Timing stock investments is commonly the key to profits in the NYSE or NASDAQ. Fundamentals are what drive eventual price of a stock. When fundamentals change so do stock prices. Using fundamental analysis helps in knowing what stock might be selling at a bargain price but not in timing stock investments. Technical analysis with Candlestick charts does not tell us anything about intrinsic stock value, price to earnings ratio, or margin of safety. But, Candlestick pattern formations help traders and investors decide when a stock has hit bottom. Candlestick pattern formations help investors and traders increase their profits by buying at the bottom of a price curve and not when stock prices are higher. When stock fundamentals change there is often a period of market inefficiency as the market digests new information. News that occurs before market hours often causes a stock to open well above its previous day close. Success in trading a breakout gap like this often depends upon technical analysis with Candlestick patterns.
When Fundamentals Are Not Clear
In the often chaotic and confusing stock market news of today investors are confronted with conflicting opinions and what appear to be conflicting market fundamentals. Timing stock investments can be tough for the investor steeped in fundamentals when the fundamentals are uncertain. At such times, a firm grasp of how to use clear and easy to read Japanese Candlestick charts can help both investor and trader. The old saying about not being able to see the forest because of all the trees certainly applies to trying to invest in stocks or trade stocks in a market of confusing fundamentals. Here is where a tried and true system like Candlestick analysis comes to the rescue.
Reading Market Trends
Market trends and market reversal occur in repeating patterns over the years. What may seem to be a brand new stock market trading phenomenon has typically been seen many times before. Rice traders in ancient Japan saw this and categorized various price patterns. They found that when the first part of a pattern occurred the second part was highly probable. Japanese Candlestick charts that first had application in commodities trading of rice have found application in trading options, futures, Forex, and stocks. It not only works for day trading but for long term investing as well. Although investors timing investments may hold a stock for years, their long term profits will be substantially higher if they buy stock at the best price and if they sell stock at the optimum price. Investors typically research stocks and by timing stock investments buy when the price is right, and eventually sell when dividend stocks stop paying dividends or stock price appreciation tapers off. Traders benefit from both rising and falling stock prices. Both benefit from the insight into market sentiment that Candlestick chart formations offer.
Using a Japanese Candlestick to Light the Way to Profits
Stock market analysis with Candlestick signals provides objective insight that investors and traders do not get from analyzing stock fundamentals. Analysis of stocks with Candlesticks pattern formations as a guide helps investors in timing stock investments in order to gain maximum profits.