The ULTIMATE Guide to Online FOREX

yesterday trading

2007-03-21T19:29:00.000-07:00

GJ was gain more than expected . From 227 within this week moving up to 231.51 yesterday .

last trading 2/3/2007

2007-03-02T19:25:00.000-08:00

my last trading

My last trading 15 Sept 2006

2006-09-15T18:27:00.000-07:00

yesterday ....my trade is " Trade to the News " .... quite nice ... not bad..... usd ....was strong on CPI ... brig eurusd ... touch 1.2636 .... also other pair .. ..

Discipline, Mental Skills and the Psychology of Trading

2006-09-14T20:51:00.000-07:00

Hi there ...new article that i got from best resources .. the experience in trading ..... hope u enjoy it. :)

Are you searching for answers to become a master trader? Or are you still trying to be a profitable trader? Trading is not easy as most people think, why is that out all those who try, over 90% fail?

My trading experience expands 2 decades, and also being a trading mentor I have also interviewed many traders, many of them have struggled to earn any profits after so many years of trading and yet they continue to fund their trading accounts.

Most traders do not realize that successful trading comes from a belief and confidence within oneself. It's an attitude! It's thinking like a winner. It's trading to win, not trading to lose. The fact is, trading, as all of you should know, is a zero sum game. You either are a winner or a loser. Why does a trader let his loss accumulate? Why does a trader snatch a profit and not let it run? When you are wrong, why don’t you admit it? All these answers come from within. It's trading psychology not technical knowledge. For anyone preparing a trading plan, the first thing you must do is to get to know yourself. This may seem silly, but 95% of trading plans that I have seen do not cover this important aspect.

Then the question arises, "why a few win and most don't?"

First, think about this. Every trader has access to the same tools, the same research, the same charts, the same quotes, the same proven trading methods, etc. So, why is it that, with everybody having access to the same stuff, only a few make consistent profits over time?

Well, it’s clear that the common denominator is the PERSON. Yes, YOU!

So, if somebody asked me to list the BIG THREE mental / emotional characteristics that define the majority of successful FOREX traders, I would list:

1. Discipline & Passion

2. Confidence & Courage

3. Patience & Persistence

One could have a great trading methodology and a system, but weak on psychology is likely to fail. Whereas someone with a mediocre trading system, but strong discipline with mental & psychology skills is likely to be on a winning side. One trader I recently interviewed has no clue about Macd, or stochastics or RSIs or Elliott Wave. He has a very simple system of trading the breakout on triangles and trendlines – that’s all he does, and consistently produces over 700 pips profit trading Forex.

He has a simple system, a set of rules, sets achievable and realistic goals – and all he does is follow these simple rules! – No rocket science. Recently one trader told me “I'd read very good books by Elder, Mark Douglas, Toni Turner, Candlestick course by Nison, Edwin Lefevre etc. however, after reading those I was still trying to find the 'secret' to trading successfully and wasnot sure about mysystem. I realised that the 'secret' to successful trading is that there is no secret! I've also developed a system from very effective strategies that suits my psychology and mystyle, and more importantly I have devised a Trading Plan”

DISCIPLINE & PASSION:

Discipline - Majority of traders are not disciplined in their approach, else they would not be failing. These failed traders simply hate to hear the word Discipline! As Jack Schwager points out in his book, 'The New Market Wizards', "Discipline was probably the most frequent word used by the exceptional traders that I interviewed. Often it was mentioned in an almost apologetic tone: 'I know you've heard this a million times before, but believe me, it's really important'."

Discipline allows you to more effectively plan your work (trades) and work (trade) your plan. Discipline – “Habit of Obedience” – yes the keyword being habit, i.e. have a Trading Plan and make a habit of following it. The golden rule should be No Signal – No Trade.

Passion - We may spend a third of our life working, so you deserve to feel fulfilled in what you do, you do it because you love to do it! – Yes the monetary rewards are the by-product of your success in doing things you love to do.

How can you be naturally successful at something, continue to fine-tune your trading skills, seek the services of a mentor, and stomach the ups and downs of the business and if you don't know WHY you're doing it? As Michael Jordan once said, "If you have a love for the game, your talent will eventually catch up to you." So if you do not have the love for trading, will you succeed?

