Understanding Candlestick Chart Patterns

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Best Candlestick PDF Guide – Banker’s Favorite Fx Pattern

Best Candlestick PDF Guide – Banker’s Favorite Fx Pattern

The best candlestick PDF guide will teach you how to read a candlestick chart and what each candle is telling you. Candlestick trading is the most common and easiest form of trading to understand. The candlestick patterns strategy outlined in this guide will reveal to you the secrets of how bankers trade the Fx market.

If this is your first time on our website, our team at Trading Strategy Guides welcomes you. Make sure you hit the subscribe button, so you get your Free Trading Strategy every week directly into your email box.

When you first start out on your trading journey, you will be bombarded left and right with new concepts. It can be daunting and confusing to assimilate everything. This trading tutorial will show you how to read candlestick charts for beginners.

We’re going to explain candlesticks in a way that you will remember. If you’re a more advanced trader, this candlestick PDF guide is for you as well. We’re going to share with you a powerful candlestick pattern strategy.

Stay tuned, because we’re going to show you some of the best candlestick patterns that only institutional traders know about.

Let’s first start with the basics of candlestick trading and how to properly read candlestick charts.

Understanding Candlestick Charts for Beginners

If you strip away everything you have on your charts, you’re left with a simple candlestick chart. What you’re seeing on the chart below is the raw price data that in Forex jargon is also referred to as the naked price action chart.

Note #1: Unlike Renko charts, which we have covered in our previous chart trading guide, candlestick charts incorporate the time element.

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The most important pieces of information you need as a trader are current and historical prices. The candlestick price will tell you exactly what the price is doing at any given time. The candlestick price chart also gives you a unique insight into the market sentiment.

A candlestick price chart is made up of lots of individual candles that have different shapes, which form different candlestick patterns.

  • Bullish candlestick – These are green candles and it shows that that the price has increased over the selected time period. In other words, the closing price is higher than the opening price.
  • Bearish candlestick – These are red candles and it shows that the price has decreased over the selected time period. In other words, the closing price is lower than the opening price.
  • Neutral candlesticks – These are candles without a body and the opening price is equal to the closing price.

Besides the opening and the closing price, the candlestick chart also gives us information about the highest and lowest price during the time period selected.

The bars above and below the body are called shadows. In Forex jargon, they are also called ‘wicks’ or ‘tails’.

In technical analysis, the Japanese candlesticks can display different types of price formation that are at the base of many candlestick patterns strategy. If you want to explore the most popular chart patterns, please check out our step-by-step trading guide here: Chart Pattern Trading Strategy Step-by-Step Guide.

For now, we’re going to focus on the best candlestick patterns that many banks use against retail traders.

Candlestick Patterns Strategy

If you want to get the most out of what the candlesticks are showing, let’s explore the best candlestick patterns you can ever use. We’re going to show you some candlestick patterns explained with examples. If you understand the psychology behind what the candlesticks are showing, it can make your life as a trader a lot easier.

Not only that, you get a possible insight into the battle between the buyers and sellers. Chart patterns can also be used to trigger your trades.

In this best candlestick PDF guide, we’re going to reveal a secret candlestick pattern used among bank traders. This forex candlestick pattern we’re talking about is the ORB Nr4 pattern developed by hedge fund manager Toby Crabel.

Toby Crable is probably one of the less known profitable traders. Even though in 2005, Toby Crabel was described by the Financial Time as “the most well-known trader on the counter-trend side,” he still remains an unknown name in the retail industry.

The reason why we mention Toby Crabel work is because he is the father of the ORB pattern, aka the Opening Range Breakout pattern. The ORB pattern is regarded as being the most powerful trading tools in the last 25 years.

This powerful trading technique has helped legendary guru trader Larry Williams to turn $10,000 into $1 million in less than a year.

Step #1 How to Identify the ORB Nr4

The ORB pattern is defined as a trade taken at a fixed value of the opening range.

