Stephen Bigalow’s third book on Candlestick Analysis on sale now. Regularly $97 on sale for only $67.77 plus free shipping. Please read below for more information with link to sale following the article.

Why do most investors make very poor returns in the stock market? Unfortunately the answer is very simple, themselves! The investment markets are a level playing field for everybody. However it is a small percentage of investors that make big money from the markets. Why? Because those investors have learned to gain control of their own emotions! Most of the time, to become a successful investor requires many years of hard knocks, gaining costly experience for controlling one’s own emotions. There are many books demonstrating successful trading methods. There are a few books that delve into the description of how the human psyche is what usually keeps investors from making consistent profits in the investment markets

Candlestick Profits – Eliminating Emotions with Candlestick Analysis is a truly unique book. It reviews the major candlestick signals, reiterating the reasons that candlestick patterns have worked dramatically successfully through the past few centuries. This book also strikes at the heart of why most investors cannot make money in the markets. Stephen W Bigalow illustrates the gut wrenching truths of why our own emotions can make the most successful trading programs a failure. This information is what most investors either do not realize is occurring or they do not want to know that it is occurring. Most investors learn how to invest the wrong way. This ingrains the wrong mental disciplines into the majority of investors from the onset.

Candlestick Profits – Eliminating Emotions with Candlestick Analysis has a truly unique educational theme. Mr. Bigalow clearly demonstrates how the correct investment perspectives are built into the graphics of candlestick analysis. He also brings to light the obvious mental flaws most investors participate in due to their initial incorrect learning process. The most powerful aspect of this book is the demonstration of how the correct use of candlestick analysis not only helps investors ‘unlearn’ their incorrect investment perspectives, but quickly converts an investor’s outlook to evaluating investing in the correct manner. The most successful investing programs will not work correctly without the proper investment perspectives. This book will completely alter your own investment practices. The commonsense aspects of investing built into candlestick graphics allows investors to participate in a well disciplined trading program that has the ability to correct each individual investor’s self-discipline.

How often have you heard investment promotions state that if you learn just one of their trading secrets, it would pay for the whole training? What if your trading profitability is even more deep rooted than that? What if you could learn and/or resolve one of your personal mental flaws. Correcting that one aspect of your investment perceptions will improve your investing capabilities no matter which trading program you decide to use.

Most trading program promotions promise you great profits if you use their system. The unspoken assumption is that you know how to implement trading strategies correctly. The newly introduced trading strategy is successful because of the background of the developer. Do you think a new trading strategy was developed by somebody that had extensive trading background or somebody new to the investing arena? The major advantage of candlestick analysis is that it was developed based on one simple premise, common sense aspects of reoccurring investment sentiment. This factor is so basic, candlestick analysis has the power to convert investors with flawed investment perspectives and turn them into a productive investment thinker. Do not miss this opportunity to discover the hidden nuances of your own mind that might be keeping you from investing profitably.

Don’t miss your chance to get this on sale now.

Happy investing!

Again, I like to look back at previous blogs to revisit where we thought the market was going. Below is a blog done as the euro sovereign debt bailouts regained life and there was another stimulus package coming.

As the Euro sovereign debt bailout regains life and another economic stimulus package is on the horizon it may be time for traders to find the market bottom with Candlesticks. Two things drive stock and stock market prices. These are the fundamentals of the economy and individual stocks on one hand and market sentiment on the other. In both trading and long term investing, margin of safety and intrinsic stock value are good measures of the value of a stock. What may look like a promising stock with a low price to earnings ratio may be underpriced as regards forward looking earnings but market sentiment may be such that the stock remains inactive and underpriced. Market sentiment is the composite action of everyone from the day trader to one who only engages in buy and hold investing. While fundamental analysis helps spot hidden stock value in a bottoming market, it is often more profitable to find the market bottom with Candlesticks. Stock technical analysis with tools such as Candlestick charts is useful in spotting new market trends and market reversal. If a trader or investor is looking to profit from a market turnaround he will do well to find the bottom with candlestick patterns  and trade or invest accordingly.

It is fine to talk about finding bargains in a down market but just how long will the market be down and how long will a given stock be ignored by the market? Both fundamental and technical analysis are necessary in both short term trading and long term investing. However, it is with Candlestick analysis that smart traders are often able to spot when the market is going to turn and profit from buying at the bottom. To find the market bottom with Candlesticks, either for the market in general or for individual stock prices, traders follow stock price patterns and their representations as easy to read Candlestick signals. A commonly useful signal is the Doji Candlestick. This Japanese Candlestick signal indicates market indecision. It is useful in predicting a market rebound or a correction in an ascending market. The Doji is a very short to virtually flat candlestick with long upper and lower tails. It tells us that the market opened and closed on a stock at nearly the same price but that the market tested both higher and lower during the trading period. This signal often precedes a breakout. It is not especially useful in a flat market as it does not tell us in which direction the stock market or individual stock will move but in an upward or downward trending market it commonly warns the trader of a turnaround. In a falling market it is a way to find the market bottom with Candlesticks.

After a recent sell off took two and a half trillion US dollars of value out of the markets many are predicting that the market has hit bottom. The smart stock investor or stock trader will not rely upon the pundits. He will work to find the market bottom with Candlesticks and profit thereafter with Candlestick trading tactics.

