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Candlestick charting is the Japanese version of bar charting. The Japanese used the technique to trade in rice in the 17^th century. Candlestick charts and bar charts give you the same information but presented in different graphic forms. Each stick or bar gives you four information, i.e., the opening price; the closing price; the high price; and the low price. The volume is shown at the bottom.

 A white candlestick is one that closes higher than the opening price. A black candlestick is the other way round, i.e., the closing price is lower than the opening price. A white candlestick is bullish. a black candlestick is bearish. Thus, in chart reading, the closing price is important.

Candlesticks have many fanciful names. To name a few there are: marubozu, spinning top, dogi, hammer, hanging man, dragon fly and grave-stone doji . Each name suggests a different kind of candle and carries with it a different value.

 By looking at a daily candle, we can know whether the bull or the bear is in control or whether they are about evenly matched on that day only. This one day information is of little use. So we have to look at the previous candles to get more information. By looking at the past actions, we try to predict what is likely to happen going forward.

A doctor will listen at your heartbeats, take your blood pressure, and give you and overall examination to evaluate your overall health. But to give you an operation, he has to do many other things as well, like a blood test, x-ray, etc.

 Likewise, in the stock market, if you want to buy or sell, by looking at a few candles is not enough to enable you to make a good decision. Hence, you have to look at the patterns formed by the individual candles. These patterns are many and varied. Each has its own meaning and interpretation.

 It is beyond the scope of this commentary to explain the meaning of each pattern as this will probably go into more than a hundred page. If you are keen to learn, get yourself a good book and study it like studying for a degree. It is not easy to become proficient in chart reading. Once you are good at it, your return can be enormous.

 At Metastock, we have the monthly charts, weekly charts and daily charts. Normally, I like to look at the weekly chart to get an overall view of the stock and then to look at the daily chart for the details. If we can include a half-hourly chart into it, it will be very useful as we can get the breakdown figures as well. Any genius out there?

 One big advantage a retailer has is that he can pick and choose. If somebody ask you to join him in a business venture, you will have many questions to ask, such as: what is the business about; how profitable is it; who is managing it; who are its competitors, what are its concern; what are its prospective earnings and so on and so forth.

 When you buy a stock, did you ask yourself all these questions or did you buy just on a tip? Amateurs, especially beginners are mostly consensus-takers. They will go around asking people what to buy. They will then buy what the majority agrees is a good buy. These people are going to lose get their pockets cut off, for soon they will find their money gone and that the majority is usually wrong.

The best advice I can give you is to do your own research. If you don’t have the time or the interest, better put your money in trust and not your trust in money.

 Happy investing.

Firstly, he will acquire most, if not all, of the free floats of the stock. Then he will play up the stock by buying and selling his own shares using several different names. He will spread rumors by posting in all the forums available to him that the stock has landed or about to land big big contracts which will make it a super stock. He will say that the stock will be in great demand and will definitely be “goreng” up to RM2 when it is being traded at 20c.

Because he has cornered all the free floats, he can easily push up the price and create a false market for the stock. When the stock is boiling with demands, mug punters and especially beginners rush in to buy and buy. The unscrupulous manipulator then slowly and quietly unloads his holdings. After he has done that, the stock soon drops. Everyone scrambles for the exit. The price drops very fast and before long it goes back to where it comes from.

With broker firms making available chart services, more and more people have come to know about charts. To have some knowledge about charts is easy. To be proficient in chart interpretation is indeed extremely difficult.

Professionals know that a great majority of people now depend on charts to time their purchases and sales. So they will do what is necessary for their own benefits.

 Let’s say a professional trader has a big block of shares to unload and the market is in equilibrium (buying and selling in balance). How can he unload his shares without disturbing the price? The only way to do it is to sell into strength. So he waits for the stock to test it resistance in a high level. With some well-timed purchases, he pushes the share price above its resistance. This causes a false breakout. Conditional buy orders are triggered.  People become excited and join in the buying creating great demands for the stock. The professional then releases his holdings. Other professionals short the market and soon the stock is back to square one.

Buying on breakouts was profitable in the early days. Now you have to be very careful indeed. You must be witty to survive.

Good luck.