Forex Trading With Candlesticks
Forex candlesticks are perhaps the single most valuable technical analysis tool that a trader can have in their toolbox. Candlestick charts have been a staple of the art and skill of technical analysis since the 18th century when Japanese rice traders invented them in an effort to spot repetitive patterns in price so as to predict future price movements. Similarly, the forex candlestick has been the backbone of technical analysis for forex currency traders since forex trading first became widely popular. Essentially, candlesticks display the overall thought process of all investors in the forex market for the given period of time the candlestick represents, thus they generate visual signals of investors' beliefs and it is these beliefs that are the engine that moves the forex market.
The greater appeal of forex candlestick charts over simple bar or line charts lies in the fact that they present the same data but with a dramatically dynamic visual interpretation. In essence, forex candle charts make it much easier and clearer to see the change in trader and investor sentiment, this makes candlestick charting the most efficient and profitable form of chart reading. The forex candlestick chart shows the raw price action that occurred as a result of market participants' reaction to economic variables.
Forex candlestick patterns give traders a definable and effective strategy to trade the market with. The primary reason for this is because candlestick charting gives a clear and easy to utilize depiction of the force of price action. The way that forex trading candlestick patterns do this is by having a "body" that shows the distance between the open and the close for the time period the bar represents. The body of a forex candlestick is typically either black or white or two other opposing colors. This easy to interpret visual effect gives you an instant view of who won the daily forex battle; the bulls or the bears. When using simple bar or line charts that do not contain this same contrast of price movement it is much more difficult to interpret forex price action.
Any forex trader looking for an effective yet simple to understand and implement trading strategy can make great use of candlestick pattern trading. By simply learning and then mastering a few core candlestick setups, traders can develop their own profitable forex trading system that will allow them to trade with clarity and conviction. A simple plain vanilla forex candlestick chart can be your primary technical analysis tool, trading in this simple manner will allow you to think clearly and calmly, and this will work to positively influence your trading.
Article Source: http://EzineArticles.com/5229117