Using Candlesticks to Improve your Forex Trading

As a priority, your Forex trading strategy must safeguard your budget whilst increasing your profit potential. To provide even more protection for your account, you will find that it is good practice to seek additional confirmation every time you detect new entry opportunities.

One method of undertaking this task is to examine the candlestick charts and patterns on the hourly or four hour trading charts of the currency pair in question. Ideally, you should look for a sign that supports your new entry opportunity which will increase the chances that you are selecting a profitable winning trade.

During this process, you cannot afford to be subjective in your analysis. For instance, you should not enter a trade just because you think it feels right especially if major technical events and items are indicating the opposite. If you continued to use this approach, then you will only experience significant Forex failure in the future.

Instead, you should always examine trading Forex charts carefully and objectively for possible entry points. After you have achieved this, you should then undertake an additional confirmation step by studying the candlestick patterns of the currency pair of interest. If you only activate new positions should this secondary check provide positive feedback, then you will find that you will increase your number of winning trades substantially.

In addition, if your other trading another Forex strategy that is not signaling any new entries, you can also study candlestick patterns for any evidence in their own right. Should you locate any possibilities, you then need to research into the reasons why they have been formed. You should then also re-examine your trading strategies to determine if there are any further backup indications.

Candlestick patterns can be used to detect and confirm key Forex formations such as retracements, reversals, breakouts and fakeouts. For instance, you will find that you can make great use of candlesticks to help you determine and distinguish between reversals and retracements.

Sometimes, if you have other reasons for entering a trade, you should still inspect the candlestick patterns for additional verification. For example, suppose that you are planning to enter bullish Forex trends after studying the four hour chart, but then notice that a morning star candlestick is forming. Should this happen, then you are well-advised to reconsider and wait for further developments before activating your new trade.

Candlestick methods can help you detect new trades, confirm your open positions or prevent you from entering trades that will eventually transform into losses.