The Opening Range Breakout trade is more effective if taken after an inside day that has its daily range smaller than the previous 3 days. This is what the Nr4 stands for. You have three candles followed by another candle, with a daily range that’s narrower than the previous three days.

Note #2: The 4th day doesn’t necessarily need to be an inside day, it only needs to have its daily range smaller than the previous 3 days. However, inside days tend to produce higher success rates.

Here is how an actual ORB Nr4 pattern looks like on a Forex candlestick chart:

The ORB Nr4 pattern can be one of the best candlestick patterns for intraday trading too. You simply have to apply the same rules outlined in this guide on your favorite intraday chart

What if we told you that 40% of the time, the first trading hour can tell you the high and low of the day. Our candlestick patterns strategy incorporates this price behavior so you can better manage your risk and set your targets.

Basically, you can become a proficient trader.

Like with all our trading strategies, we’re going to give you first the trading rules by going through an actual live trade example that uses the best candlestick patterns mentioned through this PDF guide.

Step #2: Identify the best candlestick patterns and mark the high and the low of the 4th candle

When you search for the ORB Nr4 candlestick chart pattern keep in mind two things:

  • The Daily range of the 4th candle needs to be narrow and smaller than the previous 3 candles.
  • The 4th candle price range also needs to be inside the candle number 3.

The ORB Nr4 pattern in the chart above is a bullish candlestick pattern because it leads to a bullish move.

Narrow daily trading ranges suggest contraction. And contraction always leads to expansion. This is kind of a general rule because the markets do move from periods of contractions to periods of expansion.

This is the reason why this ORB Nr4 candlestick pattern is so powerful.

Step #3: Switch to 1h TF and Buy if we break the high, Sell if we break the low of the Nr4 candle.

Our trade is taken the next day after the Nr4 pattern showed up. In order to have a clear view of the short-term price action, we need to switch our focus to the one-hour time frame.

Note #3: Only Buy or Sell if the breakout happens during the first 5 hours of the new trading day.

We use the Opening Range Breakout technique to time the market and have an effective trade entry.

Trades based on the ORB – Nr4 candlestick chart pattern will show you a profit instantly.

Now, if the trade is not showing you a profit right away, then your trade becomes more vulnerable. As a general rule, if after the first trading hour your trade is not in the green, you can safely close the trade at the market.

Of course, you can only do that if your stop loss hasn’t been triggered in the meantime.

Now, let’s outline where to place our protective stop loss and where to exit our profitable trade.

Step #4: Place SL below NR4 day low, Take profit using a trailing SL below each 1h candle low

For buy trades, hide your stop loss below Nr4 day low. The ORB – Nr4 pattern tends to precede strong trend day activity, so your stop loss should be rarely hit.

Our take profit strategy is fairly easy and it’s slightly modified from the original strategy highlighted in the “Day Trading with Short Term Price Patterns and Opening Range Breakout” book written by Toby Crabel.

Even though the ORB nr4 pattern tends to lead to trend trading days, we’re more conservative and want to quickly take profits. We would rather trail our SL below each 1h candle low and wait for the market to reverse to take profits.

Conclusion – Best Candlestick Patterns

The best candlestick PDF guide is a result of a series of research that leads us to find tradable market tendencies The price of any market follows some mechanical laws that can be observed through candlestick chart patterns. Having some definable rules of entry based on candlestick patterns can really help the aspiring trader.

Some of the best candlestick patterns are more predictable once you have a framework developed around these chart patterns. As a trader, your obligations are to apply these trading concepts inside your own understanding of the market. Be sure to read about our shooting star candle guide!

If you manage to combine the two things, you can develop a candlestick pattern strategy.

Thank you for reading!

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Our free candlesticks charts e-book walks you through step by step on how to trade the most popular patterns with proper entries and stop levels. We’ve also included our custom-made desktop backgroun ds.