To sum-up this Mental skill set PAIR (Discipline / Passion): You must be disciplined AND remain emotionally detached from the market.

CONFIDENCE & COURAGE:

On of the basic traits of successful traders is that they believe in themselves first. They have the confidence and courage to stick with their plan, not stray from their rules, go against the crowd if need be, and see the end result (the Big Picture) in their mind.

What does every successful TRADER have in common? From the book, 'Poker, Sex and Dying': "Poker is an explosive game combining money, ego, and emotions. It is not enough to know, have information, and insight regarding your opponent (the markets), you must know of yourself." Therefore within your trading plan, you must have a section about YOU – get to know yourself

In the early days of my trading career, I had faced many a situation where I "knew" exactly where the price was going, had a trading plan, but failed to follow it. Of course, greed, fear, and our other emotions stood in our way. When you let this happen to you...all your knowledge, planning and information quickly becomes useless.

In other words, no matter how good you are at analysing the market, if you don't have confidence, all you're really doing is repeatedly creating experiences to which you will respond with similar frustration and anxiety.

How do you achieve confidence? You gather knowledge, practice discipline, and grow as a person. The more you learn about the markets, your approach to trading the markets and, more importantly, yourself...the more effective you become as a trader. The more effective you become, the less fearful you are. Confidence is the lack of fear. When you are confident, you can win.

PATIENCE and PERSISTENCE:

In this day and age of instant gratification, people want thrills without risks, wine without alcohol, more money without effort, beer without belly and yes, a profitable trade without doing homework.

The market knows better than you and I, don't rush to trade, you have to have patience and wait for the right signal – A golden rule No Signal – No Trade.

The successful trader realizes that patience pays! Every successful trader has a special talent for 'watching and waiting' and waits until trading behaviour has dictated when to enter the market. The prudent FOREX trader specifically applies patience to his/her advantage by:

Listening To The Market. The market is continually donating valuable trading information, and you must get into the proper frame of mind where you are in reality taking your orders from the action of the market itself or the signals your trading system is sending you. Your judgment will become poorer from the very time that you decide you know more about the market than the market itself is telling you, and you throw patience aside and give in to fear or hope.

Sitting On The Sidelines While Waiting For a Trend to Develop. It has often been said that looking at one's screen during the trading day is like sitting in front of a slot machine and trying to resist gambling. Successful traders in the FOREX have learned that they cannot buck the major price trend of the individual currency-pair they are trading. You still don't want to let impatience cause you to trade against the trend.

While patience is important not only in waiting for the right trades, it's also important in staying with the trades that are working. You must know how to wait patiently for the optimal time to sell. Selling a winner too early is not going to allow your account balance to increase exponentially at an ideal rate. So, this is where the 'persistence' mental factor comes in as well. You can be 'patient' until the cows come home but if you don't persistently control your impulses and don't persistently follow your exit rules, and then your profits won't balance out losses overt time.

"Be patient with winning trades; be enormously impatient with losing trades. Remember, it is quite possible to make large sums trading/investing if we are "right" only 30% of the time, as long as our losses are small and our profits are large." - Dennis Gartman

Success in trading depends on education to learn the critical technical analysis, trading techniques, sound money management habits, and how to control your emotions. The education

involves many stages, individual self-study, group lessons, classroom study, and constant practice. This takes you to a near professional level. Then, they add one more dimension, individual mentoring and coaching to rise to the absolute top and remain there over their professional career.

Do you really need a mentor or a coach? The best golfer in the world thinks so! Tiger Woods pays his coach over 1 million dollars per year! Yet he makes over 50 million dollars per year. In fact, all professional athletes have coaches to help make them better. The reason you choose to spend the money on coaching is to shorten that learning curve over which all traders have to travel, while increasing your levels of success; it is a cost of doing business. Remember if you are or want to be a professional trader you are in a business.

Today’s traders are lucky in that, they have many facilities and resources available. When I started trading 2 decades ago, there were very few resources available to a retail trader, few had heard of a Trading Coach or a mentor, no Internet and indeed no public boards such as T2W – trading was lonely.

