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How to Exit a Profitable Position? (Part 2)

Previously, we talked about the ONLY two ways to exit a position. 
Your way and the market way. 
What is the market way? It's simple. Do whatever the market tells you to do. Follow the sentiment of the market. Listen to the market just as you listen to your parents (many of you don't).
When the market whispers to you:"Hey trader, it's time to exit."You really should get out. As fast as possible. The market is not your home where you disobey your parents and still have them love you. You disobey the market, you pay the price. Fair enough? You naughty kid!
"But I can't hear the market's whisper."
"That's not because you're not listening. But you don't know how to listen."
"Can you tell me how to listen to the market?"
"You know I'll always say YES to you."
The market's whisperalways, always, alwayscomes in the form of Japanese Candlestick Patterns (JCP) formation. 
First of all, let's recall the two typ…

How to Exit a Profitable Position? (Part 1)

There are only two ways to exit a position - your way and the market way.
You can’t find a third way.
Your way requires you to have a predetermined profit target. 1x, 1.5x, 2x, 2.5x, 3x or even 10x of the risk taken, it’s completely up to you. I’ll assume that you’ve established a solid rationale for each of your profit target set.
If you set it at below 1x, I’ll be envy that you’ve got a strategy with super high win rate to justify the risk. My king, could you please share with me?
If you set it at 10x or higher, come on, man! Are you sure that's even realistic?
However, once the profit target is set, you must 100% commit to it. There should be no room for tolerance. You should not adjust it until the position is closed. Any attempt to lower or raise the profit target when the position is open is unethical. It is a sin. Why? Because it will disrupt you from being disciplined.
“I’m sure it will continue to go up. I don’t want to miss any profits. Let me just raise the profit target a bi…

Unspoken Secret: The Perfect Time Frame For Trading Candlestick Patterns

...So, we have the same burning question from all over the world:
Trader A: "What is the best time frame to trade the Japanese Candlestick Patterns (JCP)?"
Trade B: "The JCP changes with the change in time frame. A reversal JCP in a particular time frame may be no pattern in another. How to decide the best time frame to use?"
Trader C: "If you were given a 5-min, 15-min and 4-hour time frame, which one would you use to trade the JCP?" (This guy is pretty smart, huh? He asked a hypothetical and funnel question to limit the choice of my answers and attempt to get the desired one.)
Yes! I can't agree more. A Hammer on a chart could be a Shooting Star on another with different time frame. This can affect your trading decision badly.
If you don't get it, take a look at these charts:
If you were on this 4-hour chart on 20 October at 12am, you could have caught the Bearish Engulfing and made a decent profit.Now, look at what happened in the shorter time frames:

The No.1 Killer of Japanese Candlestick Pattern (Avoid It or It'd Kill You!)

Hey, Traders! Today, I'm very excited to share with you the No. 1 killer of Japanese Candlestick Pattern (JCP) -- the extreme JCP.

Let's get straight to the point: What is an extreme JCP?

Simply put, the size of the candle(s) is UNUSUALLY LARGE. But how large is unusually large? We can identify by comparing the size of the current candle with the average size of the previous 10 candles.

Hard to imagine? Let me give you some examples of extreme JCP:

Did you see the candle size of the Bullish Engulfing, Dark Cloud Cover and Shooting Star is unusually larger than the average size of the previous 10 candles? They are the extreme JCPs.
Now, my advice to you here is: Avoid trading the extreme JCPs or you risk blowing up your account. 

You're probably wondering; "Why can't I trade the extreme JCPs? Aren't they a valid JCP though?

Some of you may even ask: "The longer the upper shadow of the Shooting Star, the more effective the bearish reversal signal is. This is what …

The Power of Japanese Candlesticks

There are 3 major types of charts depicting price actions, namely line chart, bar chart and Japanese Candlestick chart. Which one is the best? In trading, we always want to catch the turning point of a trend in order to reap the maximum profits. We don’t want to enter when the price has already moved considerably. Unless you offer to be locked at the top or bottom voluntarily. Timing is everything. So, what is a turning point? A turning point is a time when the market sentiment is changed. The change of market sentiment can be from bullish to bearish or bearish to bullish. (Note that it could also be from bullish or bearish to no trend.)The Japanese Candlestick Chart is the ideal chart for analyzing the market sentiment. A Japanese Candlestick is constructed by the 4 critical prices in a specified time frame: Opening price, Highest price, Lowest price and Closing price (OHLC). The market sentiment is revealed through the elasticity of the OHLC. Consider this case. Stock A opens at $10…

How to Catch the Top and Bottom with Japanese Candlestick Patterns?

You trade the Japanese Candlestick Patterns (JCP) and you probably wonder why they don't work sometimes. The JCP offers tremendous value and zero value to a trader at the same time. Why it is so?

We know that there must be a preceding trend in order for a reversal JCP to take effect. The most effective JCP is born at the top and bottom of a trend, be it short-term or long-term. Just remember, the top and bottom are the holy shrine for a reversal JCP. If the reversal JCP appears elsewhere, just "next" your chart.

But how do we know where the top and bottom of a trend is? This is the most commonly and frequently asked question we've got from traders around the globe.

It's simple. Support and Resistance. If you don't know what they are yet, please take your initiative to google them. But I need to highlight one important thing about the Support and Resistance here. Do I have your full attention?

90% of the traders, including you, think that the Support or Resistance…

3 Steps to Quantify the Bullish Momentum of a Candle

We all know that green candles contain bullish momentum and red candles bearish. However, we are often ignorant on the quantity of the momentum. In other words, how bullish is a bullish candle and how bearish is a bearish candle? 
Measuring the quantity of the bullish momentum in a candle is critically important in order to increase the winning probability. 
We can quantify the bullish momentum of a candle in 3 steps: 
Step 1: Divide a candle into 4 segments with 25% each segment. 
Step 2: Mark down 100% bullish momentum at the high of the candle, 50% at the middle and 0% at the low. Then, mark down the 25% and 75% accordingly. 
Step 3: Observe which segment the closing price of the candle is located. You can probably tell the percentage of the bullish momentum. 
The image above shows that there is approximately 10% bullish momentum in the red candle and 90% bullish momentum in the green candle. 
Now, try to find out the percentage of bullish momentum of a candle on your chart. 

---Your Way t…

Japanese Candlestick Pattern Intro: Gravestone Doji

This Japanese Candlestick Pattern is called Gravestone Doji. 

What is the word commonly associated with the gravestone? You've got it! Rest in Peace (R.I.P). 

Just imagine: A Gravestone Doji is formed when the market comes to its top, what is likely to happen next? 

Hey! Mr Market. May you R.I.P.

---Your Way to Becoming a Profitable Trader---
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