I don't know where the name of this type of Candlestick came from but anyway the most important part is that we get to know how to make use of it. As the title states, it acts as a Reversal Signal which provides you the early warning of getting out of the trade.
Most strategies out there are composed of various sets of indicator tools where some can accurately predict the entry points. However, the problem comes on the part of determining the exit point. This is the reason why you need to learn how to read Candlestick patterns which will lead you into success.
To describe a Doji, it is a Candlestick that doesn't have any Real Body. The body is simply composed of short horizontal line. This means that the opening and closing price are almost exactly near at the same price. As for the body, the Bulls and Bears are on the balance of trying to overcome one another.
If you happen to see a Doji on your chart, this could be a Pending Reversal but you need to take caution since it could just be a false alarm. Thus, you need another set of confirmation candle before you make your final decision. A good example is when the current market trend is up, you need to wait for the next succeeding candle if it will end-up with a close just below the close of the Doji. If this happens to be the case then it means that the trend has changed.
Most strategies out there are composed of various sets of indicator tools where some can accurately predict the entry points. However, the problem comes on the part of determining the exit point. This is the reason why you need to learn how to read Candlestick patterns which will lead you into success.
To describe a Doji, it is a Candlestick that doesn't have any Real Body. The body is simply composed of short horizontal line. This means that the opening and closing price are almost exactly near at the same price. As for the body, the Bulls and Bears are on the balance of trying to overcome one another.
If you happen to see a Doji on your chart, this could be a Pending Reversal but you need to take caution since it could just be a false alarm. Thus, you need another set of confirmation candle before you make your final decision. A good example is when the current market trend is up, you need to wait for the next succeeding candle if it will end-up with a close just below the close of the Doji. If this happens to be the case then it means that the trend has changed.
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