This special compilation of past Active Trader magazine articles contains six articles devoted to different aspects of candlestick analysis and trading techniques.

The strategy articles range from simple concepts to more complex techniques. Also, an extended interview with Steve Nison is included in the package. This collection is 30 percent off the regular price. Price shown is the discounted price.


ARTICLE 1: "Steve Nison: Candles shed light on the market" by Kira McCaffrey Brecht (January 2003)
Summary: An interview with candlestick analyst Steve Nison.

Excerpt: When Steve Nison provided trade recommendations to brokers at Shearson Lehman Hutton, where he worked in the futures research department more than 15 years ago, he didn’t tell them he was using Japanese candlestick analysis.

Although technical analysis was more widely accepted in the futures industry than on the equity side of the business, candlestick charts were still virtually unknown in the West. At the time, Nison was not quite ready to reveal the intricacies of candles (he was still finalizing his research on them) and he also did not relish the thought of explaining a particular buy or sell signal was based on a "hanging man," "morning attack" or "three advancing soldiers" pattern.

In recent years, Western technicians, including stock traders and analysts, have come to appreciate the additional insights these visually distinct price charts can bring to market analysis...

ARTICLE 2: "Candles in the zone" by Thomas A. Bierovic (June 2002)
Summary: A candlestick–pattern strategy that uses Fibonacci ratios to identify changes in trends and countertrends.

Excerpt: Like most other technical analysis tools, Japanese candlestick patterns perform better in some market environments than in others. Most candlestick patterns are reversal patterns––i.e., they are supposed to alert traders to the impending change in a market’s underlying trend.

However, because a basic tenet of technical analysis is trends are more likely to continue than reverse, reversal patterns work at a disadvantage. Essentially, reversal patterns tease traders by telling them, "Although a trend is more likely to continue than reverse, this trend is going to reverse now." Of course, candlestick patterns sometimes do correctly forecast reversals of the major trend, but more often than not, the major trend resumes after undergoing a correction or period of congestion.

When analyzing chart patterns, the three most important words are context, context and context. For this strategy, a retracement zone provides the technical context that increases the reliability of candlestick patterns...

ARTICLE 3: "Candlestick patterns Beyond the basics" by Thomas A. Bierovic (November 2002)
Summary: Discussion of multiple–bar candlestick patterns that can identify important market inflection points.

Excerpt: Although Japanese candlestick charts have become very popular in the west over the past several years, some candlestick patterns are understood better than others. Many traders who make use of a few simple candlestick patterns haven’t mastered more complex patterns––those that develop over the course of several trading periods.

Two of these more difficult candlestick patterns are "Tower" tops/bottoms and "rising/falling threes." Although the former are reversal patterns (they usually reverse the prevailing trend) and the latter are continuation patterns (they usually lead to a resumption of the trend), these formations have much in common...

ARTICLE 4: "Don’t fall into the trap" by Thomas A. Bierovic (July 2002)
Summary: Identifying a candlestick pattern can transform bull and bear traps into new trading opportunities.

Excerpt: Many breakouts are nothing more than bull or bear traps, but candlestick patterns can tip you off to when a trap is occurring, helping you turn losing trades into winners.

Bull and bear traps have been catching unwary traders in their clutches ever since the financial markets began. However, if traded properly, traps can actually be one of the most reliable chart patterns.

One way to transform bull and bear traps from nemesis to benefactor is to identify a candlestick pattern within a trap and trade in the opposite direction––i.e., using a bull trap as a selling opportunity and a bear trap as a buying opportunity...

ARTICLE 5: "Flags by candlelight" by Thomas Bierovic (January 2002)
Summary: Just as you need more than one wall to hold up a roof, you need more than one trading idea to take consistent profits out of the market over time. Combining, or "synergizing," flag patterns and candlestick formations can result in better trades than either approach could provide on their own.

Excerpt: The potential rewards of trading stocks and futures are so great that competition in the markets is fierce. The markets do not exist to provide easy money to the fledgling trader; instead, they constantly redistribute wealth from the aspiring many to the successful few.

One of the many mistakes beginning traders make is thinking they know a lot about technical analysis because they know a lot more than they used to. Unfortunately, the markets will not reward dabblers or dreamers with quick fortunes (or even livelihoods) just for knowing how to recognize a double top or how to calculate a moving average.

However, a technical trader can get an edge on the competition by cleverly combining two simple trading concepts into one original trading idea that is greater than the sum of its individual parts...

ARTICLE 6: "Trading tests and retracements with Japanese candlesticks" by Teresa Lo (October 2000)
Summary: Candlestick patterns help highlight the battle between the bulls and the bears. Western trend analysis helps identify test and retracement levels. Combining the two approaches can improve your ability to catch market turning points.

Excerpt: Japanese candlestick charts have become immensely popular over the past 15 years and are now a familiar sight to most traders.

However, consistent application of candlestick patterns – especially when used in conjunction with Western technical analysis methods – has eluded many traders. In this article, we’ll explain how to use Japanese candlestick patterns with retracements and tests... These six articles would cost a total of $27.25 if purchased individually. Save 30 percent and purchase them as a set for $19.08.