After 10 years of trading, overall I was a loser. This period included major Stockmarket crashes, such as the 87 crash, and the 91 Gulf war. Trading was tough. My trading took to a new level, when I went to the Trading Expo in USA and was introduced to a Trading Coach.

I sought the services of a coach; the main focus of my coach was Psychology, an area that I had totally ignored all these years. My life as a trader was to change forever and I have not looked back, trading has become so easy and I am able to pick an iron-clad trade with great ease.

As I have often said, ignore the trend at your own peril; today I add if you ignore the psychology of trading you may not succeed.

my last trading 14 Sept 2006

2006-09-14T19:48:00.000-07:00

hi there , here my result yesterday ... trade with news and mfazley technique ... my 1st trade with this technique.. still working on it ... :)

My last trading 11 Sept 2006

2006-09-11T18:39:00.000-07:00

yeah !!! ... mostly get targeted after closed .... better than before... :)

My last trading ..yesterday ... EURUSD... Bullish .. result not bad.... still virtual ... eurusd touched 1.2735

My last 06 Sept 2006

2006-09-06T23:17:00.000-07:00

Target eu will bearish is true . Just ensure that with my result ..just virtual ... but the waysto solid my trading as well as mix with live trading.

Today result 5 Sept 2006

2006-09-05T21:42:00.000-07:00

As i mention yesterday , eurousd target touched 1.2820 and if i not wrong , the final moving to 1.2808.. 3 position full target in 16-18 pips .. :)

Today trading

2006-09-04T20:43:00.000-07:00

eurousd.... bearish ...maybe will touch target 1.2820 .. still working out ... hope sucessfully

My 30th & 31th August 2006

2006-08-31T21:24:00.000-07:00

My result last 2 days ago .... try another My system and mix with Grid system deferent 5-6 pips ... all successfully .. :) . Just get it from marketiva... 79 pips ... i will try trade with live trading after this.

My last Trading 29 August 2006

2006-08-29T20:24:00.000-07:00

As i mention yesterday i try to combined the Breakout System with Grid System.... not bad ... most sucessfuly ... but the market not quite strong to push eurousd.. over the 1.2870 ... juat reached 1.2849... i used grid system with 15 , 30, 45,60 & 75 ... half of position meet the target. Herewith i enclosed the early result that i told already..

I get it from marketiva , the result yesterday ... for yor attention :) . As u can see Pips (circle ).Total 153 pips ..

Last trading 25 August 2006

2006-08-25T18:55:00.000-07:00

hm... open 2 position yesterday at Timeframe M1 ... eurousd ....bearish... at 1.2748 to 1.2725 ..and test at support (S1) ... and RSI stated oversold .After reached 1.2725 eurousd pull back to 1.2772... FED bos anounced effect usd ... that why the market pull out to 1.2772..

As you can see result yesterday ... just open 2 position .... not bad .... still learning .... using Bolinger bands , RSI , MACD , EMA 10, 20 &50 ..breakout system.Patern elert & EMA cross signal. etc.. next trading will include Grid system .... wait & see ..

How to use HEDGING to your advantage

2006-08-25T01:59:00.000-07:00

How to use HEDGING to your advantage

Hedging can be a useful tool to the Forex trader. When you have an open position, for example, you are long on a USD/JPY trade and you right click your trade on the VT platform, a menu will pop up and you have a choice to Hedge your trade. If you click Hedge, you will automatically open up a position in the opposite direction at the current market price without canceling out your other position and without margin increase!. In the above example you would now have a USD/JPY trade long and short. You will now neither gain or lose any equity in your account because the gains and the losses will cancel
each other out.

Hedge in an emergency: Hedging a losing trade won’t solve your problems, but it will 1. Keep you from more losses 2. Give you time to think about what happened to your bad trade and 3.Give you a second chance. Some traders will hedge losing trades instead of stopping out there position, because they have a chance to win back the losses of the original bad trade.

Example: You are looking to ‘Trade the Trend’ so you go long on the EUR/USD, using the indicators in this guide. The indicators signaled BUY so you opened up a position. In case of a bad trade, you choose to hedge instead of using a stop loss (be careful when doing this). Your ‘Trade the Trend’ indicators didn’t work and your position goes against you, you hedge your trade. Now you have a losing position and a winning position going in the opposite directions. You didn’t use up any more margin. What do you do now?

