Best Candlestick PDF Guide – Banker’s Favorite Fx Pattern
The best candlestick PDF guide will teach you how to read a candlestick chart and what each candle is telling you. Candlestick trading is the most common and easiest form of trading to understand. The candlestick patterns strategy outlined in this guide will reveal to you the secrets of how bankers trade the Fx market.
If this is your first time on our website, our team at Trading Strategy Guides welcomes you. Make sure you hit the subscribe button, so you get your Free Trading Strategy every week directly into your email box.
When you first start out on your trading journey, you will be bombarded left and right with new concepts. It can be daunting and confusing to assimilate everything. This trading tutorial will show you how to read candlestick charts for beginners.
We’re going to explain candlesticks in a way that you will remember. If you’re a more advanced trader, this candlestick PDF guide is for you as well. We’re going to share with you a powerful candlestick pattern strategy.
Stay tuned, because we’re going to show you some of the best candlestick patterns that only institutional traders know about.
Let’s first start with the basics of candlestick trading and how to properly read candlestick charts.
Understanding Candlestick Charts for Beginners
If you strip away everything you have on your charts, you’re left with a simple candlestick chart. What you’re seeing on the chart below is the raw price data that in Forex jargon is also referred to as the naked price action chart.
Note #1: Unlike Renko charts, which we have covered in our previous chart trading guide, candlestick charts incorporate the time element.
The most important pieces of information you need as a trader are current and historical prices. The candlestick price will tell you exactly what the price is doing at any given time. The candlestick price chart also gives you a unique insight into the market sentiment.
A candlestick price chart is made up of lots of individual candles that have different shapes, which form different candlestick patterns.
There are three types of candlestick candles:
- Bullish candlestick – These are green candles and it shows that the price has increased over the selected time period. In other words, the closing price is higher than the opening price.
- Bearish candlestick – These are red candles and it shows that the price has decreased over the selected time period. In other words, the closing price is lower than the opening price.
- Neutral candlesticks – These are candles without a body and the opening price is equal to the closing price.
Besides the opening and the closing price, the candlestick chart also gives us information about the highest and lowest price during the time period selected.
The bars above and below the body are called shadows. In Forex jargon, they are also called 'wicks' or 'tails'.
In technical analysis, the Japanese candlesticks can display different types of price formation that are at the base of many candlestick patterns strategy. If you want to explore the most popular chart patterns, please check out our step-by-step trading guide here: Chart Pattern Trading Strategy Step-by-Step Guide.
Now, do you want to learn:
How to read candlestick chart for day trading?
Best candlestick patterns for day trading?
Bullish engulfing and bearish engulfing are the best candlestick patterns for day trading. You need to learn to recognize these patterns if you really want to have a good day trading experience.
In simple terms, when the body of a candlestick engulfs the entire body of the previous candlestick, it’s what we called the engulfing candlestick pattern.
See the forex chart below:
If you want to learn how to trade the engulfing pattern check our strategy here: Engulfing Trading Strategy - The Fade.
Other simple and effective day trading patterns are:
Let’s look at some Japanese candlestick patterns for swing trading.
Best candlestick patterns for swing trading?
The pump and run are the best candlestick patterns for swing trading. The nice thing about this pattern is that it’s a very aggressive trading strategy to capture tops and bottoms.
If you want to learn more about the pump and dump candlestick patterns check our full trading guide HERE.
In this case, the candlestick chart analysis is done by studying how fast the price changes in relation to something that we call a lead-in trendline.
The top 3 candlesticks patterns for swing trading are:
- Head and Shoulder pattern along with the advanced version the Quasimodo pattern
- Double tops and double bottoms
- The Doji sandwich the best H4 forex strategy
Let’s see what the best candlestick patterns strategy is to level up your intraday game.
Best candlestick patterns for scalping?
The shooting star is the best candlestick patterns for scalping. This candlestick pattern will help you to stop losing money scalping the market. The shooting stars are bearish candlestick patterns while hammers are bullish candlestick patterns.
A simple forex scalping strategy based on the shooting star can be found HERE.
For a more aggressive scalping strategy see our 1-minute scalping strategy HERE.
For now, we’re going to focus on the best candlestick patterns that many banks use against retail traders.
Candlestick Patterns Strategy
If you want to get the most out of what the candlesticks are showing, let’s explore the best candlestick patterns you can ever use. We're going to show you some candlestick patterns explained with examples. If you understand the psychology behind what the candlesticks are showing, it can make your life as a trader a lot easier.
Not only that, you get a possible insight into the battle between the buyers and sellers. Chart patterns can also be used to trigger your trades.
In this best candlestick PDF guide, we’re going to reveal a secret candlestick pattern used among bank traders. This forex candlestick pattern we’re talking about is the ORB Nr4 pattern developed by hedge fund manager Toby Crabel.
Toby Crable is probably one of the less known profitable traders. Even though in 2005, Toby Crabel was described by Financial Time as “the most well-known trader on the counter-trend side,” he still remains an unknown name in the retail industry.
The reason why we mention Toby Crabel's work is because he is the father of the ORB pattern, aka the Opening Range Breakout pattern. The ORB pattern is regarded as being the most powerful trading tools in the last 25 years.
