Here I list six reasons why candlestick charts are so popular amongst professional traders:
- Leading indicators – They have an ability to show reversal signal earlier that western chart techniques. As such, candlestick charts are a true leading indicator of market action. Candlestick charts regularly identify potential moves before they become apparent with western technical tools or indicators. It is almost rare to found Japanese candlestick pattern in Western chart trading techniques.
- Pictorial – They are very pictorial and describle the state of player’s psychology the moment they unfold. All of which can be utilised to make meaningful trading decision. Terminology like hanging man, shooting star, dark cloud cover, hammer, morning star and some others paints indelible word pictures which can assist the trader to remember the pattern through remembering the name.
- Versatile – Candlestick chart are versatile in that they can be used alone or by combining with any other indicators (including Western technical tools). Candlestick use the same price data as bar charts yet the candlestick technique better promotes the ability to recognise complex pattern groups and predict the next possible outcome based on them.
- Can be used at any time frame – Candlestick charting techniques can be adapted for either for short and long term chart.
- Flexibility and adaptability – It can be applied to follow as many market as desired, either for stock market, currency market, or commodity.
- Time tested dependable and useful – the candlestick charting technique is time tested and has been refined by generations of use in Japan. The fact that it is still be used after about 300 years since its discovery is testimony of its usefulness.