Trading with candlestick shadows can be a great help in optimizing your trading strategy, so take a few minutes to read this important article with me. Many traders believe that candlestick shadows are always a headache and put their positions at risk.
Shadows in technical analysis provide valuable information for traders. Shadows show the highest and lowest prices over a period of time, and you can easily find the highest price levels in uptrends or downtrends with shadows. In fact, long shadows are formed faster and more rapidly than candlestick bodies. If you set the time frame of a stock to one minute, you can see this happening.
What I have experienced about candle shadows
My experience with building a strategy with shadows is that there are few candles that do not have shadows, such as the Marubezou candle, which is made up of two candles without shadows. Most candles have shadows, but in some of them the shadows are very long and in some they are short. This is also true for the body of the candles. I have learned some interesting lessons from trading with shadows. Shadows indicate the pressure between buyers and sellers. Thus, a long shadow appears above a candle when sellers are selling and reducing the pump that has occurred for a while.
To get a deep understanding of candlestick shadows, it is necessary to examine the position of the candlestick and know where the candlestick you are looking for appeared on the chart. If you want to trade with shadows, I suggest you consider strong confirmations for trading with shadows. Some users place the stop loss above or below the shadow in some cases. You should pay attention to the behavior of traders and the volume of the transaction so that the price does not reach the loss limit as much as possible.
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