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Candlesticks: The trading indicators of the stock market

The ones who are quite familiar with the trading system and interface are quite familiar with the charts and graphs used for the trade representation of a stock. There are several charts and graphs that are used to represent the previous, current, and expected positions of the stocks in the market that are trading currently. As we know there are various kinds of traders in the market viz. intraday, swing, scalp, and normal traders. Not all traders use the same chart or graph always. Intraday traders usually employ candlestick pattern charts for their trading purposes. There are advantages associated with the candlesticks chart for daily traders which are the main reason for the vast employment of candlestick charts by intraday traders. Also, there are certain advantages associated with it which gives traders all the more reasons to employ the use of these candlesticks vociferously.

  • Simple: Understanding candlestick’s patterns or graphs is a fairly easy task. These graphs and charts are not very difficult to deal with. There are 2 colours in a candlestick red and green. Not getting into technicalities, we can say that green denotes the market being bullish which means the market is likely to jump up whereas red denotes that market being bearish which signifies the possibility of the market going down.
  • Loss saving: One main reason for the vast employability of the candlestick pattern among intraday traders is its unique ability to predict the turning point of a stock. By predicting the turning it makes the traders of any turnaround in the stock price which in turn saves the investors from a sumptuous amount of losses. As intraday traders always need to keep a sharp eye on their positions and tracking their entire portfolio at once and maintaining a sharp eye isn’t practical, so candlesticks come in handy here.
  • Profitability: Candlesticks not only save traders from unexpected losses but also give them significant profit-making opportunities. The study of the complete structure of candlesticks provides the trader with enough information to make somewhat significant profits if not exorbitant. The dilemma of having stocks held for the end of the day in expectation of high returns and finally selling them at a loss can, situations like these can be comfortably avoided with the use of candlesticks.

Candlesticks vs other options:

Performing a fair comparison between different charts and graphs available in the market we see the only competitors that candlestick has are bar graphs, mountain, etc. Albeit these charts and graphs are quite useful, but the instinct of a daily trader will always be to go with a candlestick, it is not about performance but suitability and one’s choice.

Conclusion:

Studying the facts and details regarding the candlestick pattern we come to realize its massive employment in the intraday trading industry. These are the first choice for intraday traders and the preference is justified too since we have already seen the advantages.

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