My recommendation: When your position is hedged, you are safe and you won’t lose any more money in your account. Here is what you should do:

1. Wait until another chart set up occurs and proceed to step 4. or Exit the trading platform.

2. Wait till the next trading day or session .

3. Look for the DTF indicators the next day.

4. Instead of opening up another position, simply get rid of the bad position that was hedged. So if the indicators the next day signaled long in the EUR/USD, like in the above example, then you would get rid of the short, losing hedge and hope that the price will rise enough to erase the previous days losses to make a profit.

5. If your position moves against you again you can hedge that position again and repeat steps 1-4.

Last trading 24 August 2006

2006-08-25T00:59:00.000-07:00

yesterday result .... open only 1 position .... market not so good .... but ok .... eu bullish ... :)

22 AUGUST 2006 -My new Trading

2006-08-22T04:43:00.000-07:00

RESULT TODAY still working on it , eu ... quite good today .. bearish from yesterday ... from 1.2890 goes to 1.2840 ...if eu berish reach 1.2832 (S1) ..will see bearish.Here result today ... not bad ...some WIN some LOSE

after last 5 minutes eu over the S1 ... now reach 1.2810 and now test 1.2803...

Forex Study

My last Trading in marketiva

2006-08-16T02:05:00.000-07:00

as u can see , the green circle .. show to us the signal for reversal for bullish engulfing patern... MA cross BB.

the arrow shown to us that elert signal bullish patern MA cross and fibonacci Rect at 38.20 ..best signal ever. last trading , got 72 pips ..

just tarde eurousd .... 16/08/2006

Result 17/08/2006 ... still ok .... want to improve my trading... mostly eu is bouncing ... after 12.00+ eu bearish from 1.2860 - 1.2827 .... just put my tagret S/L at 1.2800 but not reached just reached 1.2827. maybe will bulish today but depend on market today .

The Day Trade Forex System: Six Steps to Success

2006-08-14T00:11:00.000-07:00

The goal of this guide is to instruct and teach potential traders how to day trade the currency markets. The objective of day trading is to trade the intra day market moves to try to gain small to medium sized profits in any given trading day. This is how this guide will help. Most readers will not have the time or resources to ‘position trade’ like the major institutions and banks do. They tend to look at the big picture holding onto trades for weeks or months. The Forex Profit System is pecifically designed for use with the 1, 5 or 10 minute charts, with the goal of taking 5-20 pip profits per trade—closing
bad trades out using tight stops, or hedging any losing trades. The following steps will show you how to do this. Step 1. Choose an online Forex Firm What to look for in an online Forex Firm:

1. Low Spreads.
In Forex Trading the ‘spread’ is the difference between the buy and sell price of any given currency pair. The lower the spread saves the trader money. Most firms offer 4-5 pip spreads in the Major Currency pairs. The best firms offer clients 3-5 pips.

2. Low minimum account openings.
For those that are new to trading, and for those that don’t have thousands of dollars in risk capital to trade, being able to open a mini trading account with only $200 is a great feature for new traders.

3. Instant automatic execution of your orders.
This is very important when choosing a Forex firm. You want instant execution of your orders and the price you see and ‘click’ is the price that you should get. Don’t settle with a firm that re-quotes you when you click on a price or a firm that allows for price ‘slippage’. This is very important when trading for small profits.

4. Free charting and technical analysis
You need a firm that gives you access to the best charting and technical analysis available to active traders. The firm that I recommend gives clients FREE professional charting services and even allows traders to trade directly on the charts!

5. High Leverage
You want high leverage—the ability to trade a large amount with a small margin deposit. Some of the best firms offer .25% or 400:1 leverage.

6. Hedging Capability
You want the flexibility of opening positions on the same currency pair in opposite directions without them eliminating each other and without margin increase!

Here is a list of some of the main Forex trading Firms on the Internet. After a lot of research and personal experience, the firm that I recommend with the above- mentioned benefits is Capital Markets Services LLC (CMS Forex LLC). You can
research the rest of the firms listed to see for yourself.

