Doji

                  

#TermoftheDay - Doji

Tushar Popat says Doji is a type of candle which signals that buyers and sellers are almost equal in strength with no significant direction.

Mukesh Gupta adds Doji is a candle which is formed by a very small body indicates that opening and closing of the candle are in a close range + typically it has long shadows. Doji indicates an indecision in the price movement for that particular duration, meaning people are not certain what will be the next move. After a good trend in either up or down side if a Doji is formed, many a times it is considered to be a reversal point and a next candle in opposite direction confirms the reversal. One can look for trading opportunity if a doji is forming on a chart and as always bigger the time-frame of chart, better the possibility of trade in your favor.

Narendra Tank further adds when a doji is formed it mostly suggest that there would be a change in trend

Jaya Prakash Reddy informs that the location of a doji is also important. If it is formed after a significant uptrend or after a significant downtrend, it will have high importance. During such situations if other indicators such as RSI, Stochastic etc are in overbought r over sold areas then we may have a high probable trade.

Vineet Singh adds Doji is especially meaningful near support & resistance levels. Near these levels trend change probability is very good.

Jaya Prakash Reddy explains How to trade a doji:

If a doji is spotted after an uptrend chances are there for a downside reversal. If the candle formed after the 'doji candle' closes below the Low of the 'doji candle' then chances of reversal r more. So we can go for a short trade by keeping stop loss slightly above the high of the 'doji candle'.If the candle next to the 'doji candle' breaks the high of the 'doji candle' then downside reversal is negated and there is no short trade.

To join us on whatsapp, fill your data here. Mention "Trading Terminology" in reference column