This powerful trading technique has helped legendary guru trader Larry Williams to turn $10,000 into $1 million in less than a year.
Step #1 How to Identify the ORB Nr4
The ORB pattern is defined as a trade taken at a fixed value of the opening range.
The Opening Range Breakout trade is more effective if taken after an inside day that has its daily range smaller than the previous 3 days. This is what the Nr4 stands for. You have three candles followed by another candle, with a daily range that's narrower than the previous three days.
Note #2: The 4th day doesn’t necessarily need to be an inside day, it only needs to have its daily range smaller than the previous 3 days. However, inside days tend to produce higher success rates.
Here is how an actual ORB Nr4 pattern looks like on a Forex candlestick chart:
The ORB Nr4 pattern can be one of the best candlestick patterns for intraday trading too. You simply have to apply the same rules outlined in this guide on your favorite intraday chart
What if we told you that 40% of the time, the first trading hour can tell you the high and low of the day. Our candlestick patterns strategy incorporates this price behavior so you can better manage your risk and set your targets.
Basically, you can become a proficient trader.
Like with all our trading strategies, we’re going to give you first the trading rules by going through an actual live trade example that uses the best candlestick patterns mentioned through this PDF guide.
Step #2: Identify the best candlestick patterns and mark the high and the low of the 4th candle
When you search for the ORB Nr4 candlestick chart pattern keep in mind two things:
- The Daily range of the 4th candle needs to be narrow and smaller than the previous 3 candles.
- The 4th candle price range also needs to be inside candle number 3.
The ORB Nr4 pattern in the chart above is a bullish candlestick pattern because it leads to a bullish move.
Narrow daily trading ranges suggest contraction. And contraction always leads to expansion. This is kind of a general rule because the markets do move from periods of contractions to periods of expansion.
This is the reason why this ORB Nr4 candlestick pattern is so powerful.
Step #3: Switch to 1h TF and Buy if we break the high, Sell if we break the low of the Nr4 candle.
Our trade was taken the next day after the Nr4 pattern showed up. In order to have a clear view of the short-term price action, we need to switch our focus to the one-hour time frame.
Note #3: Only Buy or Sell if the breakout happens during the first 5 hours of the new trading day.
We use the Opening Range Breakout technique to time the market and have an effective trade entry.
Trades based on the ORB – Nr4 candlestick chart pattern will show you a profit instantly.
Now, if the trade is not showing you a profit right away, then your trade becomes more vulnerable. As a general rule, if after the first trading hour your trade is not in the green, you can safely close the trade at the market.
Of course, you can only do that if your stop loss hasn’t been triggered in the meantime.
Now, let’s outline where to place our protective stop loss and where to exit our profitable trade.
Step #4: Place SL below NR4 day low, Take profit using a trailing SL below each 1h candle low
For buy trades, hide your stop loss below Nr4 day low. The ORB – Nr4 pattern tends to precede strong trend day activity, so your stop loss should be rarely hit.
Our take profit strategy is fairly easy and it’s slightly modified from the original strategy highlighted in the “Day Trading with Short Term Price Patterns and Opening Range Breakout” book written by Toby Crabel.
Even though the ORB NR4 pattern tends to lead to trend trading days, we’re more conservative and want to quickly take profits. We would rather trail our stop loss below each 1-hour candle low and wait for the market to reverse to take profits.
Best Candlestick PDF guide FAQ
The Best candlestick patterns for crypto
The Spike and Ledge pattern by Linda Raschke is the best candlestick patterns for cryptocurrencies. Every crypto trader should know this pattern especially if you want to keep up with the volatility in the cryptocurrency market.
The Best candlestick patterns for penny stocks
The OHL trades are the best candlestick patterns for penny stocks. This trading pattern allows everyone to establish a position during the first 5 minutes of the trading day.
The Best candlestick patterns for binary options
The best candlestick patterns for binary options are the pin bars, bearish and bullish outside bars, the 3 white soldiers and the 3 black crows. For binary options trading, candlestick patterns are the most reliable techniques you can use to place your bets on.
The Best candlestick patterns to profit?
The best candlestick patterns to profit in any market and across different time frames is the Hot Dog pattern. This is a unique pattern taught to our subscribers that can be used to detect bullish and bearish reversals as well as continuations in any market.
Best candlestick patterns to buy?
The best candlestick pattern to buy stocks is the 3-bar strategy. This candlestick pattern is an all-in-one trading strategy is a trend-dependent strategy that can ride both bullish markets and bearish markets.
Conclusion – Best Candlestick Patterns
The best candlestick PDF guide is a result of a series of research that leads us to find tradable market tendencies The price of any market follows some mechanical laws that can be observed through candlestick chart patterns. Having some definable rules of entry based on candlestick patterns can really help the aspiring trader.
Some of the best candlestick patterns are more predictable once you have a framework developed around these chart patterns. As a trader, your obligations are to apply these trading concepts inside your own understanding of the market. Be sure to read about our shooting star candle guide!
If you manage to combine the two things, you can develop a candlestick pattern strategy.
Thank you for reading!
Feel free to leave any comments below, we do read them all and will respond.
Also, please give this strategy a 5 star if you enjoyed it!
Please Share this Trading Strategy Below and keep it for your own personal use! Thanks, Traders!