Traders are using multiple tools and indicators to improve their trading performance. There are many options to choose from. Sometimes, this variety can absorb you so much, you forget about the simplest methods. And today we will come back to basics, in a way. We are going to discuss a strategy that requires you to watch the candles on the chart.
There are several types of charts you can work on while trading on the Binomo platform. One of the most commonly used is Japanese candlesticks. This type of chart is utilised in many strategies you will come across and also today we will base on it.
So, when you set the Japanese candlestick type of chart, you will see a series of candles that take different sizes and colours. The green candles are also known as bullish ones and the red candles are called bearish. Some of them have wicks and some do not. And this is an important part of today’s strategy.
When the shadows appear on both sides of the candle, it means the course of the price is quite difficult to catch. When the shadow is long, the price level was rejected.
Candles wicks in trading
Before you begin trading based on the wicks of the candles, prepare your chart, that is choose Japanese candlesticks and the timeframe (we will be using 5 minutes candles here and the transactions will be open for 5 minutes as well). Moreover, decide what type of asset you are going to trade and what is the amount you can invest. It should not exceed 1 to 5% of your overall capital.
Candles with the shadows offer trading signals in two situations. The first situation is when the price is ranging and is testing the support or resistance levels. The second occurs when the price breaks out support or resistance, moves in a certain direction, and then tests the key level again.
Trading with the wicks of the candles when the price is ranging
In the times of the price moving sideways, you can easily mark the support or resistance levels from which the price returns.
Look at the exemplary chart below. The support line is drawn. You receive a trading signal when a candlestick with a long wick pointed downwards touches the support. Open a long position.
Below you will find the resistance level drawn on a 5-minute Eurodollar chart. When a candle with a long shadow pointed upwards appear, you can enter a trade for the price decrease. The duration of your transactions should be 5 minutes.
Trading breakouts with candles wicks
The first thing is to wait for a breakout of the key levels. When this happens, you can expect a new trend to form. Watch the candles carefully and look for opportunities to enter the trade.
Below you will find the chart with the resistance level drawn on it. After some time, the level was broken by the green candlestick with the shadow pointed upwards. Watch the candlesticks and await the one that touches the earlier resistance level. This is your signal to open a transaction for the price increase.
The next chart shows a situation when the support is broken by a bearish candle. Enter a sell position when the next candle tests the level.
There are many ways of trading. Do not forget about the simplest ones that do not require you to add extra indicators to the chart. This article describes a trading strategy that is based on the candle bars with the wicks.
Set the Japanese candlesticks type of the chart and the timeframe for 5 minutes. Trade when the price moves sideways or when it breaks out the support or resistance.
Breakouts of the meaningful zones are quite safe to trade. The win rate is quite high because the price often behaves in a certain way after the breakouts.
Always have your money management plan with you. It will help you to stay on track.
Use the Binomo demo account, where you get the possibility to test any new strategy in a risk-free environment. You can come back here as often as you want to. Once you feel confident enough, shift to the live Binomo account.
Wish you high profits!