Many investors believe trading the Candlestick Doji System is the best trading strategy for Binary Options. A Candlestick Doji will happen when both the opening and closing prices are the same or resemble each other closely. Knowing the information and the source of that information is also very important.
When using the Candlestick Doji System or any other system for that matter, the first and most important thing to consider is with which broker you are trading.
At Day Trader Guide we provide an in-depth review on a variety of brokers and a comparison of their trading platforms. Select the broker that best fits your day trading needs, and then you can begin using the Candlestick Doji System.
The first thing you need to know is that a Candlestick Doji System is only substantial after a lengthy move to the upside (for a short setup) or a long move to the downside (for a long setup). The issue with this system is that you don’t know all the information about the markets beforehand. You’re only going to be able to use the information that is given to you, which is information that is known after prior momentum has stalled.
*The Candlestick Doji System should be used at a support or resistance area.
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The underlying asset being shown formed a Doji after successive positive days and then moved into the previously supported area of $17.50. A support area may become resistant after it has been breached, which makes this a good candidate during a short setup.
How can it be determined if this stock is going to reverse directs and move towards the downside, or just continue with its upward trend?
You’ll have to move down to a lower time frame. Then you’ll be able to see what is going on within that Doji.
From looking at this chart, how can you tell what is going to happen next? You’re going to have to move further down and lower the time frame. Usually, I tend to use either hourly or 15 minute charts.
In this example, stocks values are becoming more aggressive at that price area. In a situation similar to this you’d want to go short on a stock on the day of the Doji, making for an aggressive entry. Then you’ll have to wait until the next day to determine if the trade has moved decisively below the reversal pattern, in either case your stop will be higher than the two tails.
In this example, the stock traded down 5% on the following day:
Now, it will not work out like this every time, but there are ways in which will significantly improve the success rate if you use trade with a Doji Candlestick pattern. You have to search for those hidden reversal patterns in the lower time frames.
If you don’t recognize the reversal pattern, then you should move on to another asset with a pattern that is much more clearer to identify.