List for Successful Engulfing White Entry Candlesticks
Often Beginner Traders learn a few candlestick patterns and rush out to trade, believing this is all they need to be successful trading stocks. Then they are often surprised to see the stock retrace and lose money.Learning to find candlestick patterns that are ideal and will move in a strong run or trend that will provide an excellent, consistent Return on Investment for a trade requires more than just the candlestick pattern identification.
Here is a list of a few requirements for
successfully trading Engulfing White candlestick patterns:
Where the candlestick pattern forms is crucial as to whether the stock will run up as expected or not. Every entry signal has ideal set ups. Not every time that a particular candlestick pattern forms is the stock going to run up.
Beginners go to watch the Candlestick Patterns Webinar to learn which patterns work all the time, and how many patterns you really need to learn.
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2. Indicators
Indicators that
reveal who is in control of price and that the energy behind the candlestick
pattern, in this case an Engulfing White is sufficient to move
price up for good profits.
Experienced Traders
go to watch the Stock Leading Indicators Webinar. Learn the 5 Essential Stock
Indicators, Price vs Quantity, and indicators for finding Dark Pools & High
Frequency Traders which cause huge gaps and runs.
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3. Risk versus Reward
This must be
calculated. Often when a stock does not run as expected, the reason is that the
Risk versus Reward point gains was too low for a good entry.
4. Support and
Resistance
Support and
Resistance factor into Risk versus Reward. If Support is far below the
Engulfing White Candlestick Pattern, then risk increases and the probability
that the stock will not gain sufficient points is higher. Resistance which is
too close cuts down the number of points possible to gain in a run, and warns
that the Engulfing White Candlestick has consumed most of the run gain
potential.
5. Market Conditions
Many times traders
are accidentally trading against the Bias and Sentiment of the overall Stock
Market. This happens often when they are following the major Indexes, rather
than Market Condition Analysis which is all inclusive of every stock traded
that day.
Experienced Traders
go to watch the Technical Analysis Webinar with the 6 primary market
conditions, percentage of time each occurs, with how each impacts trading and
investing.
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Below is an example
of how an Engulfing White Candlestick Pattern may look like a
great entry.
See the candlestick
just rises above Resistance, indicated by the red line. However even though the
next day is also a white candle this Engulfing White pattern fails to run.
As can be seen in the
following days it would cause a small loss for most traders who used this entry
signal, because of Resistance in the past.
The problem with this
entry was that the stock started to run up eight days prior to its formation.
In addition, the Engulfing White moving only just slightly above a strong
Resistance level is another problem.
The combination of a
run underway, easing just only slightly above the high of Resistance, AND the
consuming of the potential point gain by the Engulfing White all together
indicated this was not a good entry.
The gap down was
triggered Professional Trader profit taking.
Summary
It takes more than an
Engulfing White Candlestick Pattern or an indicator crossover to be
highly and consistently successful in the stock market.
If you have learned
candlestick patterns or indicators that is a great start. However there is much
more you need to learn in order to trade like a professional, and thus earn the
high income of a professional.
Beginners to the Basics of the Stock Market 12 Webinar Lessons to get started trading and investing.
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Experienced Traders
go to the Learning Center Libraries for TC2000, StockCharts.com, and MetaStock
Users.
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Trade Wisely,
Martha
Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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