Page 28 - NEW FOREX FULL COURSE

FOREX TRADING COURSE FOR BEGINNERS

What is the proper decision-making process when a profit is made? Looking for the signals that
illustrates the sellers is starting to take control. Taking profits because there are profits has
nothing to do with the parameters of the trading program you are utilizing. Candlestick signals
illustrate when it is time to buy. They also illustrate when it is time to sell. The problem most
investors run into is getting over the fear factor of holding the profits when they trend is in
progress. Candlestick analysis makes that process much easier to cope with. Simple rules can be
applied when a trend is in progress. These rules stemmed from the observations that have
worked effectively in the past.

Currently, the market trends have been bearish. This seems like an overstatement, but there
have been some big profits produced during this bearish trend. The Candlestick Forum
recommendations have been heavily to the short side ever since the breakdown from Dumpling
Top formation this past summer. The short positions have now produced extensive profits. As
those profits grow, normal investment tendency is to take profits just to have some locked back
into the account. Unfortunately, this diminishes the potential of where the profits could move
to.

"Cut your losses short and let your profits run" is often professed by most money managers.

However, they never tell you how to cut your losses short and let your profits run. The candlestick
signals have very effective means for cutting the losses short. That same analysis technique also
allows for letting profits run.

As illustrated in the Dow chart, the Bearish Engulfing signal, formed in the first week of
November, instigated the continuation of a downtrend following the Dumpling Top Pattern of
this past summer. During that downtrend, there were candlestick buy signals. With those signals
appearing, some at potential support levels, what caused the recommendations to continue to
be oriented towards the short side? Two simple rules! First, what is required once a candlestick
buy signal appears? Confirmation! Bullish follow-through is required. The past three weeks did
not show any buying confirmation after a bullish signal appeared. Secondly, the lack of bullish
confirmation after each signal produced the failure of the trend to close above the T. line. This
was all occurring as stochastic were continuing their downtrend.

SEE THE WEEKLY CHART OF US30 (DOWJONES) ON THE NEXT PAGE

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