The Day Trade Forex System

2006-08-02T22:45:00.000-07:00

Before we begin looking at the specifics of the FPS and how it works, let’s look at 4 building blocks that I believe to be oundations to the Forex Profit System.

Foundation #1: Currency Trading is not a Get-Rich- Quick Scheme.

Currency trading is a SKILL that takes TIME to learn. Skilled Traders can and do make money in this field, however like any other occupation or career, success doesn’t just happen overnight. Here is a great ‘formula’ for success:

Practice + Patience + Persistence = Profits

As they say, there is no substitute for hard work and diligence. Practice trading on a demo account and pretend the virtual money is your own real money. Do not open a live trading account until you are profitable trading on a demo account. Stick to the plan and you can be successful.

Foundation #2: I highly recommend that you follow 1 or maybe 2 major currency pairs.

It gets far too complicated to keep tabs on all four. I also recommend that traders choose one of the majors because the spread is the best and they are the most liquid. The Euro/USD is the most commonly traded pair and usually has the best ‘spread’ because of its liquidity. The USD/Swiss Franc is usually the most volatile and moves the most during the trading week. The USD/Yen moves a lot on the news out of Japan and normally the Pound Sterling/USD is more stable in it’s moves than the other three.

Foundation #3: Follow and understand the daily Forex News and Analysis of the professional currency analysts.

Even though this system is based solely on technical analysis of charts, it is important to get a birds-eye view of the currency markets and the news that affects the prices. It is also important that you know and understand what the key technical ‘support’ and ‘resistance’ levels are in the currency pair that you want to trade. Support is a predicted level to buy (where currency pair should move up on the charts), resistance is a predicted level to sell (where the currency pair should move down on the charts). Fortunately, all the best Forex news and analysis is offered free on the Internet.

Here is what you should do first:
*While you are reading the daily news and technical analysis, write down on a piece of paper what direction the analysts are saying about the major currency pair you are following and the key support and resistance levels for the day.

A. Go to www.forexnews.com and you will find 24hr news and analysis on the spot FX markets. The site will give you the big picture of how the economic calendar and central banks affect the currency markets. A great resource.

B. Then go to www.fxstreet.com and click on the ‘Top Forex Reports’. Here there is a wonderful listing of all the major daily currency analysis and forecasts with support and resistance and direction forecasts. C. Click on www.currencypro.com and go to ‘Today’s Market Research’ and there you will find more excellent analysis on the Major Currency pairs. Another great Forex Portal.

Foundation #4: Learn how to use the technical indicators in this course and always trade with stop losses! .It is worth your time to be patient and learn how to use the technical indicators on the charts that you will be reading about shortly. It is important when you are trading Forex, to be disciplined and to stick to a plan. Don’t just trade your ‘gut’ feeling. Use the technical indicators outlined and always enter in stop losses on every trade. Remember that everyone who trades has a different tolerance for losses. Depending on your risk capital, and strategy, set your stop losses accordingly.

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The ULTIMATE Guide to Online FOREX

2006-07-19T23:46:00.000-07:00

“How You Can Earn $50 to $500 A Day Currency Trading
From The Comfort of Your Own Home!”

Did you know that more and more business opportunity seekers worldwide are discovering the powerful profit potential of Foreign Exchange trading? In this business, there are no employees to hire, no advertising, no products to stock,
no downlines to fill--just you, an Internet connection and a computer. That's all you need to make money on the worlds largest market. If you are searching for .

Our purpose is to empower, mentor and train currency traders all around the world who would like to Day Trade Forex as their main source of income. For those looking for a significant part-time income, we believe Currency Trading is
the vehicle to use. Our aim is to assist you to:

1. Stay Disciplined—To learn how to manage risk effectively.
2. Keep Objective—To trade in a non-emotional, intelligent way.
3. Trade with Confidence—To know exactly when to trade.
4. Become Systematic—To generate your own Forex buy/sell signals.

The goal is to earn $50 to $500 per trade and minimize losses on losing trades using technical indicators on charts, which I will explain later on in this course. The potential to profit is there for those who trade this system. The great thing about Forex trading is that you can test this system for FREE on a demo account using virtual money, before you risk one penny on actual trades. You will be able to join my team of traders as you advance step-by-step through this guide. We will begin by explaining what Forex is and all the benefits of trading currencies.

