Doji Candlestick Pattern Trading System

Reading and determining candlestick chart are significant factors in technical trading skill for traders to make profit. Candlestick shapes and formations can show visual insight into what Foreign exchange traders are understanding as well as determine support and resistance levels. With this method we will learn on identifying and trading one of the forex markets most accurate candlestick pattern, the Doji candlestick pattern.

What is a Doji candlestick pattern anyway ?

A Doji candlestick is built if market price causes a candlestick to open and close at closely the same level price. in the chart above, we will know that the Doji candlestick formation basically will occur like a plus shape or a cross signal on our chart. The body candlestick is very short, the doji candlestick has long tails on either side. These tails represent the volatility of the Forex market during the certain period of time. Since market price opened and closed at nearly the same market price neither the bulls and bears occur to be in control of the Forex market.

Since Forex market momentum has stalled , the Doji candlestick pattern usually represents market indecision. Forex traders can trade this situation as a chance for increase in momentum. Generally participants pick to trade support and resistance levels for new market breakout strategies or to determine parts where a broader trend may trade. Let's take a trading example.

Doji candlestick pattern trading system

If you are already understood with determining Doji candlestick pattern, Doji can then traded to any trading strategy. Since the candlestick itself doesn't give us much data regarding market trend, Doji are usually traded in conjunction with a trend lines or other Support and resistance Forex technical indicators. Chart above is a trading example of Doji candlestick, making close a support level on the chart. Since market price has been trading lower back to support level to the creation of the Doji formation, a potential reversal in trend would indicate a resumption of uptrend strength.

We can find to entry into the market in the trend direction after the creation of a Doji. We can managed the risk as well using this Doji candlestick with stop loss being plotted under the tails is now acting support for the market price.