How to Trade on Reliable Reversal Pattern — Doji

The best way to predict further price action is by using reversal patterns. Spotting them at the top or bottom of a swing provides you with great trading opportunities for significant profits on Forex. Today we will look at one of the most striking patterns — Doji.

The best way to predict further price action is by using reversal patterns. Spotting them at the top or bottom of a swing provides you with great trading opportunities for significant profits on Forex. Today we will look at one of the most striking patterns — Doji.

This candlestick is fairly easy to spot on the chart. Its open and close levels practically coincide and thus it has no body. This is due to the fact that neither bulls nor bears managed to push the price higher or lower. This speaks to the growing uncertainty in the market. When the Doji appears after an active trend, such uncertainty gives a fairly accurate signal of a further market reversal.

How to Trade Doji

In some cases, the appearance of this pattern indicates a further continuation of the trend. If you want to receive a reversal signal, several conditions must be met:

  • The Doji should appear after a strong uptrend or downtrend.
  • Before the Doji, there should be a large or at least medium-sized full-body candlestick.
  • After the Doji, there should be a candlestick confirming the trend reversal. You can enter the trade after its closure.

Doji Types

Doji is of four types (for all the markets):

  1. Star. It is a candle with little shadows and no body. The pattern itself gives a reversal signal only if there are gaps in the area. In other cases, the Doji should be a part of a stronger reversal pattern — Evening or Morning Star Doji, Harami Cross, Abandoned Baby.
  2. Rickshaw or Long-legged Doji. This candle has much longer shadows than the Star. When this pattern appears at the very top or bottom of a trend, it signals a reversal.
  3. Gravestone. This candlestick is similar to the Shooting Star pattern, but it has no body. At the top of a bullish trend, this Doji signals a downward reversal.
  4. Dragonfly. It mirrors the previous candlestick. It has a long shadow at the bottom and a tiny body. It resembles a Hammer in shape and also gives a signal of an upward reversal after a downtrend.

Even when all the conditions for the reversal are met, don’t enter the trade unless you confirm the signal. Make sure to wait for the next candlestick to form. Alternatively, you can confirm the signal with an oscillator. If the price moves out of the overbought or oversold zone just at the moment of the Doji formation, then the chance of a successful trade is much higher.

That’s all you need to know about Doji. If you fulfill all the conditions, you have a great chance for a great increase in the percentage of successful trades.

Good luck from FXCL!

 

 

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6 Responses to “How to Trade on Reliable Reversal Pattern — Doji”

  • xoxo:

    Do not speculate if possible.
    Charts patterns can be *artificially* formed,cant they?
    Super computers can do all sorts of things.
    Big boys and your brokers are in cahoots.
    Triggering STOP LOSSES of retail speculators is BIG MONEY?

    DONT BE SUCKED IN unless you have alot of extra funds to throw.
    As high as 75 or more of all retail speculators lose money.

    Invest in longer term and in value shares.
    FX IS A CHEATING GAME.

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  • Nathan Chen:

    Put your money where your mouth is. Follow up with another article with document proof of how you have profited using the DOJI technical analyst in Forex. Just show one transaction as an example.

    What foreign currency was you trading in?

    The date and time of entry and exit from the market?

    What was your cost of this single trade?

    How much did you made?

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  • ExpertAdvisor:

    Ever used robot to trade. In one month made 10K less than one day lose it all. Trading with candle is as good as flipping coin unless its a monthly or weekly time frame. The downside must have lots of discipline and deep pocket to withstand the draw down. It seems easy when looking at hind sight but on live trades emotion will kill you.
    There are still people who are good and make a living out of trading. Been trading for the past 10 years still learning everyday.
    Forget about all those expensive courses. They make money teaching than actually trading. As the saying goes – those who can trade. Those cannot teach.

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  • oxygen:

    @ ExpertAdvisor

    GREAT COMMENT below.

    ExpertAdvisor: It seems easy when looking at hind sight but on live trades emotion will kill you.

    EMOTIONS AND FANTASIZED DREAMING are the dumbest investors or speculators’s (read casino) biggest enemies from within.

    And therefore you need

    ExpertAdvisor: The downside must have lots of discipline

    but discipline DOES NOT EXIST because the ghost of emotion overwhelms the gambler each time.

    and this is no help either.

    ExpertAdvisor: deep pocket to withstand the draw down

    The bigger the capital of so-called “deep pocket”, the bigger the wipe-out because the market can be manipulated even by top name bankers.

    Gold price manipulation is real; JPMorgan’s spoofing case explained

    https://www.kitco.com/news/2020-10-02/Gold-price-manipulation-proven-real-JPMorgan-s-spoofing-case-explained.html

    TO PLAY WITH THE DEVILS, YOU MUST KNOW THE DEVIL of hype, emotion and fantasized “knowledge/information” WITHIN YOURSELF AND THE DEVILS BAITING YOU OUTSIDE and YOU WILL NEED A LOT of “casino” luck too.

    Tzun Zi said in the Art of War

    know yourself, not your “enemy” you are finished
    know your “enemy” but not yourself, you are finished.
    Know yourself and your enemy, a hundred battles a hundred victories.

    The last one is a BIG IF IMPOSSIBLE ASK.

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  • liew mun leong must be jailed:

    we never voted pap. we never will. because we know pap are all liars. we don’t listen to pap. so we are never lied to.

    the same applies to anyone who tells us how to make money.

    1, if it truly is money making, sure as sunrise nobody will tell you. because sure to make money. the person telling would have kept very quiet and made all the money there is.

    but the person tells how to make money. which means there is a catch. the person isn’t sure and wouldn’t commit his own money into his money making theory. so he tries to con sheep as pap is conning sheep.

    2, if it is money making, truly money making, the person wouldn’t even tell his father or mother or brother or sister.

    so if any person tells you, sure as sunset it is a lie, a lie as good as any pap lie. because as long as it is money making, rest assured that unless you are really the real spouse, he isn’t going to tell you. unless of course it is a lie, like any other pap lie.

    3, long story short. never believe for a second any such BS. because if brain fails to work, put a red string round ones neck tied to the message – if it is truly money making, nobody will tell you.

    after all, if it truly money making, the person would be so busy making money where got time to write about how to do it.

    only when it isn’t true. then, only then, long stories using many pap words trying to BS.

    just like liew mun leong writing many words about how to build up people when all he meant and ever did was to be in cahoots with 2 prosecutors and 1 police and 1 judge to fix a low wage maid.

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  • ExpertAdvisor:

    @Oxygen
    It’s a casino alright. Thrown away whatever strategies acquired thru the years. Now only trade by monkey see monkey do method. Scalping for crumbs…LOL.

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