Why do beginners only look at the 'wicks' of candlesticks? That is not what you should really be looking at
I ask this question at seminars.
"Where do you look first on a candlestick?"
Then, in many cases,
"The wicks"
is the answer that comes back.
Every time that happens, I feel this way:
"Why don't they look at the 'thickness' of the candlestick first?"
I think.
"Thick candlesticks" are packed with important information that leads to winning trades.
In other words, not looking at them means,
you are missing out on the "best information available for free."
You could say that.
How about you?
Are you looking at the "thickness" of the candlestick first?
Why is the "thickness of a candlestick" important?
Please look at the figure below.
A short bullish candle and a thick bullish candle. Which one looks like it has stronger "buying momentum"?
Probably, most people
"The thick bullish candle"
would answer.
A thick bullish candle, even with some ups and downs, ultimately shows a significant rise.
This means that
there was 'strong buying interest' throughout the market
signifies.
On the other hand, what about a short bullish candle?
The price increase is limited, and compared to a thick bullish candle, it can be considered that
the buying momentum is not that strong
can be thought of.
What happens when 'thick candlesticks' continue
Now, let's change our perspective a little.
Instead of looking at one, let's look at multiple candlesticks.
For example, a market that is ranging.
Bullish and bearish candles appear alternately, and there is no sense of direction.
However, after that,
what if several thick bullish candles appear in a row?
Actually, both of these two images are 'Euro-Yen daily charts'.
You will probably
'feel that upward momentum has emerged in the Euro-Yen'
should feel.
Even without looking at difficult signal tools,you can see that changes in the market are already reflected in the candlesticks.
Having the same perspective as professional players
The main players in the foreign exchange market are,
bank dealers
hedge funds
pension funds
large asset management companies
—so-called professional players.
And they,
actually have the power to move the market.
If that is the case,
thinking the same way they do and acting in a similar manner
will naturally increase your probability of winning.
This is the true meaning of
trend following
it is.
It is not just about memorizing chart patterns.
A simple way to understand the psychology of professionals
So, how can you understand the psychology of professionals?
The answer is,
to observe the 'thick bullish and bearish candles'.
that is.
Candlesticks are the embodiment of the psychology of market participants.
In particular,
thick bullish candles
thick bearish candles
show,
'strong intent'
manifested.
Thick bullish candle
→ Strong buying interest
Thick bearish candle
→ Strong selling interest
In other words,
by confirming the reason for the large movement, you can see what the market is reacting to.
This becomes a hint for deeply understanding the market.
How to cultivate market intuition
In this way,
by repeating the simple task of 'confirming the reason for large movements'
market intuition will gradually grow.
What is market intuition?
Simply put,
'the ability to distinguish between good and bad market conditions'
.
At first, isolated knowledge is fine.
However, by accumulating it,
Points become lines, and eventually, you begin to see the flow.
And then,
Whether you should attack now,
or whether you should wait now
becomes something you can judge.
This is
the process of developing market intuition
itself.
If you currently have habits like,
・Looking at the wicks of candlesticks first
・Not placing much importance on candlesticks
then I recommend that you focus on
“thick bullish candles”
“thick bearish candles”
as introduced today.
You don't need complicated signal tools.
This is the way of thinking for “true trend following” that anyone can easily do.
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