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The Responsible Trader
One Candlestick Pattern


In this Section, we are going to learn one candlestick pattern only. This will serve as our foundation for learning two, three and more complex candlestick patterns later when we move on to Section 8 – Further Charting.

In Responsible Trading, we classify candlesticks into three General Categories: Marubozus, Spinning Tops and the Dojis. Let us discuss them one by one.

Marubozu


Marubozus are the Full-bodied or Fat types in the family of candlesticks. Marubozu in Japanese means shaven head and shaven bottom. Just visualize them as Sumo wrestlers for easy recall.

Candlesticks with real body and without or very little shadows or wicks are called Marubozu. This pattern is the strongest expression of market sentiment – either Bullish or Bearish.

The closing price determines the color of the candle. If the close is higher than the open, then the color is white or green. If the close is lower than the open, the color is black or red. Both are shown in Figure 13.

[Image: Figure%2013_zpscptk1r4h.png]

Why do we say strongest expression of market sentiment? Each candle represents the drama that happened during the trading day. Let us look first at the candle on the left the Bullish Marubozu and examine what happened using the combination formula we saw in Figure 12.

We can see that the line representing the trading day does not appear at all. This means that when the market opened, the Bulls went on a buying spree all the way to the end of the trading day. All effort of the Bears to lower the price were negated by the Bulls by buying everything that the Bears offered. This is shown in Figure 14.

[Image: Figure%2014_zpslpkfp7kc.png]

The opposite happened as shown by the Bearish Marubozu in Figure 15. Again we can see that the line representing the trading day does not appear at all. This means that when the market opened, the Bears went on a selling spree all the way to the end of the trading day. All effort of the Bulls to raise the price were negated by the Bears by selling everything that the Bulls asked for.

[Image: Figure%2015_zpskjkmmfur.png]


Not all Marubozus look exactly like these. There are times when you will see some Marubozus with a little shadow or wick either on top or at the bottom. As long as the real bodies are longer than their shadows or wicks they are still called Marubozu.


Spinning Tops


Spinning Tops are the Physical Fitness Buff types in the family of Japanese candlesticks. Just visualize them with “Coca Cola” bodies for easy recall.

Candles with real bodies that are shorter than their shadows or wicks are called Spinning Tops. Again, the closing price determines the color of the candle. If the close is higher than the open, then the color is white or green. If the close is lower than the open, the color is black or red. Let us examine both using the same procedure.

Let us take a look at the Bullish Spinning Top shown in Figure 16.

[Image: Figure%2016_zpsvb4v4upj.png]

When the market opened, the Bulls tried to bring the price up as indicated by the High. However the Bears resisted and tried to bring the price down as indicated by the Low. In the end, the Bulls were able to win the struggle by closing the price higher than the opening price.

Let us take a look at the opposite – the Bearish Spinning Top shown in Figure 17.


[Image: Figure%2017_zpsc6gdxss1.png]

When the market opened, the Bears tried to bring the price down as indicated by the Low. However the Bulls resisted and tried to bring the price up as indicated by the High. In the end, the Bears were able to win the struggle by closing the price lower than the opening price.

If the Marubozu represents an overwhelming victory by the Bulls or the Bears, the Spinning Top represents a bitter struggle between the two with either the Bulls or the Bears finally winning the battle.

The last set of one candlestick pattern we are going study is the opposite of the two.

Let me Teach You How to Doji


Let me teach you how Dojis are formed. Dojis are the Slim types in the family of Japanese candlesticks. Just visualize them as Fashion Models with body-type like hangers for easy recall.

A Doji is a candlestick with no real body and it represents indecision or weakening of sentiment on the part of both the Bulls and the Bears. In chess, this is what we call stalemate with neither side winning the battle.

Let us begin our discussion of Dojis with the basic of them all -- the Four-Price Doji shown in Figure 18, using the same procedure.


