This story discusses the frequent errors that novice candlestick traders often commit. The author maintains that understanding Japanese candlesticks is the most reliable methodology for successful trading.
Candlestick patterns can be helpful indicators of price movement, but they are not always reliable. The market can often move in the opposite direction of a candlestick pattern, so it is important to wait for confirmation before entering a trade.
A trader who is feeling greedy may hold onto a winning position for too long, hoping to make even more profits. However, if the market reverses, the trader could end up losing all of their gains. Conversely, a trader who is feeling fearful may sell a losing position too early, cutting their losses short. However, if the market then reverses, the trader could miss out on a potential rebound.
Candlestick pattern psychology is not workable in low-volume stocks. This is because candlestick patterns are based on the idea and the behaviour of large groups of traders can be predicted. However, in low-volume stocks, the behaviour of a small number of traders can have a significant impact on the price. As a result, candlestick patterns may not be as reliable in low-volume stocks.
Jumping into complex trading such as futures and options (F&O) is one of the major common mistakes made by beginner candlestick traders from WATCHING VIDEOS on Youtube.
If you are a beginner candlestick trader, it is best to avoid F&O trading until you have gained more experience. Instead, start with swing and intraday trading.
Diversification is the process of spreading your investments across a variety of assets. This helps to reduce risk by ensuring that you are not reliant on any one asset for your returns. By diversifying your investments, you can reduce your risk and protect your capital. This is especially important for beginner traders who are still learning the ropes.