This lesson will focus on the Doji, which is one of the most powerful of the Japanese candlesticks. Doji are common candlestick patterns – look for them in your favorite market and watch what happens around them. Find here how to trade Doji candlesticks in the proper way!
HOW TO TRADE DOJI CANDLESTICKS IN BINARY OPTIONS
A Doji indicates that the difference from the opening to the close was very minimal. In the case of momentum this quite often signals a trend reversal or at least an end to the current momentum. Actually many trading strategies combined the Doji Patterns as signals or rules to enter or exit the trades.
Doji candles often gain significance when they appear after a long trend move up or down, or if they appear at a support or resistance level (such as a trendline).
Doji Candlesticks - Upwardtrend and Downwardtrend
If the Doji Candlestick appears at the top of a trend, when indication of overbought is present, get ready to sell especially after one or two red candlesticks confirm trend change.
You can apply same principle in a downward trend but in reverse.
Some rules about how to trade Doji candlesticks
- First, you will have to understand that a doji candlestick can only be used if it’s positioned on the top or the bottom of a trend.
- If before the formation of a doji the value of the asset was fluctuating a lot anyway, then you cannot accurately use this strategy.
- If you see a Doji form after a long uptrend, Sell.
- If you see a Doji after a long down trend, Buy, but seek confirmation first
- A trend usually moves in the direction of the next candlestick
- A Doji followed by a gap is a strong trading signal
Before you use this strategy in binary options you will have to understand that it won’t work 100% of the time. It however is expected to work around 85%-90% of the time. This is more than enough for you to generate profits on a constant basis. A winning rate of above 85% is really amazing.