Candlestick Strategies That Work with Stock Scanner Software

Japanese Candlestick Patterns Work with Stock Scanner Software to Lay the Foundation for Solid Online Stock Trading Strategies

Effective online stock trading strategies are built on a comprehensive knowledge of the stock trading system and the trends and patterns that suggest the direction a particular stock or group of stocks is going to take in the future. To obtain that knowledge, an efficient method of analysis that describes the stock’s recent and past behavior is absolutely vital. That’s why many stock traders have chosen to utilize the Japanese candlestick pattern when laying the foundation for their trading practices.

The Japanese candlestick pattern was developed back in the 1600s as a technical way to analyze the price of rice contracts, and utilizes the simple figure of a candle with a wick protruding from both ends laid against a traditional X and Y axis. Simply put, the candlestick represents traders’ reactions to the market at a given time. The tendency of traders to react en masse, and the ease with which candlestick patterns can and should be used with other means of technical analysis, is what makes this form of analysis particularly effective.

The top of the “wick” represents what is known as the upper shadow, the price at which the stock price peaked during the day. Where that wick joins with the “body” of the candle is the opening or closing price, whichever is higher. If the closing price is higher than the open, the “body” of the candle is white; otherwise, it is shaded black. The bottom of the candle meets the bottom wick at the opening or closing price, whichever is lower, and the lowest tip of the wick represents the lower shadow, or lowest price of the stock.
Candlestick patterns focus on the presentation of trends and fluctuations over extended periods of time, condensing a large quantity of information into a relatively small figure. The data one can convey with this simple image over the course of a week could take technical data analysts page upon page of graphs and charts, and investors would spend three times as long trying to identify trends that are easily identifiable with the simple candlestick.

Online stock trading strategies are built on the philosophy that once investors are able to analyze certain bullish and bearish trends when represented on a candlestick pattern they’ll be in a good position to make decisions regarding their trading habits. There are many patterns a candlestick chart can present; however, familiarity with those listed below is sufficient to lay the foundation for a successful trading career.

Common Candlestick Patterns:
• Mat hold
• Rising three methods
• Separating three lines
• Side by side white lines
• Upside gap 3 methods
• Upside Tasuki Gap

It’s important to understand that candlestick patterns should be viewed as a part of a whole rather than an individual method of analysis. There are literally hundreds of factors that play into a trading decision, and investors should consider as many of those factors as possible before making a solid decision. Once their analysis techniques are successfully incorporated, however, investors will have the tools they need for savvy online stock trading strategies and successful trades.

Stock scanning software from MadScan.com works well as an accessory to candlestick pattern tracking because it successfully analyzes elements of online stock trading that wouldn’t otherwise be included. Along with the information you gather on the relationship between open and closing costs, MadScan’s real time stock alerts give you up to the minute information on price fluctuations and make efficient online stock trading easier than ever. Checkout their website for more information www.madscan.com

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