Chapter 2

Getting to Know Candlestick Charts

In This Chapter

bullet Considering the advantages of candlestick charting

bullet Examining a few potential candlestick problems

bullet Checking out the competition: Line, bar, and point and figure charts versus candlesticks

Ever wonder why a trader or investor would choose candlestick charts over other types of charts when analyzing price action of investments or markets? Well, this chapter provides some answers.

Trading and investing aren’t easy undertakings, and they’re certainly not easy professions. Most traders — professional and amateur alike — and investors struggle just to keep up with the market’s performance as measured by the Standard & Poor’s 500 Index (S&P 500). The S&P 500 is an index comprised of 500 of the largest stocks traded in the United States (U.S.) and is considered representative of the stock market as a whole.

In order to be one of the successful few who beats the market and other market participants, you should strive to develop a competitive advantage or some unique insight, commonly referred to as your “edge,” that you believe ...

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