Bloomberg Visual guide to Candlestick Charting PDF- Candlestick charts are an effective way of visualizing price movements and, due to the increased interest in the complex derivatives market, they are being used more and more widely. This book is arranged in an easy-to-use manner, providing a quick reference for those new to the field.
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Category: Technical Analysis
Author: Michael C. Thomsett
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Introduction- Bloomberg Visual guide to Candlestick Charting PDF
Today, a majority of chartists and technicians are familiar with candlestick charting patterns. However, many chartists are not certain about how to interpret the dozens of indicators found through candlestick analysis, or how to use candlesticks along with other indicators to confirm reversal and continuation forecasts. This has led to the desire among traders for a consistent, reliable, and powerful system that supplies them with more and better information.
As a part of this desire among traders for more and better information, the enthusiasm for candlesticks as informative representations of price movement is due to their many attributes, including:
1. Instant recognition. The significance of a series of candlesticks is recognizable at a glance. A strong upward or downward movement is visible not only because of the direction of price trends, but also because of the color of candlesticks. The strength or weakness of momentum is further visible in the evolving height of candles, the volatility of trading range, and the special meaning of exceptionally large or small sessions.
2. Valuable confirmation. Technicians know that any indications of significance (breakout and a new trading range, resistance or support testing, and gapping action, for example) need to be confirmed before entry or exit should occur. But how do you confirm and then decide before the important and expected price movement takes place? The answer is found in candlesticks. Anticipating price movement rather than following it helps every trader improve the timing of entry and exit through the use of candlesticks to confirm traditional charting patterns and indicators.
3. Variety of indications. There are dozens of candlestick indicators, and each has a specific name. How many? This book defines and illustrates approximately 200 candlesticks and related terms. The distinction between the number of sessions involved with a particular candlestick indicator can be confusing; for this reason, the terms used in this book are “sign” (single candlestick), “move” (two-session indicators), and “pattern” (three sessions). While the time span of sessions may vary from seconds or minutes up to hours, days, or even weeks, the chart examples provided in this book are those of daily charts; and the sessions are described as “days”—however, the observations of indicators and their meaning apply equally to charts of all durations.
4. Applicability for a range of trading purposes. Candlestick signs, moves, and patterns provide valuable price movement insight for a range of purposes. These can be used not only as confirmation tools, but also to augment day trading or swing trading strategies, timing of options trades, identification if current price volatility, and even for timing of purchases as part of a value or growth investing strategy.
This book provides a convenient and easy-to-use summary of candlestick patterns. It is arranged in the following chapters:
– Types of charts. Candlesticks are the most valuable of charting systems; this section compares them to line charts and OHLC varieties.
– The history of candlesticks. Here are brief explanations of where Japanese candlesticks were first used and how they became popular in American technical analysis.
– Candlesticks and their attributes. This is a summary of the parts of the candlestick and what each reveals, in terms of shape, size, and color.
– Pitfalls of candlesticks. Like all systems, candlesticks cannot guarantee 100 percent accuracy in timing of entry or exit. They can provide improvement over analytical skills and the timing of entry and exit. However, traders should be aware of the pitfalls within the world of candlesticks as well as the advantages.
– Confirmation. The key to all technical analysis is confirmation, the verification of what one indicator reveals with the same prediction offered by a separate indicator.
– The six basic candlesticks. Although there are dozens of possible candlestick indicators and combinations, they all consist of combining six basic candle types.
– Candlestick alphabetical entries. This section contains entries with descriptions as well as two illustrations for each: a small view of the candlestick followed by an actual example on a chart of one of 50 selected stocks.
– Noncandlestick confirmation indicators and terms. These are traditional Western indicators (as opposed to Eastern, or candlestick types) used to confirm what candlesticks first predict, or that predict changes that are then confirmed by candlestick indicators. The section also explains principles of technical analysis related to overall methods, or to both Eastern and Western charting techniques.
– Answers to Test Yourself, for e-book users, are provided through the previous sections of the e book. These consist of multiple-choice, true/false, and chartcompletion exercises.
– Bloomberg systems. A brief explanation of how the Bloomberg terminal provides basic keystroke commands to begin the process of using candlesticks and their charts.
The stock charts employed are those of 50 well-known listed companies, shown in three-month timeframes. Additionally, many of the alternative charting types and traditional technical indicators are also explained in the context of how they work along with candlesticks.
Some discussions of signals and what they predict are not shown completely in these limited timeframes, so in these cases the text explains what followed (or preceded) the indicator shown within the three-month timeframe.
This book is highly visual and takes you through all of the information you need in order to master candlestick charting in the broader context of technical analysis. The purpose of setting up the book with these visual aids and in alphabetical order is to explain the meaning of each candlestick indicator, not only by defining the indicator itself and how it appears, but also to provide an analytical context. Knowing the importance of a candlestick indicator as it appears in the price chart helps improve the timing of entry and exit. Every trader needs to rely on analytical signals and patterns to anticipate price movements and to confirm those movements as rapidly as possible. This is where the strength of candlesticks is most important and most valuable.
