterns
The three inside up pattern
Identifying the three inside up pattern
Making effective trades using the three inside up pattern
The three inside up pattern not working out too well
The three outside up pattern
Spotting the three outside up pattern
Trading on the three outside up pattern
The three outside up pattern comes before more bearishness instead of bullishness
The three white soldiers pattern
Recognizing the three white soldiers
Using the three white soldiers to make a profitable trade
The three white soldiers fail to signal bullishness
The morning star and bullish doji star patterns
Identifying the morning star and bullish doji star
Trading on the morning star and bullish doji star patterns
The bullish doji star failure signal
The bullish abandoned baby pattern
Identifying the bullish abandoned baby pattern
Making a trade based on the abandoned baby pattern
The abandoned baby failure signal
The bullish squeeze alert pattern
Spotting the bullish squeeze alert pattern
Executing trades with the bullish squeeze alert
The bullish squeeze alert failing to bring on higher prices
Working with Bullish Three-Stick Trending Patterns
The bullish side-by-side white lines pattern
Spotting the bullish side-by-side white lines pattern
Trading on the bullish side-by-side white lines
The bullish side-by-side white lines failing to indicate more bullishness
The bullish side-by-side black lines pattern
Recognizing the bullish side-by-side black lines pattern
Using the bullish side-by-side black lines for a profitable trade
Failure of the bullish side-by-side black lines pattern
The upside tasuki gap pattern
Spotting the upside tasuki gap pattern
Using the upside tasuki gap pattern for a successful trade
The tasuki gap fails to indicate more bullishness
The upside gap filled pattern
Recognizing the upside gap filled pattern
Making wise trades using the upside gap filled pattern
The upside gap followed by lower prices
Trading with Bearish Three-Stick Patterns
Understanding Bearish Three-Stick Trend Reversal Patterns
The three inside down pattern
Figuring out how to spot the three inside down
Trading on the three inside down pattern
Failing to give a good bearish signal
The three outside down pattern
Spotting the three outside down
Making trades with the three outside down pattern
Offering a failing signal
The three black crows pattern
Identifying the three black crows pattern
Making trades with the three black crows pattern
Failing to signal lower prices ahead
The evening star and bearish doji star patterns
Recognizing the evening star and bearish doji star
Using the evening star and bearish doji star patterns to make trades
Failing to indicate lower prices
The bearish abandoned baby pattern
Spotting the bearish abandoned baby pattern
Trading on the bearish abandoned baby pattern
Failing to signal lower prices ahead
The bearish squeeze alert pattern
Familiarizing yourself with the bearish squeeze alert pattern
Using the bearish squeeze alert pattern in your trades
Falling short with the bearish squeeze alert pattern
Forecasting with Bullish Three-Stick Trending Patterns
The bearish side-by-side black lines pattern
Identifying the bearish side-by-side black lines
Using the bearish side-by-side black lines pattern
Failing to confirm a downtrend
The bearish side-by-side white lines pattern
Spotting the bearish side-by-side white lines pattern
Working with the bearish side-by-side white lines
Failing to predict a downtrend continuation
The downside tasuki gap pattern
Understanding how to identify the downside tasuki gap pattern
Making a trade with the downside tasuki gap pattern
Catching the failing trend at the end of the pattern
The downside gap filled pattern
Recognizing the downside gap filled pattern
Trading the downside gap filled pattern
Failing to signal a continuing downtrend
Combining Patterns and Indicators
Using Technical Indicators to Complement Your Candlestick Charts
Using Trend Lines
Drawing trend lines
Considering trend line direction
Taking advantage of automated trend lines
Using Moving Averages
Selecting appropriate moving average periods
Using simple moving averages
Using other types of moving averages: What have you done for me lately?
