Not all candle patterns are equal
In this video:
00:32 – Why are the candles not making me money?
01:10 – Understanding technical analysis to help your trading
01:55 – Taking the high probability trade setups
02:24 – What are we looking for?
02:55 – Further in-depth analysis
03:54 – The extras we look for and teach our traders to do
04:50 – Trading from the right hand side of the chart is when you make money from trading
05:30 – Moving house and Cyber Monday sale
06:25 – Register your interest in the Cyber Monday sale
Not all candle patterns are equal. There's a big difference between what works and what doesn't work. Let's talk about that and more right now.
Hey forex traders, it's Andrew Mitchem here, at the Forex Trading Coach with video and podcast number 344.
I want to talk about candle patterns and how I can help you to select the best patterns.
Why are the candles not making me money?
You see, I've received an email just this week from a guy who said, “Hey, Andrew, done lots of research online. I've been looking everywhere. I understand candle patterns. There's 12 that I've identified. I spent a lot of time at my charts looking at them, taking trades off them, but the problem is I'm still not making any money. Can you help me and identify what my issue is?” Now, when I delved further into this, I realised that this guy six months ago started looking at candle patterns and he spent a lot of time looking at YouTube videos and just looking at sites online and forum sites, et cetera.
Understanding technical analysis to help your trading
He had done a lot of research in defining these 12 patterns, the problem is that not all candle patterns are equal. You need to understand that, and you need to understand a lot more information about technical trading rather than just saying, “Oh, here's a pin bar, or here's an engulfing candle, and I'm just going to trade it because it's a pin bar or an engulfing candle.” You cannot do that. That will not make you money. You can go and look at your charts. Have a look at the chart behind me, there's engulfing candles and pin bars and hanging man and all those different patterns that you hear about and candles that you hear about all over your charts. The problem is you can't just take every single one of them. It's just not going to work. There's a lot more research, a lot more finesse that you need to do into understanding them and what makes a good candle pattern.
Taking the high probability trade setups
So for me, it's all about getting high probability trade setting up. I want to take less trades, but high probability. What I'm grading is like A and A plus quality setups. Less is more, but it's all about identifying what it is about that candle, where it occurs within the chart, what part of the chart it's in, what the price is doing. It makes it from just an engulfing candle to yes, this is a high quality setup.
What are we looking for?
So it's all about things like looking at the previous trend, has there been a trend line break? Has there been previous exhaustion? What level has the candle bounced at? If it's a sell trade, has it bounced at a resistance level? Is that a random number or a pivot point? Is it a previous high? It could be all sorts of manner of things that we're looking for, but it's identifying that and seeing why that candle has bounced at that level.
Further in-depth analysis
You identify what potentially could be a good setup, and then it's a case of, well, looking into that further, do I have stop loss protection? Am I just going to place my stop loss higher the candle or a fib level. But if you have things such as like round numbers in the way or previous highs or the pivot point or the middle Bollinger Band or things like that, things in the way of that candle. So if you're taking a sell trade, if the price does retrace, which quite often it will do, is it going to then not go and hit your stop loss? So it's understanding, do you have that in your favour? Exactly the same, but with the profit target. You're looking for a sell trade, and you're looking for the price to head down.
What is in the way of your profit target? Hopefully nothing or not very much, but you can't put your profit target if it's obviously below the last swing low or below the pivot point or below a round number, things like that. You want to do yourself a favour and give yourself a high probability chance of success.
The extras we look for and teach our traders to do
So when I'm analysing and when I teach people to analyse candle shapes, candle patterns, it's not just about, “Here's an engulfing bar, take a sell trade.” There's a lot more that goes into it than that to give yourself a good, high quality chance of that being a good profitable trade. We add strength and weakness analysis into it, so we're trading with the likely daily or likely weekly direction depending on the timeframe chart that we're trading. All those extra things go into it.
And that's something that, realistically, a lot of screenshots and a lot of historical videos cannot teach you, and that's why we have things in real time. That's why we publish our daily trades every day on our membership site, which by the way have been profitable every single year since 2010. It's why we have our forum site. It's why we have live weekly webinars as well, where we trade in front of our clients. It's all about understanding things in real time, and that's a big part of trading.
Trading from the right hand side of the chart is when you make money from trading
Trading from the right hand side of the chart is what is the difference between making money and not hindsight trading, economists, screenshots. All that type of stuff might look very pretty, might look very impressive, but quite honestly, most of it is a waste of time. You have to be able to trade from the right hand side of the chart, see the trade, understand that yes, this is a good quality set up according to what our rules are and actually take the trade, and that's the difference.
You can't make money out of what happened months ago or even several hours ago by looking at hindsight. You can only make money from taking a trade right now. Is this a good trade? Yes or no? So I hope that helps.
Moving house and Cyber Monday sale
Now leading on from that, I've had a number of people ask me if I'm going to be doing an end of year sale, Christmas sale, New Year sale, and I'm not, because I'm moving house in a few weeks from now. I'm moving from the North Island to the South Island of New Zealand, big, big move. A lot's going on. But what I will do is I'm going to be holding a Cyber Monday Sale, Monday the 2nd of December. It could be Tuesday, the 3rd of December, depending on where you live in the world. It's going to be 12 hours only. I will put a link below this video or somewhere on this page so you can register your interest.
It's going to be my only sale at the end of the year, no Christmas sale or anything like that for me this year. It's a 12 hour sale, Cyber Monday. Take advantage of it if you'd like to join us, and come and learn how to trade these candle patterns effectively and profitably. Low risk, high reward to risk trades, what you need to do in order to make money out of the forex market in real time.
Register your interest in the Cyber Monday sale
So once again, register your interest. It's going to be a great opportunity for you to join us. We've been around for nearly 11 years. There's a lot of proof, a lot of history, a lot of different market conditions help thousands and thousands of traders from 58 countries at the last count, all around the world, all different levels of trading, knowledge and experience, different time zones, all those type of things. We've helped so many thousands of traders.
If you'd like to join us, it'd be great to have you on board, register your details, and I'll send you more information once that is ready. So make a note on your calendar, Monday, the 2nd of December it's Cyber Monday for our 2019, the only sale this year for me. So look forward to helping you and look forward to also bringing in more trading tips and information this time next week. Bye for now.