When it comes to trading it can be so difficult to stay above the current and to pay attention to everything that is going on around you. When trading Japanese candlesticks there are some common issues and some common problems that tend to muddle trading and make it more difficult to handle. Here are some common mistakes that traders make that can truly change the game.
Mistake #1: Assigning Meaning to Every Candlestick
For starters, there does not need to be a meaning assigned to every candlestick that appears. Though you might be tempted to try and find a meaning in very single candlestick that appears, not every candlestick is going to be useful to predicting what is going on and what is likely to happen.
Mistake #2: “There’s Something to See Here”
Another common mistake is that you might be trying to see something when there is really nothing there to see. If you are watching the market, and you must look super closely, there is likely nothing there. You need to pay attention to both selling and buying pressure and do not let either persuade your own selling or buying patterns.
Mistake #3: “There’s Nothing to See Here”
Similarly, without enough critical thinking, you may end up missing good opportunities that could have changed the outcome. Patterns are said to appear after three candlesticks, but that is not always the case, it may take five to get a real, clear pattern. Just because it takes longer does not mean that is it not a pattern, just because it does not fit the pattern exactly or the formula exactly that does not mean it is not valid.
Mistake #4: Not Seeing the Bigger Picture
You may also be forgetting the bigger picture. With any trading method it is important to pay attention to small patterns, but it is also important to step back and pay attention to the bigger picture and to what might be happening on a larger scale.
If you’re a day trader and you use the hour or fifteen-minute chart as your guide, take a step back and recognize any macro patterns on the daily or weekly chart.
Mistake #5: Acting Too Quickly without Proper Confirmation
The last problem you might be facing is not waiting for confirmation. Though you may think that the pattern is self-confirmed, it is always best to wait for a fully formed and closed pattern before you act so that you can be sure you are getting the best outcome possible.