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Developed by the Japanese and popularised in the west by Steven Nison, Candlestick charts are an alternative to standard price charting styles. Like a standard 'bar chart', they display the open, high, low, and closing prices but use a solid or empty body to visually reinforce whether the bar rose or fell. This reinforcement may be useful or not, depending on your trading style. Some short term investors claim that unless one is in strong control of one's emotions, candlestick charts may panic a trader into trading when he should be sitting on the sidelines. We disagree, finding them very illuminating, and so from a day trading strategy perspective, we use them a lot, although we pay no heed to 'patterns'. Many 'patterns' have been documented over the years, all with fanciful Japansese-sounding names, and all purporting to tell a trader what is about to happen. Opinion is divided on the validity of these patterns, our own statistical research leads us to believe that 'they work when they work, and don't when they don't.'. |
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