WHAT IS FOREX
The Foreign Exchange, also referred to as the "Forex" or "Spot FX" market, is the largest financial market in the world, with over $1.2 trillion changing hands every single day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you see how giant the Foreign Exchange really is. In fact it is three times larger than all of the US Equity and Treasury markets combined!

What is traded on the Foreign Exchange? The answer is money. Forex trading is where the currency of one nation is traded for that of another. Therefore, Forex trading is always traded in pairs. The most commonly traded currency pairs are traded against the US Dollar (USD). They are called ‘the Majors'. The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY); and the Swiss Franc (USD/CHF).

The notable ‘commodity’ currency pairs that trade are the Canadian Dollar (USD/CAD) and the Australian Dollar AUD/USD. Because there is not a central exchange for the Forex market, these pairs and their crosses are traded over the telephone and online through a global network of banks, multinational corporations, importers and exporters, brokers and currency traders.
Traditionally, currency trading has been a 'professionals only' market available exclusively to banks and large institutions, however, because of the rise of the new E-economy, online Forex trading firms are now able to offer trading accounts to retail' traders like you and I. Now almost anyone with a computer and an Internet connection can trade currencies just like the world's largest banks do. There are now over 6 million trading accounts worldwide up from 1.7 million in 1997.

BENEFITS OF FOREX TRADING
There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market as a business opportunity:

1.LEVERAGE: In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the rader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. Some Forex firms offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of rrencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on.

2.LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid. This means that with a click of a mouse you can instantaneously buy and sell at will. You are never 'stuck' in a trade. You can even set the online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop order).

3.PROFIT IN BOTH 'RISING' AND 'FALLING' MARKETS: On the stock markets, you can only make money if shares are rising, but in economic recession and falling 'bear' markets, there is little chance of making big money. Forex is different. One of the most exciting advantages of FX trading is the ability to generate profits whether a currency pair is 'up' or 'down'. A trader can profit by taking a 'long' position, (buying the currency pair at one price and selling it later at a higher price), or a 'short' position, (selling the currency pair and buying it back at a lower price). For example, if you think the US dollar will increase in value vs. the Japanese Yen then you will buy Dollars and sell Yen (go long). If you think the Yen will increase in value gainst the Dollar then you will sell Dollars and buy yen (go short). As long as the trader picks the right direction, a potential for profit always exists. 4. 24HRS: From Sunday evening to Friday Afternoon EST the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.

5. FREE 'DEMO' ACCOUNTS, NEWS, CHARTS AND ANALYSIS: Most Online Forex firms offer free 'Demo' accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for traders who would like to hone their trading skills with 'virtual' money before opening a live trading account.

6.'MINI' TRADING: One might think that getting started as a currency trader would cost a lot of money. The fact is, it doesn't. Online Forex Firms now offer 'mini' trading accounts with a minimum account deposit of only $200-$500 with no ommission trading. This makes Forex much more accessible to the average individual, without large, start-up capital.

Bullish Engulfing Patterns: Powerful Buy Signals

2006-07-18T03:11:00.000-07:00

Learning how to use candlestick signals has become easier in the past few years. Previously, the major concern was there were too many signals to learn and they didn't always work well. In recent years, those deterrents have been overcome, but investors still run into trouble when they are just beginning to study candlestick signals: Where do the signals occur in the trend? One facet makes candlestick signals highly accurate--the ability to identify a candlestick signal during a trend dramatically simplifies learning candlestick analysis.

Candlestick analysis incorporates approximately 50 to 60 candlestick signals. Of these, you need learn only 12, which are considered the major ones. These signals produce most of the trend reversals. Recognizing the psychology that form these major signals will give you new insight into price movements. Understanding the investor psychology that form the major signals reveals optimal times to buy and sell. When candlestick analysis was being formed, Japanese rice traders realized that prices do not move based on fundamentals. Instead, they move based on the investor perception of those fundamentals. Candlestick signals are the visual depiction of investor sentiment.