The inclusion of several traditional Western indicators helps you further see how confirmation works between the two approaches to charting (with “Western” being the traditional price patterns so popular with technicians, and “Eastern” being candlesticks). Neither is better or worse, but the disciplines are separate. The greatest value in charting and technical analysis is derived by using the best of both sides to improve insight, anticipate price movement and momentum, and time entry and exit. This book is designed to enhance your charting skills by knowing how to best employ candlestick charting techniques.
One problem in relying on fixed-period charts to explain or check indicators is that the proof of a reversal or continuation often extends beyond that period. In many instances, the indicators are proven or disproven by long-term price patterns in the periods after the period shown. This is unavoidable. No matter how long a period might be used in plotting a candlestick indicator and its later outcome, there will always be ramifications that need explaining. With this limitation in mind, many of the explanations of indicator outcomes include mention of price developments taking place after the threemonth timeframe shown in each chart.
Candlestick charts are an effective way of visualizing price movements and, due to the increased interest in the complex derivatives market, they are being used more and more widely. A combination of a line-chart and a bar-chart, where each bar represents the range of price movement over a given time interval, candlestick charts are most often used in technical analysis of equity and currency price patterns. A guide to the most used charts, The Bloomberg Visual Guide to Candlestick Charting is arranged in an easy-to-use manner, providing a quick reference for those new to the field.
Candlestick charts are formed with the help of the opening, high, low, and closing price of the day―if the opening price is above the closing price then a filled candlestick is drawn, and these charts are visual aids for decision making in forex, stock, commodities, and options trading.
- Contains alphabetical explanations of over 200 candlestick and related terms
- Includes daily charts of 50 companies, and six-month charts for comparative explanations of candlesticks with Western-style technical indicators
- Written by Michael C. Thomsett, author of over sixty books and hundreds of articles, including the bestselling Getting Started in Bonds, also published by Wiley
- Enhanced eBook editions offer video tutorials, test-yourself quizzes, and full-color/interactive charts and graphs, available for purchase separately.
A practical and concise resource for anyone new to this way of representing derivatives, The Bloomberg Visual Guide to Candlestick Charting presents sometimes confusing concepts in a format that is easy to understand and digest.
Table of contents- Bloomberg Visual guide to Candlestick Charting PDF
Introduction: The Value of Candlestick Charting vii
Chapter 1: Types of Charts 1
Chapter 2: The History of Candlesticks 11
An Era of Commerce and Growth 11
The God of the Markets 12
Candlesticks Come to America 13
Chapter 3: Candlesticks and Their Attributes 15
The Importance of Long Candlesticks 18
The Opposite: The Extremely Narrow-Range Session 18
Attributes Missing in Candlestick Analysis 19
Chapter 4: Pitfalls of Candlesticks 21
Chapter 5: Confirmation 29
Chapter 6: The Six Basic Candlesticks 31
Chapter 7: Candlestick Alphabetical Entries 36
Chapter 8: Noncandlestick Confirmation Indicators and Terms 246
Appendix: Bloomberg Functionality Cheat Sheet 370
“Another winner from Michael Thomsett! Many traders consider candlestick charting a difficult subject to master, but the Bloomberg Visual Guide to Candlestick Charting has made it easy. The interactive quality of this book makes a complicated topic come alive. Michael’s enthusiasm leaps off the page—I didn’t want to put it down.”
—Marty Kearney, Options Institute,Chicago Board Options Exchange
“The Bloomberg Visual Guide to Candlestick Charting is truly a comprehensive reference for any trader who wants fast access to the essence of candlestick indicators. The visual approach taken by the author makes the topic user-friendly and valuable.”
—Julie Schoerke, principal of JKSCommunications, A Literary Publicity Firm
“Michael Thomsett articulates how candlestick interpretation reduces trading risks, improves timing, and assists individuals in managing their portfolios effectively. This book is designed for ease of use and I recommend it highly. I would also recommend the book to the thousands of members of the GlobalRisk community who know Michael as the top blogger and trainer.”
—Boris Agranovich, founder of GlobalRisk community
“It is refreshing to find a book that tackles a complex topic like candlestick chart interpretation and makes it crystal clear. Every chartist and technician should keep this book close at hand. The alphabetical and visual combination makes this the book of choice on candlestick charting.”
—Michelle Lemmons-Poscente, Chairman of the International Speakers Bureau
About the author
Michael C. Thomsett is a financial writer with over sixty books and hundreds of articles to his credit, including the eight editions of Getting Started in Options, as well as Getting Started in Swing Trading, Getting Started in Fundamental Analysis, Getting Started in Property Flipping, and Getting Started in Rental Income. He has been a management consultant in the securities industries and is an active options trader.
“I have been writing professionally since 1978 and fulltime since 1984. Today I operate my options educational website at ThomsettOptions.com.
From 1978 to 1984 I wrote part-time and also was a consultant in the financial services industry. Once I began writing fulltime, I began in the magazine journalism field as a freelancer. In 1985 and 1986 I wrote approximately 500 articles in business, trade and professional magazines. I then switched over to books exclusively and have written over 70 books. These include my own as well as ghost-written projects.
Today I like to work on multiple books at the same time, normally two or three projects. Being able to switch back and forth keeps the writing process fresh and interesting. I generally write from 7 a.m. until noon and spend afternoons on research.”