The Right Candlesticks Confirmation In Day Trading Strategies

When you have a strategy and set of rules for day trading, it is necessary to know the basic rules of the right candlesticks confirmation, which is in fact a signal of your day trading strategy.

If your strategy based on the trendlines, Moving Averages etc. You should know when your day trading strategy generated a valid signal. I noticed that many newbies have the wrong idea about candlesticks confirmation, so I decided to explain the simple basics. If you don’t know the basics of candlesticks confirmation you will probably using an excellent day trading strategy in the end have very bad results, which is essentially your fault.

Rule 1: Always wait for the current candle is closed, after closing the candle we get a true picture of whether our signal is confirmed.

Suppose that our system based on trendlines, we set the chart and look forward to a candle closes above the trendlines so we could get the signal to buy. Candle at one point was above trendlines, any chance that you bought on Level1, not playing by rule 1, price later returned under the trendlines and closed below it. This brings us to another rule.

Rule 2: Shadows are not right signal.

The following example is a candle closed above the trendline, which is the correct signal to buy. Although it would have profited on this example, observe the rule number three.

Rule 3: If a candle closed far above the trendline, it’s not an ideal opportunity for buy, because the next candle is usually returned to sell trend. Opposite for sell.

These are of course rules for the breakout strategy, if you expect strong trendline support, watching the candle closes below the trendline. In the picture below we have two examples sell Candlesticks Confirmation. In both cases, a candle has reached the trendline but closed below, which is an excellent opportunity to sell. After this signal we could archive nice profit.

This technique can be used for all day trading strategies that basically contain a “breakout indicators.

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