Japanese patterns are known for taking less time and being at least as effective.
Japanese candlesticks techniques differ strikingly from the classic pattern recognition approach knew at that time. However, while showing the opening and closing prices, they lack the follow-through we see when interpreting Japanese candlesticks. Japanese candlesticks made it easier for market participants to understand the price action within a period.īefore that, bars charts were the preferred choice. Since the Japanese introduced the candlesticks chart to the Western world, technical analysis changed completely. How about a simpler, yet effective approach to trading? The Beauty of a Single-Candlestick Pattern The same is valid for all classic technical analysis patterns: head and shoulders, wedges, flags, pennants, ascending and descending triangles, etc. It takes a lot of time for the market to form a pattern with the Elliott or Gartley theories.
He developed a set of rules that results in a similar 1:2 risk-reward ratio for a trade.Īll trading theories and concepts mentioned so far have a significant disadvantage. Gartley uses Fibonacci ratios to find a trade at the bottom of a bullish or bearish trend. After a time-consuming process, labeling impulsive and corrective waves, the result is a trade respecting at least 1:2 as the risk-reward ratio. Effectively, it means that for every pip risked, the reward should be at least twice the risk.Įlliott, for example, uses a complex logical approach to the market, interpreting various market cycles of different degrees. For trading to make sense, money management defines the potential of a trade, with a risk-reward ratio of minimum 1:2 mandatory. In the end, it is the trade that matters. However, regardless of the approach, technical analysis outcome is to forecast future prices. The early 1900’s saw most of the trading theories trying to understand crowds’ behaviour.Įlliott, Gartley, Gann, Dow, they all looked at complex market behaviour and put everything together in a trading theory. Technical analysis today differs significantly from the old days. Pin bar trading is a simple, yet effective trading strategy that offers excellent risk-reward ratios. Everyone comes to the market with different expectations but aims for the same thing: to make money.
5 Pin Bar Trading Strategies that Every Trader Must Knowīy: Bonus Material: Get the Free E-book on Candlesticks IntroductionĪs the most liquid market in the world, Forex or foreign exchange attracts more and more retail traders.