Candlestick patterns have gained recognition as technical signals to trade the Indian stock markets. Knowledge and application of different candlestick patterns is considered advantageous to those intending to develop a competitive edge and maximize returns whenever trading in stocks and/or indices in India. There are five broad benefits of incorporating candlestick analysis in the Indian stock trading system.
1. Picking up on trends and reversals fairly quickly
and candlestick charting is far more ‘graphic’ compared to other charting techniques (line or bar chart) and in respect of up, down or change in trends, traders will be able to locate these more easily on an instant basis. This make it possible to capitalize on the shifts that happen in the markets, and the flip flops.
2. Evidenced from the research
Whether you aspire to be a daily scalper or a long-term holder of the asset, candlestick patterns will be useful to you. Day traders should rely on Doji and hammers to search for an intraday swing in the opposite direction; bears and bull trend weakness can be identified by Dark Cloud Cover and other patterns. In its simplest explanation, candlestick patterns assist intra-day, swing and positional traders in identifying potential trading opportunities in stocks, indices, commodities, currencies and any market.
3. Complements Technical Analysis
Candlestick patterns can also be used very effectively in conjunction with other technical indicators. Some such patterns that assist in confirming or reinforcing trading signals are Engulfing and Harami patterns, which superpose the indicator patterns such as RSI, MACD, Fibonacci, Moving Average and so on. Further, the application of candlestick patterns with other technical analysis systems enhances total efficiency of trading signals.
4. It is easy to learn
Advanced combinations and sequence analysis requires some concepts and knowledge, but most of the candlestick pattern like Doji, Hammer, Bullish and Bearish Engulfing and many more are self-explanatory patterns. Still, it is possible to learn about them and apply them in the trading strategies without lossing much time on training.
5. Sentiment and momentum of the stock market
Some of the most important patterns that are used in candlestick analysis are created depending on the open, high, low and close prices of a period by different shapes. They provide variety on the dynamics of the market and who is in a position of power as either the buyers or the sellers. It presents very essential data on the psychological condition of the market at some point that can be used to set trading entry or exit points effectively.
Conclusion
As such, the application of a candlestick pattern to trading and regardless of the level of experience of the trader can benefit immensely. To start with , one is free to open an account with any of the leading Indian stock brokers including 5 paisa that offers free online share trading classes coupled with knowledge in technical trading as well as candlestick patterns. Their highly recommended stock market course lets someone learn about candlestick trading in the Indian stock markets.
