Candlestick Charting For Dummies

Demystify stock charts so you can up your investing game Candlestick Charting For Dummies is here to show you that candlestick charts are not just for Wall Street traders. Everyday investors like you can make sense of all those little lines and boxes, with just a little friendly Dummies training. We’ll show you where to find these charts (online or in your favorite investing app), what they mean, and how to dig out valuable information. Then, you’ll be ready to buy and sell with newfound stock market savvy. Candlestick Charting For Dummies helps you build a foundation of investing knowledge and lingo (bullish? bearish? What is a candlestick, anyway?), then shows you the chart-reading ropes with relevant and easy-to-understand examples. It covers the latest investing technology, cryptocurrency, and today’s somewhat-less-predictable market environment. Get a refresher on stock market terminology and investing basics Discover how easy it is to understand price history and movement with candlestick charts Identify the best times to buy and sell securities, including stocks and crypto Learn from real life examples so you can invest with greater confidence and success This is the Dummies guide for beginner and intermediate investors who want to make smarter decisions with a better understanding of how to read candlestick charts.

Table of Contents:
Introduction 1 About This Book 1 Foolish Assumptions 2 Icons Used in This Book 2 Beyond the Book 3 Where to Go from Here 3 Part 1: Getting Familiar with Candlestick Charting and Technical Analysis 5 Chapter 1: Understanding Charting and Where Candlesticks Fit In 7 Considering Charting Methods and the Role of Candlesticks 8 Getting a feel for your options for charting 8 Realizing the advantages of candlestick charting 9 Understanding Candlestick Components 9 Working with Candlestick Patterns 11 Simple patterns 11 Complex patterns 12 Making Technical Analysis Part of Your Candlestick Charting Strategy 12 Trading Wisely: What You Must Understand Before Working the Markets 13 Trading can be an expensive endeavor 13 Paper trading costs you nothing but time 14 Develop rules, and stick to them 14 Chapter 2: Getting to Know Candlestick Charts 17 Recognizing the Many Benefits of Candlestick Charting 18 Seeing is believing: Candlesticks are easy to read 19 Spotting bears and bulls quickly 20 Seeing into the future (sort of) 21 Showing price patterns 23 Admitting Potential Candlestick Charting Risks 25 Comparing Candlestick Charts with Alternative Charting Methods 26 Line charts 26 Bar charts 27 Point and figure charts 28 Chapter 3: Building a Base of Candlestick Chart Knowledge 31 Constructing a Candlestick: A Core of Four 32 Price on the open 32 High and low prices for the session 35 Price on the close 37 Considering Additional Information Included in Candlestick Charts 39 Volume 39 Open interest 40 Technical indicators 42 Fundamental information 43 Chapter 4: Using Electronic Resources to Create Full Charts 49 Turning to the Web for Candlestick Charting Resources 50 Using Yahoo! Finance 50 Working with Barchart 53 Charting on CNBC.com 54 Creating Candlestick Charts with Microsoft Excel 55 Finding the data for your chart 56 Making sure that the data is in the correct format 56 Building an Excel candlestick chart 57 Adding a moving average to an Excel candlestick chart 58 Adding a trendline to an Excel candlestick chart 60 Adding volume data to an Excel candlestick chart 61 Selecting Charting Packages and Apps 63 Remembering a few key points when selecting charting software 64 Considering a few charting package options 65 Part 2: Working with Simple Candlestick Patterns 69 Chapter 5: Working with Straightforward Single-Stick Patterns 71 The Bullish Long White Candle 72 Understanding long white candles 72 Identifying the three variations of the long white candle 76 The Bullish Dragonfly Doji 78 Recognizing a dragonfly doji 79 Trading based on a dragonfly doji 80 The Bearish Long Black Candle 82 Understanding long black candles 82 Identifying the three variations of the long black candle 84 Trading based on long black candles 85 The Bearish Gravestone Doji 89 Identifying the gravestone doji 89 Trading based on gravestone dojis 90 Chapter 6: Single-Stick Patterns That Depend on Market Context 93 Understanding Market Environments 94 Recognizing the three market states 94 Identifying the market trend 94 Delving into Dojis 96 The long legged doji 96 Other dojis 101 Looking at Other Patterns: Spinning Tops 105 Identifying spinning tops 105 Using spinning tops for profitable trading 106 Discovering More about Belt Holds 109 Spotting belt holds on a chart 109 Buckling down for some belt hold-based trading 110 Deciphering the Hanging Man and the Hammer 113 Spotting the hanging man and the hammer 114 Trading on the hanging man and the hammer 114 Chapter 7: Working with Bullish Double-Stick Patterns 119 Bullish Reversal Patterns 120 Bullish engulfing pattern 120 Bullish harami 124 Bullish harami cross 127 Bullish inverted hammer 129 Bullish doji star 132 Bullish meeting line 135 Bullish piercing line 136 Bullish Trend-Confirming Patterns 139 Bullish thrusting lines 139 Bullish separating lines 142 Bullish neck lines 144 Chapter 8: Using Bearish Double-Stick Patterns 149 Understanding Bearish Reversal Patterns 149 The bearish engulfing pattern 150 The bearish harami pattern 153 The bearish harami cross pattern 155 The bearish inverted hammer pattern 158 The bearish