candlestick strategy

Want to learn the secrets of the best candlestick strategy at IQ Option? Read on as we've put together a handful of tips to help you squeeze the most out of Japanese candlestick trading.

Of all trading and market analysis tools out there, most traders will agree that Japanese candlesticks are the most important. Any attempt at trading on IQ Option without properly understanding them is like walking in the dark. But it's not only about knowing them, but also using them well. The only way you will be able to do this is by developing a candlestick strategy.

Key Takeaways๐Ÿ”‘

โ†’Japanese candlesticks are essential tools for understanding market trends and making informed trading decisions.
โ†’Developing a candlestick strategy requires knowledge of different candlestick patterns and their significance.
โ†’Always wait for candlesticks to close before making trading decisions, and consider support/resistance targets in your analysis.

How to create and trade the best candlestick strategy on IQ Option

It doesn't matter what security you trade on, you will still need candlesticks. On IQ Option, candlesticks also allow you to clearly see the struggle between bears and bulls in a new and simpler way. Candlesticks will help you to further understand market trends and make the right trading decisions. But just knowing them isn't enough. There has to be a systematic way you can apply them. This way is called the candlestick strategy. Here is how you go about it.

candlestick chart eur usd
Candlesticks will help you to further understand market trends

Determine the types of candlesticks you are dealing with.

It is at this stage that your vast knowledge of candlesticks on IQ Option is put to the test. You need to know everything concerning candlesticks and at what times in the market they are formed. This is because there are many types of candlesticks on IQ Option since each market is unique. In fact, all candlesticks, markets, and charts are different. For this reason, you need to know which candlesticks you are working with on each trade.

candles to exclude for one candle
Examples of candlesticks patterns you can use in your best candlestick strategy

For example,ย  a long candlestick in one chart might actually be average on another chart. A doji candlestick in one market might mean everything whereas, the same candlestick in another market might be a normal occurrence.

Which candlestick pattern is most reliable for day trading?

There are dozens of candlestick formations described in the literature on the subject. The good news is that you don't need to know them all. You just need to know the basic continuation and reversal patterns. The others are basically expansions of them. If you understand the basics, the shape of the candles and their sequences will be so evocative that you won't even need to name the formations, while still being able to interpret them. On this basis, you will be able to make decisions more easily. Focus on different types of pin bars, and learn about doji candles.

Become well acquainted with the workings of the hug and harami patterns. These formations are great for day trading. In addition, remember that all candlestick patterns work best in context. Remember that they must always be preceded by a trend and that it is useful to use additional technical analysis tools to get a broader view of the market. Combining different techniques may seem difficult at first in trading candlestick patterns for beginners.

Determine the signals.

This is the next step once you have identified exactly which candlesticks you are dealing with in a trade. Always remember that when trading on IQ Option, you should only act when the signal is strong enough. For a candlestick to give off a strong signal, it needs to have two characteristics. It should be larger than all previous candlesticks on the chart or have a long shadow. It could be one of these characteristics or even at times both.

Understand the relationship between candlesticks and support/resistance targets.

As mentioned earlier, candlesticks might form at just about any point on a trading chart. Candlesticks create significant signals or at times insignificant ones. One sure characteristic of strong signals is that they are usually formed at support or resistant targets. These targets are simply points where traders like you join the market to buy or sell. This is because it is at these points where prices are expected to change drastically at any time.

shooting star and bearish engulfing
Shooting star and bearish engulfing at resistance level

But for you to join the market and make a profit, you need to know the expected direction of change. Whether it will continue in the direction of market trend or reverse. To know this, you need to analyse the candlesticks, trends and signals altogether. Doing this will also help you make the right trading decision.

procedure for best candlestick strategy

Pros and Cons๐Ÿ“Š

๐Ÿ‘Japanese candlesticks provide valuable insights into market trends and price movements.
๐Ÿ‘Applying a candlestick strategy can improve trading decisions and increase the likelihood of success.
๐Ÿ‘ŽRequires a deep understanding of different candlestick patterns and their implications.
๐Ÿ‘ŽWaiting for candlesticks to close before making decisions can lead to missed opportunities.


Candlestick Pattern Description
Pin Bars Candles with a small body and a long shadow, indicating a potential reversal or continuation in the market trend.
Doji Candles Candles with an open and close price that are nearly equal, signifying indecision in the market.
Harami Pattern A two-candle pattern, where a smaller candle is followed by a larger one, suggesting a potential reversal.
Engulfing Pattern A two-candle pattern where a smaller candle is followed by a larger one that engulfs the previous candle, indicating a strong reversal signal.

Let the candlesticks close first.

After you have determined the candlesticks formed, their signal, and the support or resistance targets, you will now have to wait for the candles to close. This is one of the most important things to do before making a trade decision on IQ Option. After all, candlesticks will only give you signals once they close. The best candlestick strategy must be based on fully drawn candles. Until a candlestick close occurs, the shape of the candle can change. Keep this in mind.

let candlesticks close
Let the candlesticks close first

For example, the long-legged doji candlestick usually starts out as a long bull candle but thereafter closes when it is short. You have to pay attention to this because you might make a decision at a support/resistance target expecting the trend to continue only to have the price reverse. Take note that a reverse usually happens when the following candle formed is smaller.

Most professional traders insist that for you to increase your chances of making money from trading, you need to have a plan and strategy. Add this one to your list. If you have your own best candlestick strategy then go ahead and tell us in the comment section below. For more information check out The Ultimate Guide For Trading Candles On IQ Option.


Q&A๐Ÿ’ก

    • Q:What are the essential candlestick patterns to learn for beginners?
    • A:Beginners should focus on pin bars, doji candles, harami patterns, and engulfing patterns as they provide valuable insights into market trends and reversals.
    • Q:Why is it important to wait for candlesticks to close before making trading decisions?
    • A:Waiting for candlesticks to close ensures that the shape and signals of the candlestick are fully formed, providing more accurate information for decision-making.
    • Q:How do support and resistance targets influence candlestick patterns and trading decisions?
  • A:Support and resistance targets are key levels where price changes are expected to occur. Strong signals are often formed at these levels, helping traders make informed decisions about whether the trend will continue or reverse.
  • Q:What is the role of trend analysis in the best candlestick strategy?
  • A:Trend analysis helps traders identify the overall market direction and make informed decisions based on the current market conditions. Combining trend analysis with candlestick patterns can enhance the effectiveness of a trading strategy.

GENERAL RISK WARNING

The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
Kindly note that this article does not provide any investment advice. The information presented regarding past events or potential future developments is solely an opinion and cannot be guaranteed as factual, including the provided examples. We caution readers accordingly.

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Bart Bregman

Author / IQ Option expert: "My name is Bart Bregman, I have 9 years of full-time professional trading experience. I've been trading with IQ Option for more than 7 years, mainly on the shorter time frames doing technical analyses, and have many experience with Binary Options, CFDs, Options, and Crypto trading. There is no such thing as a bad trade! As a digital nomad trader, I'm mostly traveling all over the world. Follow my journey on Instagram at https://www.instagram.com/bart_bregman/. "

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