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 of 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 humanís 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, Iím 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

Applicability of Stock Market Products and Services

This article provokes your thoughts on the applicability of stock market advice, products and services as it relates to your stock market trading (success).

Trading Gold Stocks in 2009

This article examines various elements of importance for trading gold stocks.

From Long-Term Investing to Short-Term Trading Ė How to Profit on the Stock Price Rise and Drop

This article presents the notion of migrating from a long-term buy-and-hold investing strategy to a short-term profit-making trading style, capitalizing on the rise and drop of the stock price (following the trend and profiting on the cycles).

Stock Trading Discipline

This article examines tips for stock trading discipline which when applied stringently as rules will lead to stock trading success.

Trading with a Trend Following System

This article provides insights into the thought process of a person engaged in learning about stock market trading.

Visit igtsoft.com for
your photography needs.

Bear Peak



Find out what in life you don't do well - and then don't do that thing.