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CANDLESTICK PATTERNS

Candlestick patterns are specific price formations identified on a candlestick chart. These patterns are useful as a tool for forecasting future price movement and especially as concerns forecasting trend reversals.

 

Introduction to Candlestick Patterns

Candlestick patterns recognition can be made manually or it can be part of an automated process via the use of specialized software.

Candlesticks Formation

A single candlestick includes information such is the high, low, opening and closing price of a particular trading period. Every candlestick includes:

(i) A Body, which reflects the opening and closing price

(ii) The Shadows (or wicks or tails) which reflect the higher and the lower price of the period

-The bullish candlesticks are colored in White or Green

-The Bearish candlesticks are colored in Black or Red.

Basic Candlestick Patterns

There are tens of recognizable candlestick patterns, here are the most important patterns:

  1. Doji (Bullish / Bearish Doji)

  1. Hammer / Hanging Man

  1. Shooting Star / Inverted Hammer

  1. Morning Star / Evening Star

  1. Harami (Bullish / Bearish Harami)

  1. Marubozu (Bullish / Bearish Marubozu)

  1. Three White Soldiers / Three Black Crows

  1. Spinning Top (Bullish / Bearish Spinning Top)

  1. Railway Tracks (Bullish / Bearish Tracks)

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MT4 is a free and an efficient software solution for trading Forex, CFDs and FuturesMetaTrader 4 Tutorial -Essential MT4 Tips and Tricks for Trading Forex Manually

MetaTrader4 from MetaQuotes is by far the most traded platform in the Forex industry. MT4 is a free and an efficient software solution for trading Forex, CFDs, and Futures. MetaTrader4 can meet the requirements of any advanced and professional trader, offering features such is fast order execution, full customization, 1-click-trading, built-in language for developing EAs, historical back-testing, and much more.

 

Mastering the MetaTrader4 Platform

Here are some essential MetaTrader-4 tips and tricks that every Forex trader needs to know.


 

(1) Customize Languages on Metatrader4

It is very easy:

  1. Go to Top-Menu and Select >View
  2. Select > Languages (among tens of different languages)

(2) Adding More Tradable Assets on Metatrader4

If you wish to see the full range of products offered by your broker, then:

  • Press Ctrl-U to reveal all Symbols in a new window
  • Select any Symbol from the list, and then press -Show- (on the Right) for each symbol you wish to add
  • You can also press –Properties- to find useful information about any product
  • The selected Symbol(s) appear now on your Market-Watch Window

(3) Create a Common Template for all Charts

This is a particularly useful feature. Let’s suppose you analyze your future trades by using candlesticks on charts and by applying RSI on M5 and MACD on H1 and H4. You don’t have to repeat these settings on any new chart that you open. You can make a template and automatically apply it to any new chart, here is how:

  • Right-Click on any Price Chart and select >Properties
  • Customize the chart exactly as you want (chart type, colors, etc.)
  • Go to Top Menu, select >Insert, and by selecting >Indicators, add any indicator you wish (you may choose if it will be visualized on any TimeFrame or on specific TimeFrames)
  • After you have customized everything, go to Top-Menu
  • Select >Charts and then select >Template
  • Select >Save Template and save it by giving it any name
  • Afterward, go to any opened chart and again Select >Charts and then select >Template
  • Now select >Load Template, and click on your previously saved template name
  • Your chart preferences and all indicators are automatically imported on the second chart too. Do that in every other chart you wish to customize.

Note: If by accident you have closed a chart you can easily bring it up. Just go to Menu, >File, >Open Deleted, and you can recover it from there.

Create your Own MT4/MT5 Trading Indicators for Free


(4) Go to a Particular Date on MT4 Charts

If you want to go to a particular date easily and fast on a chart, here is what you have to do:

  • Open a Chart
  • Disable the Auto-Scroll function {Menu, >Charts, >Auto-Scroll}
  • Go the left bottom of the chart, where dates begin, and press Left-Click
  • There you can enter any date you want, and place Enter
  • You will move directly to that particular date {Your chart now starts on that date}

In the same field, you can move fast to another chart {from those you have already opened}. Instead of entering a date, simply enter a currency pair symbol (i.e. USDJPY).

In the same field, you can move fast to another chart

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Trading with Oscillators

Oscillators are technical analysis indicators that are bound within a predefined range. This range in general defines if a market or a financial asset is trading in overbought or oversold levels. In contradiction with other indicators, oscillators are presented below the chart area and not within the main price chart area.

Here are the most commonly used oscillators:

  1. Rate of Change (ROC)

  2. Relative Strength Index (RSI)

  3. %R Williams (%R)

  4. Stochastic Oscillator

  5. Momentum Oscillator

  6. Moving Average Convergence Divergence (MACD)

  7. Awesome Oscillator (AO)

  8. DeMarker Indicator

  9. Directional Movement System (DMS)

  10. Gator Oscillator (GO)
  11. Commodity Channel Index (CCI)

 

MT4 Trade Signals Generator

 

(1) Rate of Change (ROC)

◙ Utility: Identifying the Trend

◙ Standard Settings: 21, 63, 125, 250 Periods

The rate of change consist the simplest form of a technical analysis oscillator and can be also usually found as momentum.

The Trading Year Breakout

There are 250 trading days in a single year or 125 trading days per half year. There are trading 63 days per quarter and 21 trading days per month. In general, a trend reversal commences when the shortest timeframe spreads gradually to the other timeframes.

» Rate of Change (ROC)

(2) Relative Strength Index (RSI)

◙ Utility: Identifying Overbought / Oversold Market Levels

◙ Standard Settings: 14 Periods

The Relative Strength Index or RSI is a momentum oscillator that is able to measure the velocity and magnitude of each directional price movements.

» Relative Strength Index (RSI)

(3) %R Larry Williams

◙ Utility: Identifying Overbought / Oversold Market Levels

◙ Standard Settings: 14 Periods

Williams % R is another momentum oscillator as in the case of RSI. Williams % R is widely used for its ability to identify overbought and oversold market levels.

» Williams %R

(4) Stochastic Oscillator

◙ Utility: Evaluating the Trend

◙ Standard Settings: 14 Periods (14,3,3)

The Stochastic Oscillator is a momentum indicator developed by George Lane. The Stochastic Oscillator can measure the momentum and the speed of a price.

» More on Stochastic

(5) Momentum Oscillator

◙ Utility: Identifying the Trend

◙ Standard Settings: 21, 63, 125, 250 Periods

The Momentum oscillator measures the difference between last price and the price of T periods ago.

» Momentum