The Japanese candles represent «mathematical expression of psychological market moods» for the trader of Gary Wagner, using these east technical indicators in a combination to the western tools in interests of the active trading.
Gary Wagner has studied in commodity business some years before has started to use the Japanese candles at interpretation of the markets. Upon termination of college it has come to branch as the broker, and as he tells, «in 1989-1990 Future Source has started to show price range concerning time by means of candles. It seemed interesting, but I did not imagine especially what they meant. It was necessary to attend to extensive researches». Book of Seiki Shimizu under the name The Japanese Chart of Charts which he names «the alphabet for each technician in the USA. I have read it and as though have begun to see clearly. After I have understood it, my trading immeasurably has improved. I have started to earn money, and my clients have started to earn money too».
The Japanese candles differ from the traditional western histogram. The usual daily histogram shows the vertical strip representing results of one day. On the histogram are shown high, low and the price for closing of trading sessions, and last it is shown by a tic to the right of a strip.
Unlike it, the Japanese candles represent a rectangular cut with two thin lines over and under it. As they say in the book of Gary Wagner and Brad Matheny in the book Trading Applications of Japanese Candlesticks, «candle, or polar, the line is advanced as one complete cycle, with the prices at opening, low, high and closing. The thick part of a candle is known as really body. Thin lines over and under a real body are called shades and represent high and low for the given cycle … the White candle (empty) is received, when for the given cycle a rate on closing hardly above a rate at opening. Black candles (complete) represent opposite – high rate at opening should be above close the prices for a cycle ». Gary Wagner, however, uses the Japanese candles in a combination to traditional methods of the western technical analysis.
«Use of candles is a sure thing for the western technician. We use sliding average, stochastic, lines of trends. But usually more information can be received, having looked at a candle. The reason in that the western technician places emphasis on the prices between two closings», — notices Gary Wagner.
However candles show «dependence between the price at opening and closing for the given day. In dynamic sense, every day there is a fight, and the candle shows its result». The Most important result which Gary Wagner has acquired as the trader, consists that «the market develops irrespective of, whether it would be desirable you that it went uphill or fell … It is impossible to become attached to one item. It is necessary to have the systematized methodology which in the greatest possible degree would supersede emotions from trading ». Besides, he underlines necessity for traders in advance to be advanced in the sizes of risk and profit.
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