doji star 160 The bearish meeting line 162 The bearish piercing line or dark cloud cover pattern 165 Making a Profit with Bearish Trend Patterns 168 The bearish thrusting lines 168 The bearish separating lines 171 The bearish neck lines 174 Part 3: Making the Most of Complex Patterns 177 Chapter 9: Getting the Hang of Bullish Three-Stick Patterns 179 Understanding Bullish Three-Stick Trend Reversal Patterns 180 The three inside up pattern 180 The three outside up pattern 183 The three white soldiers pattern 185 The morning star and bullish doji star patterns 188 The bullish abandoned baby pattern 191 The bullish squeeze alert pattern 193 Working with Bullish Three-Stick Trending Patterns 196 The bullish side-by-side white lines pattern 197 The bullish side-by-side black lines pattern 200 The upside tasuki gap pattern 203 The upside gap filled pattern 205 Chapter 10: Trading with Bearish Three-Stick Patterns 209 Understanding Bearish Three-Stick Trend Reversal Patterns 210 The three inside down pattern 210 The three outside down pattern 213 The three black crows pattern 215 The evening star and bearish doji star patterns 218 The bearish abandoned baby pattern 221 The bearish squeeze alert pattern 223 Forecasting with Bullish Three-Stick Trending Patterns 226 The bearish side-by-side black lines pattern 226 The bearish side-by-side white lines pattern 228 The downside tasuki gap pattern 231 The downside gap filled pattern 234 Part 4: Combining Patterns and Indicators 237 Chapter 11: Using Technical Indicators to Complement Your Candlestick Charts 239 Using Trend Lines 240 Drawing trend lines 241 Considering trend line direction 242 Taking advantage of automated trend lines 242 Using Moving Averages 243 Selecting appropriate moving average periods 244 Using simple moving averages 245 Using other types of moving averages: What have you done for me lately? 247 Combining two moving averages 248 Combining three moving averages 249 Examining the Relative Strength Index 251 Calculating the RSI 251 Reading an RSI chart 252 Cashing in on Stochastics 253 Grasping the math behind the stochastic oscillator 254 Interpreting the stochastic oscillator 254 Buddying Up with Bollinger Bands 256 Creating Bollinger bands 256 Chapter 12: Buy Indicators and Bullish Reversal Candlestick Patterns 259 Buying with the RSI and Bullish Reversal Candlestick Patterns 260 Using the RSI to pick a long entry point 260 Using the RSI to pick long exits 262 Buying with the Stochastic Indicator and a Bullish Reversal Candlestick Pattern 264 Using the stochastic indicator to pick a long entry point 264 Using the stochastic indicator to pick long exits 266 Chapter 13: Sell Indicators and Bearish Reversal Candlestick Patterns 269 Shorting with the RSI and Bearish Candlestick Patterns 270 Picking short entry points with the RSI and candlesticks 270 Using the RSI to help pick short entry and exit points 272 Using the Stochastic Indicator and Bearish Candlestick Patterns for Shorting 274 Picking short entry points 275 Deciding when to get in and out of shorts 276 Chapter 14: Using Technical Indicators Alongside Bullish-Trending Candlestick Patterns 279 Using Trending Patterns for Buying and Confirmation 280 Buying trend lines with bullish candlestick patterns 280 Determining sales and stop levels with trend lines 282 Combining Moving Averages and Bullish-Trending Candlestick Patterns 285 Using moving averages with bullish-trending candlestick patterns to confirm trends 285 Setting stops with the moving average and bullish-trending candlestick patterns 287 Chapter 15: Combining Technical Indicators and Bearish-Trending Candlestick Patterns 291 Combining Lines with Candles for Confirmation 292 Analyzing short trades with trend lines and bearish patterns 292 Bearish trend lines and candlestick patterns leading to short entries and exits 294 Combining Moving Averages and Bearish Patterns for Shorts 296 Pinning down short entry points and confirming trends 297 Picking shorts with moving averages and candlesticks 299 Part 5: The Part of Tens 301 Chapter 16: Ten Myths about Charting, Trading, and Candlesticks 303 There’s No Difference between Candlesticks and Bar Charts 304 Market Efficiency Makes It Impossible to Beat the Market over the Long Run 304 Only a Full-Time Professional Can Make Money in the Markets 305 Technical Analysis Is Nothing More than Reading Tea Leaves 305 Charting Is for Short-Term Traders Only 306 You Must Be Rich to Start Trading 306 Trading Is an Easy Way to Get Rich Quick 307 Candlestick Charts Require In-Depth Data and Are Difficult to Create 307 The Trading Game Is Stacked against the Small Trader 308 Selling Short Is for Professional Traders Only 308 Chapter 17: Ten Tips to Remember about Technical Analysis 309 Charts Can Give False Signals 309 You Will Run into Skeptics 310 There’s No Definite Right or Wrong Opinion of a Chart 310 A Single Chart Doesn’t Tell a Whole Story 310 Charting Is Part Science, Part Art 311 You Can Overanalyze 311 Develop a Backup System 312 Error-Free Data Doesn’t Exist 312 No System Is Silly as Long as It Works 313 Past Results Don’t Always Predict Future Performance 313 Index 315

About the Author :
Russell Rhoads, PhD, is head of research at EQDerivatives and an Associate Clinical Professor at the Kelley School of Business at Indiana University. He has over three decades of experience focusing on trading and the financial markets. Rhoads is the author of the previous edition of Candlestick Charting For Dummies.