In this blog, we will discuss the top 3 candlestick patterns that are most useful for intraday traders.

#1. DOJI:

The Doji is a candlestick formation that signifies indecision between bulls and bears. A Doji is generally found at the top and bottom of trends and thus it can be considered as a signal of a possible reversal of security’s price direction.

A Doji is formed when the opening price of a stock is equal to the closing price. A long-legged Doji is called as a ‘Rikshaw Man”. As compared to Doji, Rikshaw Man Doji has longer upper and lower shadows.

The two important varieties of the Doji formation are:

A⇒ Dragonfly Doji

The Dragonfly Doji is generally interpreted as a bullish reversal candlestick pattern that mainly occurs at the bottom of a downtrend. This type of Doji created when the Open, high, and close are exactly the same price and the most important part of this Doji id long lower shadow.

B⇒ Gravestone Doji

The Gravestone Doji is typically interpreted as a bearish reversal candlestick pattern that mainly occurs at the top of an uptrend. It created when the open, low and close are the same or about the same price and the gravestone Doji is the long upper shadow.

#2. Hammer:

Hammer is one of the most powerful candlestick charting patterns. This hammer pattern is generally, indicates a reversal from the bearish trend.  When a security trades at a lower price than its opening, but it rallies within the period to close near opening price – hammer pattern occurs.

Hammer pattern can be identified easily, in this type the lower shadow is at least twice the size of the real body.

When the high and the close are the same of the candle then it is called as a bullish hammer and it is considered as a stronger formation because the bullish hammer is able to reject the downtrend and able to push price upwards.

“The worse a situation becomes the less it takes to turn it around, the bigger the upside.” George Soros

When the open and high are the same of the hammer then it is called as a bearish hammer, and the bearish candle is able to reject the uptrend and also has a stronger formation that can push price downwards.

#3. The Engulfing Pattern:

The engulfing pattern is the reversal pattern. It is the inverse of the harami pattern, which consists of two candles. The first candle is being a relatively short candle with a short real body and the second one is being a relatively large candle with a big real body. The large candle engulfs the real body of the first candlestick.

“I see a tremendous imbalance in the world. A very uneven playing field, which has gotten tilted very badly. I consider it unstable. At the same time, I don’t exactly see what is going to reverse it.” George Soros

There are two types of Engulfing Pattern that is Bullish Engulfing and Bearish Engulfing Pattern.

A⇒ Bullish Engulfing Pattern

Bullish Engulfing pattern is similar to the reversal candlestick pattern which is bullish in nature and forms at the end of a downtrend. The bullish engulfing pattern is made of two candles in which the first one is bearish and the second one is bullish in nature.

Bullish Engulfing pattern forms major bullish reversal candlestick pattern, in which you need to watch other things while analyzing. Which are,

• There has to be a clear (major or minor) downtrend.
• The first candle is red (bearish) candle indicating an ongoing downtrend and the second candle is always a strong green (bullish) candle.
• The second-day green candle’s real body engulfs the first-day red candle’s real body.

B⇒ Bearish Engulfing Pattern

Bearish Engulfing pattern is the reversal candlestick pattern, bearish in nature and it appears at the end of an uptrend. The bearish engulfing pattern is consisting of two candles in which the first one is bullish and the second one is bearish in nature.

Bearish Engulfing pattern forms a major bearish reversal candlestick pattern. You need to keep a few things in mind while analysis it. Which are,

• There has to be a clear (major or minor) uptrend.
• The first candle is green (bullish) candle signifying an ongoing uptrend and the second candle is always a strong red (bearish) candle.
• The second red candle’s real body engulfs the first green candle’s real body.

By, Virtueticks

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Starting Business as a Day Trader

Starting any business requires a plan. Same here for selecting day trading as a career you need to consider a few basic elements, which are – trading capital, trading equipment i.e. computer, CPU, Internet, etc and measuring performance. Let’s understand it in a brief.

#1. Trading Capital 

Without any investment, no business can get started. Same here for intraday trading business without trading capital it is impossible.

To Start Intraday trading business, first, you need to decide which segment you want to start day trading. Trading in different segment requires different capital amount.

For Equity segment you must have minimum 15,000 – 25,000 ₹, For day trading in Future segment you need to start with 1,00,000 ₹ of the capital amount and for Option segment minimum 15,000 ₹ is required.

#2.  Knowledge

To start an intraday trading business, you must have an understanding of the financial markets. You must have sufficient knowledge about how to do an analysis of stocks, etc. For this you can read different books on technical analysis of stocks, there are many different blog site available on the stock market from where you can enhance your knowledge.

After getting proper Knowledge you can go for the next step.

#3.  Intraday Trading Business Plan

To start a Day trading business, you must have a solid business plan – that is a trading plan.  A solid trading plan should outline how much risk per trade you want to take, how you will put the stop loss.

It also includes how you will develop your unique system and how strictly you are going to evaluate each trade, what will be your trading strategy?

Also, your trading plan should include daily homework. In which you need to add things such as aftermarket analysis of stocks, stock selection for next day, daily updates with news related to financial markets.

#4. Trading Equipment

Equipment for Intraday trading is a computer, extended screen, trading software, charting software, broadband service (High-Speed internet), CPU, RAM, Graphics, etc.

Most of the professional day traders use 3 to 4 monitors to analysis charts of different stocks, to open trading software and watch streaming data.

You must have a high-speed internet connection and also you have to keep a backup connection. Because without an internet connection cannot execute your trade. 

# Learn More About Trading Equipment : How to Build Trading Setup?

#5. Measuring Performance and Stringing Together Winning Weeks

Once you start your intraday trading like a professional trader you need to start measuring your performance. With the help of making an excel sheet, you can keep track of your progress report.

As you are trading like a professional, you should have goals to make profits instead of making it as a hobby.  At the end of the day, if you don’t have your report, you don’t have a professional business.

As a beginner, don’t just focus on how much you are earning from day trading. Focus on how much trades are on the winning side. Once you start to concern with the winning streak, your account will start to move in your favor.

#6. Pay Yourself

In terms of the value of money, many traders just focus on earning and earning. The real profit is when you earn from the market and on a regular basis, you withdraw in your account.

 “To enjoy your profits, you need to take out money and use it for yourself.”

To improve your day trading business, you also need to have one good financial advisor and experts. Virtueticks with the team of research analyst, Expert technical analysis experts help you to boost your day trading business by providing daily expert calls for intraday trading.

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