Up-Coming events:

April 2008 Seminar at Sea cruise to Panama Canal

At TradingOurWay, we are currently planning a Seminar at Sea cruise departing out of FT. Lauderdale on April 12th, 2008. It’s an 8 day cruise to the Panama Canal with 4 sea days of classroom activities. We would love to have everyone join us! Complete details can be found on the Tradingourway website.
Note: We encourage you to Sign up now! as the "Early Bird" seminar fee of $495 will increase after Oct 29th, 2007 to $795

Previous Issue:
 
 I closed out the previous newsletter :
As a foot note, today Sept 19, 2007 SCON was up 4.4% and my entry point of $5.87 was executed. SCON closed at $5.91 

I hope those of you that read the complete article took advantage of the trade as I did. I closed my trade @ $9.43 on 9/26/07 when it gap open and almost immediately took out the previous day's close. Not bad for a week's work. However, my making a nice profit isn't what is important here. It is the fact, that we could determine a reasonable target using Fibonacci's and have the discipline to execute and manage the trade.

This is what you will learn in our April seminar.

It was a little disappointing to see so few access and download the Fibonacci calculator.       
 

This Issue:
We are going to address candlesticks. There over 300 candlestick patterns but only a handful are needed to successfully trade using them. My good friend Stephen Bigalow has written 2 excellent books on this subject. They are both worth reading. Steve ask me to assisted in the second by book by being a proof reader. So you know it is a great book. Steve has done some really great work in identifying the 12 major Candlestick patterns that produce the best trading results. We are going to show you those 12 patterns here and add our comments on how to use them.

However, for in-depth information on the Candlesticks I am going to suggest you visit Steve's website www.candlestickforum.com. They offer books, CD's, online videos and online chat sessions. Many are free, other you have to pay him.  


  

	A Doji is formed when the open and the close are the same or very close. The length of the shadows are not important. The Japanese interpretation is that the bulls and the bears are conflicting. The appearance of a Doji should alert the investor of major indecision. I have "Coined"the term "Doji Farm" which refers to a series of Doji's lined up in a row. when this occurs the breakout that results is usually strong.
	The Gravestone Doji is formed when the open and the close occur at the low of the day. It is found occasionally at market bottoms, but it's forte is calling market tops. The name, Gravestone Doji, is derived by the formation of the signal looking like a gravestone. In this case the bears won the battle but it is still a sign of indecision.
	The Long-legged Doji has one or two very long shadows. Long-legged Doji's are often signs of market tops. If the open and the close are in the center of the session's trading range, the signal is referred to as a Rickshaw Man. . The Japanese believe these signals to mean that the trend has "lost it's sense of direction." All Doji are a sign of indecision but do provide some investor sentiment.
	The Bullish Engulfing Pattern is most meaningful when formed at the end of a downtrend. A white body is formed that opens lower and closes higher than the black candle open and close from the previous day. This complete engulfing of the previous day's body represents overwhelming buying pressure dissipating the selling pressure. This signal require confirmation  and should not be played without the confirmation.
	The Bearish Engulfing Pattern is directly opposite to the bullish pattern. It is created at the end of an up-trending market. The black real body completely engulfs the previous day's white body. This shows that the bears are now overwhelming the bulls. Just like the Bullish Engulfing this one requires confirmation to complete a sell signal.
	The Dark Cloud Cover is a two-day bearish pattern found at the end of an upturn or at the top of a congested trading area. The first day of the pattern is a strong white real body. The second day's price opens higher than any of the previous day's trading range.
	The Piercing Pattern is a bottom reversal. It is a two candle pattern at the end of a declining market. The first day real body is black. The second day is a long white body. The white day opens sharply lower, under the trading range of the previous day. The price comes up to where it closes above the 50% level of the black body. This is also referred to as a piercing line.
	Hammer and Hanging-man are candlesticks with long lower shadows and small real bodies. The bodies are at the top of the trading session. This pattern at the bottom of the down-trend is called a Hammer. It is hammering out a base. The Japanese word is takuri, meaning "trying to gauge the depth". The hanging man is a bearish signal as it occurs at the top of an uptrend. Where as the hammer is a bullish signal and occurs at the bottom of a downtrend.
	The Morning Star is a bottom reversal signal. Like the morning star, the planet Mercury, it foretells the sunrise, or the rising prices. The pattern consists of a three day signal. It is important that the first candle is bearish, meaning it closes lower than it opened. the second candle can be bearish or bullish. While the third candle must be bullish.
	The Evening Star is the exact opposite of the morning star. The evening star, the planet Venus, occurs just before the darkness sets in. The evening star is found at the end of the uptrend. It is important that the first candle is bullish, meaning it closes higher than it opened. the second candle can be bearish or bullish. While the third candle must be bearish.
	A Shooting Star sends a warning that the top is near. It got its name by looking like a shooting star.
	The Shooting Star Formation, at the bottom of a trend, is a bullish signal. It is known as an inverted hammer. It is important to wait for the bullish confirmation.

Summary:

Candlestick patterns when properly used can be very rewarding to the disciplined trader. They are even stronger signals when they are confirmed by an overbought/oversold indicator such as the Stochastic. Popular settings for the Stochastic is 12.3.3 or 14.5.5.  Patterns occurring on or near a major moving average have shown to be even more reliable.

Again, I am going to suggest you visit Steve's website www.candlestickforum.com.

The information in these newsletters are but a small fraction of what will be covered on our "Seminar at Sea". So don't miss the Early Bird pricing we have been offering, sign up before Oct 29th, 2007.



 Please feel free to send an email to kermitp@tradingourway.com  with your suggestions.
 
Thank You and good trading,
 
           Kermit Prather