Calculating a weighted moving average
Calculating an exponential moving average
Combining two moving averages
Combining three moving averages
Examining the Relative Strength Index
Calculating the RSI
Reading an RSI chart
THE ORIGIN OF OVERBOUGHT AND OVERSOLD LEVELS
Cashing in on Stochastics
Grasping the math behind the stochastic oscillator
Interpreting the stochastic oscillator
Using stochastic oscillators as you would two moving averages
Using stochastic oscillators as you would the RSI
Buddying Up with Bollinger Bands
Creating Bollinger bands
Buy Indicators and Bullish Reversal Candlestick Patterns
Buying with the RSI and Bullish Reversal Candlestick Patterns
Using the RSI to pick a long entry point
Using the RSI to pick long exits
Buying with the Stochastic Indicator and a Bullish Reversal Candlestick Pattern
Using the stochastic indicator to pick a long entry point
Using the stochastic indicator to pick long exits
Sell Indicators and Bearish Reversal Candlestick Patterns
Shorting with the RSI and Bearish Candlestick Patterns
Picking short entry points with the RSI and candlesticks
Using the RSI to help pick short entry and exit points
Using the Stochastic Indicator and Bearish Candlestick Patterns for Shorting
Picking short entry points
Deciding when to get in and out of shorts
Using Technical Indicators Alongside Bullish-Trending Candlestick Patterns
Using Trending Patterns for Buying and Confirmation
Buying trend lines with bullish candlestick patterns
A trend line and bullish pattern in a chart
Another example of a trend line working with a bullish pattern
Determining sales and stop levels with trend lines
Trend line and patterns for entries and exits
EXITING WITH A TREND LINE
Another entry and exit with a trend line and bullish pattern
Combining Moving Averages and Bullish-Trending Candlestick Patterns
Using moving averages with bullish-trending candlestick patterns to confirm trends
Charting the moving average and a bullish-trending pattern
Using a couple of moving averages and a bullish-trending pattern
Setting stops with the moving average and bullish-trending candlestick patterns
An entry and exit with a single moving average and bullish pattern
Two moving averages keeping you out of a bad trade
Combining Technical Indicators and Bearish-Trending Candlestick Patterns
Combining Lines with Candles for Confirmation
Analyzing short trades with trend lines and bearish patterns
A short trade with a bearish trend line and candlestick pattern
Another bearish trend line and bearish pattern leading to a short trade
Bearish trend lines and candlestick patterns leading to short entries and exits
Shorting and covering using a trend line combined with a reversal candlestick pattern
DETERMINING TRADING LEVELS WITH TREND LINES
Shorting and covering with a downtrend line and bearish pattern
Combining Moving Averages and Bearish Patterns for Shorts
Pinning down short entry points and confirming trends
A short trade using a signal moving average and bearish pattern
Two moving averages and a bearish pattern giving a short signal
Picking shorts with moving averages and candlesticks
A single moving average and bearish pattern for a short trade and trade exit signal
Two moving averages along with a bearish pattern for a short sale and exit trade
The Part of Tens
Ten Myths about Charting, Trading, and Candlesticks
There’s No Difference between Candlesticks and Bar Charts
Market Efficiency Makes It Impossible to Beat the Market over the Long Run
Only a Full-Time Professional Can Make Money in the Markets
Technical Analysis Is Nothing More than Reading Tea Leaves
Charting Is for Short-Term Traders Only
You Must Be Rich to Start Trading
Trading Is an Easy Way to Get Rich Quick
Candlestick Charts Require In-Depth Data and Are Difficult to Create
The Trading Game Is Stacked against the Small Trader
Selling Short Is for Professional Traders Only
Ten Tips to Remember about Technical Analysis
Charts Can Give False Signals
You Will Run into Skeptics
There’s No Definite Right or Wrong Opinion of a Chart
A Single Chart Doesn’t Tell a Whole Story
Charting Is Part Science, Part Art
You Can Overanalyze
Develop a Backup System
Error-Free Data Doesn’t Exist
No System Is Silly as Long as It Works
Past Results Don’t Always Predict Future Performance
Index. Numerics
A
B
C
D
E
F
G
H
I
J
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
About the Author
Dedication
Author’s Acknowledgments
WILEY END USER LICENSE AGREEMENT
