As has been said earlier, candlestick is a tool. It is not a system. You should integrate candlestick technique with other techniques to build your own system.
In the earlier post, I’d recommended Market Wizards books siries for those who are interested to invest in any market (Note: Market could means share market, forex, commodities, index futures etc) with technical analysis. Why I recommend those books? Why don’t I recommend other books like How I Made 2,000,000 in the Stock Market at the first place? It sounds cool right. You can made $ 2 million in a stock market as a private trader in a year. Wow! That’s sound great. (Note: I do not say this book have no good)
The reason is you shall understand that it is not easy to make money in the market. Yes, it is very easy to buy any shares, but to buy it as an asset is not. Just put your order through your broker, few minutes later, done! As simple as that. But, hey… you’re buying shares to make money, not for fun or even gamble and turn it into liabilities!
Remember, you’re only by securities, or a contract but to make it as an asset i.e to make profit (money) from it is not as easy as you think. You must learn a proper knowledge to make money from it.
That’s why there are certain people view it as a form gambling (maysir) and uncertainty (gharar) thus it is prohibited in Islam. For me, they are wrong. Do you know any people who drives a car without knowing which one is brake, side mirror, clutch, gear, wiper and all those important thing to drive a car? It goes the same for trading or investing in the market.
When you have read any books suggested earlier, you shall know that market is not a place for quick money, while if you’re a professional that’s true but for a beginner it is not. You could read stories which all those great traders have mountain of debt, they lost everything in the 1st 5 years, they learned it hard way and such type of stories.
It is the same in other business fields. As an example, for those who are thinking “internet business” is so easy. Attend any workshop, learn how to build a blog, website, write an ebook… tadaa… you will come the next Irfan Khairi! When they don’t get any sales for 1 months, 2 months … 4 months, their blogs / websites now are all abandoned. But it is a big different if Irfan Khairi now venturing his new Internet business compared to the beginner.
Thus, to understand more about market you shall read this book Technical Analysis of the Financial Markets written by John J. Murphy.
This book for me could give you a good and in-depth understanding on technical analysis subject. The language is easy to read and easy to understand.
What is technical analysis? What is forecasting? What is random walk theory? What is Dow Theory? What is trend all about? Chart pattern up to money management & trading tactics.
This book is not complete, but it is a very good book to understand the general concept in technical analysis. From here, then you can go further to develop your trading system and understanding the real business that is showed in prices. You may realize many things afterwards.
Again this book will give your other tools needed in order for you to trade any market. You may even dump candlestick technique and switch to point & figure charting and develop a system around p&f charting technique.
Happy investing!
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