Candlestick Basics by Jayram Swami

Color Matters: White = Green and Black = Red

1)      Where are you going?

Training started with a question to check who all have attended school. All the attendees replied in assertive tone. When we get up in the morning, and get ready for office, we are going to office to earn money. When we come back home after a day's work, we tend to relax, and there is no fixed agenda as such.

Direction 1: From Home to School / Office: He explained that when we go to school / office, we go to earn something. In other words, we go to school to attain knowledge / salary.

Direction 2: From School to Home: When we come back from school to home, we usually tend to relax and have no planned agenda to capture anything comparatively

                  

2)      Dress Code:

Direction 1: From Home to School: We have a uniform / formal clothes which we use while we go to school / office. Apart from the exceptional case like birthday / weekened, we have to adhere to dress code everyday

Direction 2: From School to Home: There is no compulsion to wear the same uniform while returning towards home. He meant that in case the uniform is changed before leaving the school, it is absolutely fine.

Please note the confirmations of green/red may come in the next candles, but an indication is provided-- that I may start to get into the reverse trend very soon. This is when u need to take action- get ready for booking your profit, if u are long- or getting ready to short..

3)      Colour of the Dress:

Direction 1: From Home to School: Green indicates that you are going to get something in return. Going to school gives you knowledge. Green is the colour of positive returns

Direction 2: From School to Home: Red indicates negativity. Returning from school indicates the relaxation and comparatively the education flow reduces indicate negative return.

4)      Stock Market: Stock Market is also same like going to school or returning from school. When the candle formation is green in colour, it indicates the positivity while when it is red, it indicates the downtrend. Though you can gain in both the situation, but you have to play safe and with proper trading plan

5)      Standing at Right Side and Looking at Left Side: Jairam explained, that whenever you want to trade, look at the chart in a way that you are standing at the right side of the chart. Look at the left side and monitor it.

6)   Waiting for the formation of the candles: You have to wait on the right side for the candle formations- either green or red..and keep on observing the candles formed on the left side-- this is an indication to tell u that what your game plan would be

7) Prominent Colour of the Uniform: When you are standing at the right of the chart and looking left, check out which colour you can see? Which is the most prominent colour viewable from the right? If green, go for long. If red, time is to short the stock. Prominent colour is the one that is the first one you see when you look at the chart and has covered the previous candles completely

8)      Change of uniform: It is important that there should be change in the uniform. With this he means, the trend should be changing. Either you are going home from school or you are going school from home. You cannot make much money in between those situation.

9)      Look at three candles: When you look at the candles, see in the combination of three candles. The prominent candle should cover the previous candle completely

10)      Strategy

a.       For Long Trades:

                                                               i.      Chart of 175 minutes.

                                                             ii.      Change of uniform i.e. change of candle colour and it should be prominent green in colour

                                                            iii.      RSI should be above 30. More positive go with 42 RSI

                                                            iv.      Stop loss of previous support line
                                                v.      Book Profits when the color of the candle changes on the downside or RSI is below 30

b.      For Intra Day (Long)

                                                               i.      Chart of 15 minutes

                                                             ii.      Change of uniform i.e. change of candle colour and it should be prominent green in colour

                                                            iii.      RSI should be above 51.50

                                                            iv.      Stop loss of previous support line
                                                   v.      Book profits when the colour of the candle changes toward downside

c.    Go Shorting:

                                                               i.      Chart of 15 minutes.

                                                             ii.      Change of uniform i.e. change of candle colour and it should be prominent red  in colour

                                                            iii.     Short it when RSI is below 42

                                                            iv.      Stop loss of previous resistance or when RSI reaches 51.50

                                                            v.       Book profits when the color of the chandle changes on the upside

11)   Support and Resistance: Playing in the range of support and resistance will give you good income. Showing patience when there is no change of prominent uniform is important so as you don’t lose money.

Patience is very important when trading in the stock market, as well as the information/knowledge about the supports and resistances. If traded patiently and looking at the levels, one can earn good profits from the trades.

More to come in the next blog post. Just wait... Be Patient.. Happy Learning and Trading..