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Identifying Stock Price Reversals

By: www.CandleStickForums.com

Identifying stock price reversals can be the key to

successful stock trading. The tools needed for identifying stock price reversals are, if

fact, centuries old.


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Candlestick charting goes back to Japan in the days of

the Samurai when rice commodities traders

recognized repeating patterns in trading.



By using these repeating patterns the traders were able to profit in identifying

coming market trends and market reversal.



Traders today can learn Candlestick

patterns and profit from trading Candlestick pattern

formations.



An excellent means of learning Candlestick signals and how to trade them for profit in trading

stocks is through online training webinars. Through the give and

take of basic stock market training online the trader will

learn Candlestick charting techniques in a thorough and

comprehensive fashion.By: www.CandleStickForums.com


The result can be profitable trading whether it will be

identifying stock price reversals or correctly

anticipating the continuation of a price trend.



Candlestick signals are effective tools for trading

stocks because of two reasons. They can accurately

predict future stock price movement.



They are also easy to read visual signals that cut

through the complexity of technical analysis and give a

clear indication of what is coming next in the stock

price.



Because Candlestick signals read market price changes

they are also useful in commodities

trading, futures trading, and options trading, as well as trading the stock market

directly.



A trader who learns his Candlestick signals and

patiently applies this knowledge will find himself to

be more successful in identifying stock price

reversals and profiting in stock trading.



An important factor in identifying stock price

reversals is whether the reversal is short term of a

basic sea change for the stock in question. A hot stock will commonly experience price corrections on its way up.



Traders and short term investors will engage in profit

taking. This practice is typically a healthy thing for

the market in general and for the stock price in particular.



An old saying is that you don’t have a profit on a stock until you take the profit on the stock. Old hands in the stock market will commonly take a little profit along the way even when they believe that a stock is going to be going up for some time.



The point of differentiating between a market correction and the development of an opposite trend is that the

trader will want to be out of his current position entirely if

the stock is changing direction.



If the stock is just experiencing a hiccup he or

she may increase a long position in the stock or

a short sell position if the stock’s basic direction is

downward.



For the long term investor identifying stock price

reversals in a bull market allows the investor to sell stock or to buy puts on the stock thereby hedging his

position.



In a bear market the investor will look to identify a price turnaround in order to buy

stock at the lowest price and sell later when the price is about the reverse again.



The investor can also profit by buying calls on stocks

after identifying stock price reversals in a bear market. Many cyclical stocks can be

traded this way for recurring profits.

