Candlestick pattern trading has always been a profitable trading strategy in the CFD market. The majority of professional traders are using the price action confirmation signals to take their trades. Being a new trader, you might be thinking that you know a lot about the market. After trading the market for a few weeks, you will realize, you have a lot to learn. To become good at trading, you must have strong knowledge about the candlestick pattern trading method.
There are hundreds of candlestick patterns you can follow in the retail trading industry. To ease the overall learning process, we are now going to discuss the top four prominent candlestick patterns used in the trading profession. Without any delay let’s get into the details.
1. Pin bar pattern
The pin bar pattern acts as a reversal pattern. Some of the advanced traders often use the pin bar pattern to identify the key reversal point in the market. If you spot the pin bar pattern at the critical support level, you should be looking for the buying signal. On the contrary, if you spot this candlestick pattern at the major resistance level, try to sell the asset. A pin bar is formed with the combination of a small body and a long wick. The long wick or shadow of the candle signifies the rejection of an important level. Look for this pattern at the important level and you will be able to execute high-quality trades.
2. The doji pattern
Smart traders always systematically use the doji pattern. Explore the different forms of doji and see how it gives a decent signal to retail traders. Usually, the doji pattern tells us that something is wrong with the trend. In most cases, the price reverses the direction right after the formation of the doji patterns. If you spot the doji pattern in the lower time frame, you should not take any trades. The trade signals formed in the lower time frame are not that accurate and it often confuses retail traders to a great extent. For the safety of the trading capital, traders should always look for the doji pattern in the higher time frame.
3. The engulfing pattern
The engulfing pattern is widely used by professional traders. This pattern is formed with the combination of two candles. The first candle is formed as a part of the existing trend. The second candle usually engulfs the first candle. If the second candle is bearish, you should be expecting a strong downfall in the price. On the other hand, if the second candle is bullish, you should be expecting a strong rally in the price. Based on the pattern formation, retail traders can take their trades in a much better way and make significant progress in their careers.
4. The triple candlestick pattern
Advanced traders use the triple candlestick patterns to trade the important levels. Being new to this industry, you might not understand how triple candlestick patterns work. In general, the triple candlestick pattern is used to find the major reversals in the market. For instance, you can find the bullish reversal by using the bullish morning star pattern. Similarly, with the help of the bearish morning star pattern, you can find the bearish candlestick patterns. Once you find these candlestick patterns at the important trading zone, you can trade the market with strong confidence.
The Candlestick pattern trading method has always been a profitable approach for retail traders. If you truly believe you can beat the market, you should master a price action trading strategy. After learning the art of candlestick patterns, you will realize no one can beat the market. The only way to make a consistent profit in this market is to follow existing trends. Work hard and systematically learn the trend trading process. Once you become good at that, you should be able to earn consistent profit with ease.