Spinning Tops are depicted with small bodies relative to the shadows. This demonstrates some indecision on the part of the bulls and the bears. They are considered neutral when trading in a sideways market. However, in a trending or oscillating market, a relatively good rule of thumb is that the next days trading will probably move in the direction of the opening price. The size of the shadow is not as important as the size of the body for forming a Spinning Top.

Candlestick patterns are clear and easy to identify demonstrating highly accurate turns in investor sentiment. Japanese candlestick patterns consist of approximately 40 reversal and continuation patterns which all have credible probabilities of indicating correct future direction of a price move. However the twelve major candlestick patterns provide more than enough trade situations to most investors. There are only twelve major patterns that should be committed to memory but this does not mean that the remaining secondary patterns should not be considered. In fact those signals are extremely effective for producing profits. Reality however demonstrates that some of them occur very rarely. In order to utilize candlestick analysis to its fullest all patterns, including the spinning top should be used and understood.

The twelve candlestick patterns illustrate the major signals. The definition of “major” means two things. First, they occur in price movements often enough so that they are beneficial to producing a supply of profitable trades. Second, they clearly indicate price reversals with strength enough to warrant placing trades. The twelve major candlestick patterns are listed below and as you can see each candle formation has a unique name. Some have Japanese names while others have English names.

Twelve Major Candlestick Patterns: Doji, Bullish Engulfing, Bearish Engulfing, Hammer Signal and Hanging Man, Piercing Pattern, Dark Cloud Cover, Bullish Harami, Bearish Harami, Morning Star, Evening Star, Kicker Signals (Bearish and Bullish), Shooting Star, and Inverted Hammer.

Recognizing and understanding the psychology that forms the spinning top and the major candlestick patterns will provide completely new insights for investors to understand optimal times to buy and sell. Japanese rice traders realized that prices do not move based on fundamentals but instead that they move based on the investor perception of those fundamentals. The Doji signal is one of the most predominant reversal indicators. It is very effective in all-time frames whether using a one-minute, five-minute, or fifteen-minute chart for day trading or daily, weekly, and monthly charts for the swing trader and long-term investor.

This article explains the closing and opening marubozu patterns used in candlestick charting.

Closing Marubozu

A closing marubozu has no shadow at its closing end. A white body will not have a shadow at the top. A black body will not have a shadow at the bottom. In both cases, these are strong signals corresponding to the direction that they each represent and are used in stock analysis.

A white body that has a lower shadow but no upper shadow is called a bullish white closing marubozu. When the days opens the prices go down but then begin to go up all day where it then closes at the day’s high.

The bearish black closing marubozu has an upper shadow but no lower shadow. Prices go up when the day opens and then they move down all day and close at the low of the day. This signal indicates a day of the bears and could show either a final sell off before the bulls come back into control, or the continuation of a downtrend.

Opening Marubozu

The opening marubozu has no shadows extending from the open price end of the body. A white body would not have a shadow at the bottom end and the black candle would not have a shadow at its top end. Though these are strong signals, they are not as strong as the Closing Marubozu.

The bullish white opening marubozu has an upper shadow but does not have a lower shadow and when the day opens, the prices go up all day. The price then closes higher than the opening price however it does not close higher than the day’s high.

The bearish black opening marubozu indicates a bearish day that concerns the bulls. With this candlestick pattern, the day opens with prices going below the opening price. Then the price goes down all day with a final closing price that is lower than the opening price. The final closing price is not at the low of the day however.

One of the biggest misconceptions of investors is that prices move based upon fundamental reasons when in fact prices move based upon the “perception” of fundamental reasons. The Japanese Rice traders discovered this many centuries ago. Why do prices go down when good news is announced? The answer is that the anticipation of that good news was already built into the stock price.

Please continue to learn how to identify each different candlestick trading pattern as well as what that pattern indicates is occurring in the markets.

When studying Japanese Candlesticks it is important to know about the black marubozu. The black marubozu is a long black body with no shadows at either end. It is considered a weak indicator. It is often identified in a bearish continuation or bullish reversal pattern, especially if it occurs during a downtrend. A long black candle could represent the final sell off, making it an “alert” to a bullish reversal setting up. The Japanese often call it the Major Yin or Marubozu of Yin. Ideally you would not want to have any small wicks on either end of the black candlestick but it is possible and would signify that the open and the close were close to the high and low price of the day.

Some who study Japanese Candlesticks also refer to the black marubozu as the bearish long black candle and it is the opposite of the bullish white marubozu candlestick pattern. Again, this long black candle signifies that a bearish trend is occurring and the sellers are in control in which the sellers end the day selling pretty low. So basically, Japanese candlesticks tells us that, if the price opens at the high of the day and it closes at the low of the day, then the outcome is the black marubozu. In order to confirm that this signal is valid, you need to watch it over the next few days.

The psychology built into a major Japanese candlesticks signals is simple common sense investment philosophy. When you learn how to utilize the candlestick charts correctly you now have the knowledge to improve your trading techniques for those trading entities you want to trade. You do not have to depend on canned programs that sometimes work and sometimes don’t work and you do not have to buy or sell stock recommendations blindly based on a research analyst’s recommendations. The candlestick signals provide guidance as to what investors are actually doing at a certain point in time. Learn the 12 major candlestick patterns as well as the secondary patterns and your investments perceptions will greatly improve.

Continue to learn about candlestick patterns and read about the Dark Cloud Cover, the hammer signal, the bearish engulfing, and others.