One of the most compelling candlestick signals is the bullish engulfing pattern. This signal is most effective when found in the oversold area at the end of a substantial downtrend. The pattern consists of two bodies; the first is the same color as the current trend, while the second is the opposite color. The signal day opens lower than the previous day's close, and then it trades higher. By the end of the day, the trading closes above the previous day's open. This new white candle now engulfs the previous day's candle known as the daki, or embracing line.

A white bullish candle engulfing the previous black candle stands out like a neon sign after a series of black candles; it is clear that a change has occurred in investor sentiment. A couple of simple factors make the bullish engulfing pattern more convincing: The bigger the previous day's candle being engulfed, the more effective the new trend signal will be. Or the lower the open of the white candle, then coming back up to engulf the previous day, the more powerful the next advance should be.

FIGURE 1: BULLISH ENGULFING PATTERNS

THE FORMULA
(O-1>C-1) and
(O0(C0>O-1)
Yesterday's open is greater than yesterday's close;
Today's open is less than yesterday's close;
Today's close is greater than yesterday's open.

The bullish engulfing pattern represents a change in investor sentiment. It reveals when the buyers have stepped in.

In Figure 2, on the chart of Neoware, Inc. (NWRE), the market sentiment reversed at the bullish engulfing formations. The change of investor sentiment is stronger when it confirms with other technical indications. In this case, the bullish engulfing signal formed in an area that acted as a strong support level about a month ago.

FIGURE 2: REVERSALS AND BULLISH ENGULFING PATTERNS

GAPS
A simple analysis of a candlestick signal is observing a gap up in price following the signal. The appearance of the signal not only reveals that investor sentiment has changed, but direction is changing with excessive force as well. The signals work equally well when analyzing indexes as they do for individual stocks, commodities, futures, or any other trading entity.
Witnessing a bullish candlestick signal in an oversold condition, and at a major technical level, enhances the probability that a reversal has occurred. A major advantage produced by candlestick signals is that it reveals what investor sentiment is doing right now. Seeing a bullish signal at any major technical level allows the candlestick investor to react immediately. Whereas most technical indicators require confirmation that a trend has reversed, the candlestick signal immediately reveals investor sentiment at that level.

Figure 3 illustrates in the Jos. A. Banks chart (JOSB) how the bullish engulfing signal is formed by gapping down exactly to the 200-day moving average. The buyers created a bullish engulfing signal that day. This became further evidence that a support level had been found and a reversal in investor sentiment had occurred.

FIGURE 3: COMBINING CANDLESTICKS WITH TECHNICAL INDICATORS. Note how, after a gap down, prices continued to drift lower till they hit the 200-day moving average. At this point, a bullish engulfing pattern formed and prices moved higher.

FIGURE 4: STRONG SIGNAL. Note that the downtrend ended on a very strong signal. This indicated that the last of the sellers had sold their stock.

BOTTOM REVERSALS
The bullish engulfing pattern is statistically valid for indicating bottom reversals. As stated, the signals are highly accurate when a bullish engulfing pattern is witnessed during oversold conditions. The bigger the signal, the more convincing it becomes that a reversal has occurred. Analyzing what creates a bullish engulfing signal, with the prices opening lower and closing much higher, is a demonstration that investor sentiment has changed. The further down the price opens illustrates the panic selling at the bottom of a trend, then followed by obvious buying that produces simple evidence.
A gap down in price shows that the sellers have capitulated. The buying illustrates this was the level the smart money was willing to start accumulating. Figure 4 shows the chart of First Industrial Realty Trust how the downtrend ended when the last of the sellers finally let their stock go. The large bullish engulfing signal clearly demonstrated that a change of investor sentiment had occurred.

TOP REVERSALS
A big bullish engulfing pattern observed at the top of a trend usually represents a completely different story; it is usually the last gasp of the buying of the trend. If you keep this in mind, you will have another opportunity to extract profits out of a price trend. When the hopeful traders are buying once more at the top, you'll know what that last bullish engulfing pattern means. You should be prepared to take profits.
The appearance of candlestick signals in the proper position of a trend will produce high-probability results. These results will be even better when candlesticks are combined with other technical indicators. Candlestick signals are merely the graphic depiction of investor sentiment during trend movements. Use them to your advantage.