Recognizing and Interpreting Candlestick Patterns
There are many candlestick patterns in the full spectrum of the Japanese candlesticks literature. It has been written that there are only about a dozen candlestick patterns that a trader has to learn about in terms recognizing and interpreting candlesticks and how to apply that analysis to make trading decisions. I agree with that assessment given the need for the human to do the recognition and interpretation.
My preference is to use software to perform candlestick technical analysis. That way, I can focus more time on other matters of trading such as keeping track of company news and events, and monitoring the pulse of not only the company (and stock) but also the industry that the company is in.
As it would be ludicrous to have humans plot the charts manually, I feel that doing candlestick technical analysis is best left to computer software. In this age of technology, there is no reason to resort to human recognition of candlestick patterns. On the other hand, the human’s role is ultimately to look at the technical analysis results presented by the software and make the final judgement as it pertains to actual trading decisions.
Having said that, there are those who go one step further and say that trading should be totally automated without any human emotional and psychological interference. In theory that sounds good. In practice, I’m not sure such systems yet exist for the retail trader. That day may come sooner than we think.
In the meantime, I think using software to do the recognition and interpretation of candlestick patterns is the sensible thing to do. The application of the candlestick technical analysis results is left to human judgement. The trader decides whether or not to place the trade once presented with the option to do so as indicated by candlestick technical analysis.
More you might like
Trading Success with Candlestick Technical Analysis
This article explains how to succeed in trading using candlestick technical analysis.
Emotion Dominated Stock Trading
This article examines the domination of emotions over stock trading actions. Even if you know what to do, your inability to suppress emotions will lead to bad trading results.
Stock Trading Tug-of-War between Emotions and Technical Analysis
This article examines the continuing dilemma facing the stock trader: the tug-of-war between emotions and reasoning through technical analysis.
Trading Research in Motion post Q1/2009
This article covers my observations on the trading of Research in Motion. With its huge rise leading up to and following the latest earnings announcement, where is the stock headed in the near term?
Comparing Day Trading with Other Trading Timeframes (March/2009)
This article covers my day trading experiences in the month of March/2009. Different trading timeframes are compared.
