{"id":60298,"date":"2012-07-23T11:58:33","date_gmt":"2012-07-23T01:58:33","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2012\/07\/23\/trading-the-doji\/"},"modified":"2012-07-23T11:58:33","modified_gmt":"2012-07-23T01:58:33","slug":"trading-the-doji","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2012\/07\/23\/trading-the-doji\/","title":{"rendered":"Trading The Doji"},"content":{"rendered":"

\n\tBy Richard Krivo<\/span>, Trading Instructor FXCM<\/span><\/p>\n

\n\tThe original story can be found at: http:\/\/www.dailyfx.com\/forex<\/span>\/education\/trading_tips\/post_of_the_day\/2012\/07\/17\/Trading_the_Doji.html<\/p>\n

\n\tThe doji<\/span>, which is shown below, is a unique and readily identifiable candlestick. It is definitely easy to spot on a chart.<\/p>\n

\n\t\"\"<\/p>\n

\n\tThe body of the candle is very short, almost non-existent while the wicks are elongated relative to the body. The short body shows that the opening price and the closing price were very close to one another…virtually equal. The elongated wicks show that even though the opening price and closing price were quite close, during the time that the candle was open, price fluctuated quite a bit.<\/p>\n

\n\tTaking all this into consideration, the doji<\/span> signifies indecision <\/em>since the buyers and the sellers pushed price around quite a bit. But, in the end, they finished up about where they started. This indecision also points to the potential <\/u>for price to change direction.<\/p>\n

\n\tSo when a trader sees a doji<\/span>, they would look to determine the direction that the pair was moving prior to the formation of the doji<\/span>. If the pair was moving up prior to the doji<\/span> appearing on the chart, we would be looking for a reversal to the downside after the doji<\/span> closes. The opposite would be true if the pair had been moving down prior to the doji.<\/p>\n

\n\tOne of the advantages of using the doji for trading signals is the guidance that it offers in placing a tight stop. Take a look at the 4 hour chart of the GBPCHF below…<\/p>\n

\n\t\"\"<\/p>\n

\n\tIn the above scenario, price had been moving down toward the 200 SMA (green line), since price initially broke above the 200 SMA. When the doji forms right along the 200 and “wicks” below it, this long wick provides an ideal guide for our stop…just below its wick.<\/p>\n

\n\tSince price had been moving lower prior to the doji, the potential change in direction would be to the upside. Once the doji closes, a trader could take a long position with the stop placed just below the wick as noted on the chart.<\/p>\n

\n\tThe benefit of a trade such as this is that there is very little risk and the potential for gain far surpasses the risk.<\/p>\n

\n\tBottom Line: we have entered a trade with a solid Risk Reward Ratio.<\/p>\n

\n\tAs with all things in trading, there are no guarantees and trading with a doji is no exception. All trades based on dojis will not work out but with a prudent Risk Reward Ratio, we can put the longer term trading probabilities in our favor.<\/p>\n

\n\tAlso, anytime a doji signals taking a trade in the direction of the overall Daily trendthat will be a higher probability entry.<\/p>\n

\n\tThe views expressed are not FNArena's (see our disclaimer).<\/p>\n

\n\tFor real time news and analysis, please visit http:\/\/www.dailyfx.com\/real_time_news<\/p>\n

\n\tDailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.<\/p>\n

\n\twww.dailyfx.com<\/p>\n

\n\tDisclaimer<\/strong><\/em><\/p>\n

\n\tForex Capital Markets is headquartered at Financial Square 32 Old Slip, 10th Floor, New York, NY 10005 USA.<\/u><\/em><\/p>\n

\n\tTrading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before you decide to trade the foreign exchange products offered by Forex Capital Markets, LLC, Forex Capital Markets Limited, inclusive of all EU branches, FXCM Asia Limited, or FXCM Australia Limited, any affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively “FXCM Group”] you should carefully consider your objectives, financial situation, needs and level of experience. If you decide to trade foreign exchange products offered by FXCM Australia Limited you must read and understand the Financial Services Guide and the Product Disclosure Statement. FXCM Group may provide general market information and commentary which is not intended to be investment advice and the content of this email must not be construed as personal advice. By trading, you could sustain a total loss of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading in foreign exchange products. Foreign exchange products are only suitable for those customers who fully understand the market risk. FXCM recommends you seek advice from a separate financial advisor.<\/em><\/p>\n

\n\tFXCM Group assumes no liability for errors, inaccuracies or omissions in these materials and does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM Group shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this e-mail is strictly confidential and is only intended for use by the recipient. All e-mail sent to or from this address will be received by the FXCM corporate e-mail system and is subject to archival and review by someone other than the recipient.”<\/em><\/p>\n

\n\tTechnical limitations<\/strong><\/p>\n

\n\tIf you are reading this story through a third party distribution channel and you cannot see charts included<\/span>, we apologise, but technical limitations are to blame.<\/em><\/strong><\/p>\n

\n\tFind out why FNArena subscribers like the service so much: "Your Feedback (Thank You)<\/a>" – Warning this story contains unashamedly positive feedback on the service provided.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Richard Krivo, Trading Instructor at DailyFX discusses the signifigance of the doji in candlestick analysis.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[29],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/60298"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=60298"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/60298\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=60298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=60298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=60298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}