[Image: Figure%2018_zpsbdwjk6r0.png]

As you can see, the Four-Price Doji is the height of indecision on the part of the Bulls and the Bears. Neither side wants to buy or sell at a price higher than the opening price so price closed at the same level as the opening price.

Let us conclude our study of the Dojis by looking at Figure 19. Actually, there are four of them. I will briefly discuss them but I will no longer discuss using our procedure. By this time, I think you already know this by heart.

[Image: Figure%2019_zpskqlwbbon.png]

The Cross Doji is similar to the Four-Price Doji except that price traded in a trading range. Although the Bulls tried to buy the price up and the Bears tried to sell the price down, the day ended with the opening and the closing prices remaining the same.

The Dragonfly Doji is a variation of the Cross Doji. The Bulls tried to buy the price up and the Bears tried to sell the price down. Although the opening and closing prices remain the same, this is considered Bullish since the Bulls were able to close the price at the upper part of the trading range.

The Gravestone Doji is also a variation of the Cross Doji. This time The Bears tried to sell the price down while the Bulls tried to buy the price up. Although the opening and closing prices remain the same, this is considered Bearish since the Bears were able to close the price at the Lower part of the trading range.

Dojis sometimes provide good clues and we always monitor the candlesticks that follow and come after them whether they result in trend reversal or continuation.


Next: Linear (Arithmetic) vs. Logarithmic Price Scale
















RESPONSIBLE TRADING, my Advocacy, means Practicing Self Discipline, Continuously Educating Yourself, Protecting your Capital at all Times and Taking Full Responsibility for your Trading Results.

MY TRADING PHILOSOPHY:
TRADING without FEAR, TRADING without GREED. GREED causes exposure to DANGER. FEAR causes missed OPPORTUNITIES.

MY TRADING RULES:
1. PROTECT YOUR CAPITAL at ALL TIMES. 2. TRADE to TRADE WELL not only for MONEY.
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Ninjatrader919 how can I download your lessons? Kindly give me the links. Thanks.
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(06-27-2017, 06:27 PM)elmer102 Wrote: Ninjatrader919 how can I download your lessons? Kindly give me the links. Thanks.

Hi elmer102,

Welcome to Stockmarketpilipinas. Before anything else, please do the following:

1. Start with your initial post here:
http://www.stockmarketpilipinas.com/thread-32.html

2. Next make your small introduction here:
http://www.stockmarketpilipinas.com/thread-34.html

Please do not forget to put an Avatar since this is a requirement.

RESPONSIBLE TRADING, my Advocacy, means Practicing Self Discipline, Continuously Educating Yourself, Protecting your Capital at all Times and Taking Full Responsibility for your Trading Results.

MY TRADING PHILOSOPHY:
TRADING without FEAR, TRADING without GREED. GREED causes exposure to DANGER. FEAR causes missed OPPORTUNITIES.

MY TRADING RULES:
1. PROTECT YOUR CAPITAL at ALL TIMES. 2. TRADE to TRADE WELL not only for MONEY.
Reply
Hi elmer102,

After complying with the instructions, just copy the lessons in my thread that you want to learn.

For further trading lessons, you can visit my website:
http://www.theresponsibletrader.com

or my YouTube Channel:
http://www.youtube.com/theresponsibletrader

I wish you the best in your learning journey and good luck on all your trades.

RESPONSIBLE TRADING, my Advocacy, means Practicing Self Discipline, Continuously Educating Yourself, Protecting your Capital at all Times and Taking Full Responsibility for your Trading Results.

MY TRADING PHILOSOPHY:
TRADING without FEAR, TRADING without GREED. GREED causes exposure to DANGER. FEAR causes missed OPPORTUNITIES.

MY TRADING RULES:
1. PROTECT YOUR CAPITAL at ALL TIMES. 2. TRADE to TRADE WELL not only for MONEY.
Reply
...unsticky muna ulit RT Tongue
Facebook Link to our 2017 SMP Charity Pictures https://www.facebook.com/SMPBack2School2017/
Thanks To ALL Donors, Bawiin Naman Natin sa Profits
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