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All too often, I see traders who fail to understand the meaning of a price chart. They look at different types of candlesticks and candlestick patterns in isolation without attaching any meaning to them in terms of trading activity and context.
Inevitably, this type of trader will identify patterns where really there are none and will suffer the consequences – often they then turn into traders who no longer “believe” in patterns.
So I will attempt to demonstrate to you that with appropriate application they do work and that you can incorporate patterns into you methodology.
The Human mind is excellent at pattern recognition. From our earliest hunter-gatherer days where quickly recognizing situations that might put us in mortal danger, to finding a mate, pattern recognition is hard-wired in the form of instinctual drives.
Whilst this might have served us well in our caveman days and perhaps even in other careers today, the trouble is that it’s not always appropriate in financial trading. There’s an endless stream of what on the face of it might look like patterns, but really have very little significance.
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