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Candlestick signals help profit from falling markets



Many traders and investors are afraid or uncomforatble playing the market to the downside. It is an in-built human emotion. We have always been trained to think of prices going up and making a profit. The concept of selling short and profiting from declining prices is relatively new to human thinking. Mass media has also given shorting a bad reputation. They played on emotional and ethical can traders make money at the expense of companies which provide jobs to people?

Well...Trading is initiated only for making a profit. It does not matter if profit is being made when stock goes up or stock goes down. The only important thing is to have a trading system in place to handle the inevitable stop-outs. Candlestick chart analysis makes it a breeze to design a trading system which works equally well in a sliding market as it does in a rising market.

Consider the chart of POLARIS below. The stock formed a Dark Cloud candlestick signal in mid-January. One essential piece was missing in this scenario...confirmation of the signal. A couple of days later, the stock formed a Bearish Harami. The bears were able to demonstrate control and confirm this Harami. This set an ideal place for selling short the stock.

Chart courtesy

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