Trading Commodities With Candlesticks by Stephen W. Bigalow
Here’s a trading setup that will stop you from being shaken out of your positions, especially on longer-term time frames.
by Stephen W. Bigalow
The volatility of price movement in the commodities markets frightens off investors. Horror stories about accounts being wiped out in a flash are enough to make them think twice about venturing into unfamiliar territory. For those who do not want to take a lot of time and effort to learn how to invest in commodities correctly, the best advice is probably to stay away from them. But for the investor who is willing to take the time and effort to assemble the ideal trading program for themselves, commodity trading can be lucrative. Unfortunately, the road to successful commodity trading can involve gut-wrenching, emotionally debilitating learning processes. Few investors immediately have the knack to invest in commodities without suffering painful losses.
FIRST, HAVE A SYSTEM
Before you start trading, you must have a trading platform that has proven to be successful. Without an investment method that provides you with an advantage, you will just be shooting from the hip. There must be a reason for anticipating the price of a stock/commodity/currency to go up or down. Many investors start committing their funds to market exposure well before they have researched a trading program.
Fortunately, candlestick analysis provides a trading method that works. It has proved to be a viable trading format over three centuries. The information incorporated into each individual signal has powerful implications. Analyzing a series of signals and establishing a pattern creates higher probabilities of being in the proper trades at the correct time.
A major benefit of candlestick analysis provides a common-sense element for analyzing what is occurring between the bullish and bearish sentiments. The legendary Japanese rice traders who devised this technique incorporated elements of common human nature reactions into their analysis: panic selling at the bottom and exuberant buying at the top. Once you have learned how to utilize that information successfully, your trading abilities will improve, no matter what investment entity or time frame you trade. Candlestick signals work well in isolation, but adding confirming indicators make them work even better.