Aim at selling at the ceiling and buying at the bottom. One should increase one's position after a rise of 100 bags, or a fall of 100 bags from the top. If one forecasts incorrectly, one should correct the mistake as soon as possible and rest on the side for 40 to 50 days. In spite of the fact that these trading rules are well over two hundred and fifty years old, they are still applicable to today's markets. The futures trader who seeks to succeed must learn how to read the message of the charts, just as the cat senses the direction of the mouse's movement.
Charts are the greatest weapon a trader has for determining future market direction.
While traditional bar charts show you the open, high, low and close of each day, they do not readily make the relationship between these four important variables apparent. Candlesticks give you this information immediately upon visual inspection While traditional bar charts can also be used analytically to give you specific patterns and formations, there are many more candle patterns than there are bar chart patterns. And, each candle pattern is based upon many years of study and analysis by traders in the Far East. This allows short term traders to use candle formations. Candlestick patterns can also be used for day-trading provided you have learned how to effectively recognize the necessary candle formations.