Free Candlesticks Charts E-Book

Learning how to read candlesticks charts allows traders to gauge the emotions of traders all over the world. Therefore, the importance of learning how to read candle charts can’t be stressed enough. As a result, the Bullish Bears Team felt it was necessary to create a Candlesticks Charts E-Book and two free candlesticks courses.

​ We created custom-made desktop wallpaper backgrounds that we’ve included for you as well and hope that you enjoy them! Register below and receive your free e-book, wallpapers and gain access to our 2 candlesticks courses.

How Do You Read Candlesticks Charts for Beginners?

  1. Our free e-book and courses will teach you how to read candlesticks chart for beginners but here are some tips:
  2. Understand the differences between bullish candlesticks and bearish candlesticks (bullish = long) (bearish = short)
  3. Learn how to draw horizontal support and resistance levels as well as trend lines, which are formed on candlesticks charts
  4. Learn all of the major patterns but focus in on the simple ones like bull flags, bear flags, doji’s, and spinning tops
  5. Develop a trading strategy based on the patterns that you feel most comfortable trading

Read More

1. Access to Our Free Courses

We are also going to give you login access to our two candlesticks courses. As a result, will give you video tutorials on all of the major candlesticks charts, as well as access to our $3,000+ worth of free stock market courses. (keep an eye out for our welcome email with simple instructions)

Our welcome email will have the link to download our free e-book, as well as our custom-made desktop wallpaper backgrounds. Also, we will give you a login and password to be able to access all of our trading courses. All, you need to do is login to our website and you will have access to our free courses right away.

If for some reason you don’t receive our welcome email then please check your junk/spam email folder. Make sure to white list our email address as well. If you have any issues logging in our downloading our e-Book then feel free to email us at [email protected]

2. How to Read Candlestick Charts

We encourage you to really take your time and don’t rush with our courses. We include a lot of in depth content to help you get started trading. Trading courses such as a basic stock trading course, day trading course, swing trading course, options course, two candlesticks courses, and two courses on how to setup ThinkorSwim and Interactive Brokers platforms.

We encourage our members to study candle charts from our courses and ebook as well as practice what they are learning real-time in our trade rooms. Interact with other community members, ask questions, and then practice following what we teach in our trade rooms in a virtual account. Practice paper trading for a few months first before trading with real money. Take our stock patterns courses! This is an important step in the process.

The problem with most new traders is that they rush the process of becoming a trader and try to skip over the process of learning candlestick charts and they end up blowing up their brokerage accounts because they don’t know what they are doing.

Candles give you a tremendous leg up on getting a good entry and exit on your trades. They are what most experienced traders rely on when trading, which is great encouragement because we are all playing with the same deck of cards. There CAN be a level playing field if you get the knowledge.

The more that you study and start understanding candle charts, the odds become more in your favor that you’re going to become a successful trader.

3. Understanding Candlestick Charts

Treat trading seriously and not as a hobby if you want to become successful long term. It’s important to immerse yourself into the trading world if you want to make it as a trader. Treat it like you would a job or starting a new career. Go easy on yourself and don’t get frustrated if it takes you awhile to learn how to read candle charts. That’s a totally normal process.

It takes looking at hundreds of charts over the case of several months for understanding candlestick charts to make sense. Don’t worry though. After enough studying and looking at a lot of charts, the patterns will start to jump out at you and make sense.

That’s why it’s important to download our wallpapers, so the patterns will be in your subconscious, and after enough time, they will eventually enter into your brain consciously and make sense. Reading candlestick charts begins to make more sense the more that you look at the charts.

It’s like anything in life or starting a new career or profession. It takes time to learn a new skill. When starting a new education or career it many of times takes a year or so to get the hang of things.

We’ve invested a lot of time into creating useful candlestick resources that will help the patterns become easier to understand. We suggest swapping out our wallpapers every couple of months or so to keep the patterns fresh in your mind and so you’ll learn other ones as well.

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