What is Candlestick Charting? – Part 1

Thursday April 25, 2013

So many people ask, what is candlestick charting ? As the very first to reveal candlestick to the Western world it is gratifying to see their popularity. Unfortunately, with this wide spread use of candlesticks (sometimes called “candles”), there are many educators, traders and investors. while well intentioned, who are not using them correctly. That is why our slogan is “Nison Candlesticks, Candlestick Training the Right Way”. Our goal here at candlecharts.com is to ensure you get the most benefit from candlesticks and avoid some of the common mistakes and misuses. We call these misuses of candlesticks “profit leakers.” That is because one can lose large portions of their portfolio by placing a trade or investment based on using candlestick strategies incorrectly. And, just as importantly, miss golden trading or investment opportunities.

In this multi-part series of blogs we will delve into the benefits of candlesticks, the essentials of candlestick and why candlestick charting works. Note: to make sure you receive the rest of this series be sure to subscribe to this Blog. 

Japanese candlestick chart analyses have been refined by generations of use in the Far East.  Some of the benefits of candlestick charting include:

• They are easy to understand: Anyone, from the first-time chartist to the seasoned professional can easily harness the power of candlestick charts. This is because, as will be shown in the next blog where we go over the anatomy of the candlestick line, the same data that is required to draw the candlestick chart is the same as that needed for the bar chart (the high, low, open and close).  

• Candlestick charts offer earlier indications of market turns: Candlestick charts can send out reversal signals in a few sessions, rather than the weeks often needed for a bar chart reversal signal. Thus, market turns with candlestick charts will frequently be in advance of traditional indicators. This should help traders and investors to enter and exit the market with better timing. 

• Candlestick charts provide unique market insights: Candlestick charts not only show the trend of the move, as does a bar chart, but, unlike bar charts, candlestick charts also show the force underpinning the move.  

• Candlestick charting techniques are easily joined with Western charting tools: All candlestick charting techniques can be fused with any Western technical tool you currently use. This is very significant. It means that any of the technical analyses used with bar charts (such as moving averages, trendlines, retracements, etc.) can be employed with candlestick charts. However, candlestick charts can send signals not available with bar charts. Thus, trader using candlestick charting techniques can often get a jump on those who use only traditional Western charting techniques.  

• Candlestick charts are versatile: Candlestick techniques can be used for speculation, investing and for hedging, they can be used for stocks, futures, foreign exchange, options anywhere technical analysis is applied. Candlestick charts can also be used for all time frames, from floor traders who use the 5-minute candlestick chart, to hedgers who focus on weekly or monthly candlestick charts. 

In the next “What Is Candlestick Charting Part 2” blog I will detail the anatomy of the candlestick line.

Note: to make sure you receive the rest of this series be sure to subscribe to this Blog. 

About the author

Steve Nison, CMT is uniquely qualified to help you fully exploit the opportunities candlestick charts present to today’s markets. As a renowned author and speaker, he has the distinction of being the first to reveal candlestick charts to the Western world.

Mr. Nison is not only the acknowledged master of these previously secret candlestick techniques, but is also an expert on Western technical analysis with over 30 years real world experience.

Regarded as one of the most foremost technical analysts in the world, Mr. Nison’s client list includes Fidelity, J.P. Morgan, Goldman Sachs, Morgan Stanley, NYSE and NASDAQ market makers, hedge funds and money managers. He now teaches the public the same secret strategies previously reserved only for his institutional clients. His work has been highlighted in The Wall Street Journal, Worth Magazine, Institutional Investor and Barron’s.

He has presented his trading strategies in 20 countries to traders from almost every investment firm on how to apply – and profit from – these methods. He has also lectured at numerous universities. And he was guest speaker at the World Bank and the Federal Reserve.

To get free market updates and trading/investing strategies go to www.candlecharts.com/free-education (note- your contact information is kept strictly confidential)