Forex candle strategies are charts that are most commonly used by the Forex retail traders and investors. Other types of charts used include but are not limited to line graphs (charts), bar charts and pie charts, to mention but a few. Although these charts are used as a pictorial representation data, they don’t really tell the story about the past price actions like the Forex candlestick pattern does.
When a technical analysis of Forex trading analysis is required based on the decisions for the future price action, the Forex candle strategies comes in handy. For several traders, they are the best types of charts to explain data since they work perfectly well in both volatile and non-volatile times.
Forex candle strategies deals with the price movement/action for a certain period of time, say, from as little as 1 minute to over a week or a month. The body of the candlestick is usually taken as the price difference existing between the opening and closing time. The two lines occurring at each side are known as the shadow or wicks and they display the highest and lowest points of price for that particular period of time.
Forex traders usually make use of the Forex candle strategies to carry out a technical analysis to build ideas for future trades. They also use it for strategizing the outlook of their future trade in the current market. Since the pattern shows the best possible and exit points in the market, they can be used to effectively calculate when to enter into the market and when to leave it. The shape of the candle pattern gives a clear representation of what is happening to the price.
BENEFITS OF USING FOREX CANDLE STRATEGIES
1. The candlestick chart, unlike the other types of charts, gives a clear pictorial story of what is happening to the price in the market.
2. It does not just display data; it gives a story about it past, present and future values.
3. It can be used to identify the various entry and exit points into the market, hence, giving the trader, the ability to know the best time for investing into the market and when to possibly leave it.
4. It also gives the trader a clear indication of the forces controlling the entire market.
TYPES OF CANDLESTICK PATTERNS
1. The doji candlestick pattern: in this pattern, the price opens and closes almost at the same level after having been traded on both sides. While buyers and sellers have a possibility of pushing the prices higher or lower, it finally ends at the starting points.
2. Pin or reverse pins: in this pattern, the price trades below the opening level and end up at the same level by the time of closing the period. In this type of pattern, the buyers are matching the number of sellers.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.