Uncle Steve Presents: “The Whole Ball of Wax: The Sticks According to Uncle Steve”
Who is Uncle Steve? Started with Merrill Lynch in 1975 Moved to Denver in 1976 Worked for MLFPS, Paine Webber and others Left industry in 1990 Mid-Life crisis period: award-winning baker, college degree & pursuit of MBA Cedar Creek Trading (1997): Introducing Broker & CTA 30+ years of developing indicators and mechanical systems led to: lecturing, writing articles and giving seminars
Why should I study candlesticks? Fundamental vs. Technical Analysis
“Funny Mentals” All companies tell the truth. The government never lies (nod, nod, wink, wink). The government never releases bad information (please don’t shoot me Mr. Vice President). There is a formula that calculates 250 fundamental circumstances and then assigns weights and then and then… The fundamental news has made me a “ton” of money (well, actually… $6.27; but it’s cost me thousands). I watch MSNBC and Bloomberg and they tell me all the important things to trade issues successfully (well, at least Maria is a hot tomato). I can’t wait until tomorrow, because I get better looking everyday.
“Funny Mentals”
“More Funny Mentals” “Funny Mentals” More: “Funny Mentals”
Decision Making “Psychologists have known for a long time that people often act in a seemingly irrational manner and make predictable errors when forecasting. This behavior is harmless when it causes a zest for the home sports team. Being overly optimistic when rooting for you team is fun. However, when this behavior affects your investing decisions, it can cause you to make small mistakes that lower your return or make big blunders that devastate your wealth.” John Nofsinger INVESTMENT BLUNDERS of the Rich and Famous: …and What You Can Learn from Them
The trader is like a Masai Warrior who RISK The trader is like a Masai Warrior who each day must “face the knife” and hunt the lion with only spear and bare hands. His success will come from relying on his wits and instincts at the moment of truth, embracing risk as his ally to achieve the desired outcome. Robert Koppel - The Tao of Trading
Technical Trading The question for the trader is whether it really is possible to divorce the longer-term goal of profitable trading from the potentially traumatic short-term effects of incurring losses. The answer lies in the making of two specific commitments. The first is the commitment to use a technical trading system which provides automatic entry and exit criteria and which incorporates money management principles….The second commitment is the adoption of an attitude toward oneself which is supportive of trading. Tony Plummer The Psychology of Technical Analysis
A little candlestick history “Serving the technical world since 1640” Steve Nison introduces “sticks” to the west Format is similar to bar charts, but………. No additional calculations (except: O, H, L, C) Chart dynamically…a picture of supply and demand Interpretation of candlestick charts is based primarily on patterns of accumulation & distribution (supply and demand)
A little more candlestick history The Fountain of Gold – The Three Monkey Record of Money (1755) Homma from Sakata “When all are bearish, there is cause for prices to rise…” “See no, hear no and speak no…” “Learning is the gate, not the house. You first have to go through the gate to get to the house.” “He whose ranks are united in purpose will be victorious.”
Candlesticks ARE important! “The MOOSE is Loose” www.cedarcreektrading.com
Typical Bar Chart
Notice the difference?
White candles = Up days Black candles = Down days
The Shadow(s) Knows!
“A hint of a top or a bottom”
“More than a hint of a top or a bottom”
Long-legged Doji
“Those who sell at a low price level after this doji will die and become a ghost.”
“Those who buy at a high price level after this doji will die and become a ghost.”
“Market is losing it’s breath ”
“Bullish Engulfing”
“Bullish Engulfing”
“Bearish Engulfing”
“Bearish Engulfing”
“Piercing Line”
“Dark Cloud”
Paste this one on the wall!
“If you only learn one candle…”
Shooting Stars are powerful
The opposite of a hammer
“Preggers”
Harami: inside the body of…
“Oh what a beautiful morning”
“Ain’t it lonesome when dat sun go down”
“The side that knows when to fight and when not to will take the victory”
“Even beautiful things have disadvantages and must be used with caution.”
Review: Doji
Do you see any doji? “The MOOSE is Loose” www.cedarcreektrading.com
Review: Bullish Engulfing
Corn Today
Review: Bearish Engulfing
Lot’s of men “hanging”.
Review: Hammers & Hanging Man
“Can’t touch this”
Review: Piercing Line
The Great White North
Review: Dark Cloud
Piercing vs. dark cloud “The MOOSE is Loose” www.cedarcreektrading.com
Review: Bullish Harami
Candles can take on dual identities “The MOOSE is Loose” www.cedarcreektrading.com
Review: Bearish Harami
The Great White North 2
Review: Morning Star
Bottom feeding with candles
Review: Evening Star
Stillness in the evening
Part II Candlestick formations that you won’t find in textbooks The ignored candle parts: wicks/shadows Candlestick formations applied to recent charts Using candlesticks with moving averages (the trend is still your “biggest friend” Multiple timeframes
Cedar Creek Trading Steve Karnish, Principal www.cedarcreektrading.com Uncle Steve … hard at work.. email: cedarcreek@comcast.net