Candlestick Patterns for Beginners: Hammer, Doji, Engulfing Explained

so this is going to be very very basic what is an actual Candlestick okay there's a difference between a

Candlestick chart and a line chart okay when it comes to a Candlestick chart this is where you're going to want

to use and like I said in the first video okay like I said in that video you need to understand a Candlestick you

cannot be trading a l chart because these little bodies so this right here let me just zoom in and show you guys

this right here is very very important when it comes to trading okay a lot of people overlook this but this is

literally like if I could give you one tip from this whole course that' be be pay attention to these bodies okay and

you're not going to know what I mean um until probably the end of the Court until the end of this boot camp but you

just you have to pay attention to these bodies and I'm gonna show you guys how easy it is to study on your own and how

easy it is to um just look up what a Candlestick is so literally I could just go on a Google page and

go what is a Candlestick trading okay it's very and it's going to give me a bunch of diagrams it's going to be very

very very easy all right and immediately it gives me something very very straightforward and easy to

read this is how easy it is right I don't have to be making this videos you could do this all on your own all right

but this is a Candlestick okay B basically um the green candle is bullish and the and the red candle's bearish you

can see I kind have my chart colors Chang a little bit so when we take a look at my chart these black candles are

actually red candles but I change them to Black because I prefer black for the down move um but again let me go back to

this so this is a bullish candle and these little things are Wicks and this giant thing is a body okay so you can

see this is the body and this is actually called an upper shadow lower Shadow I I've never

used that term I would not suggest calling these Shadows these are called Wicks okay so these are called Wicks not

Shadows um I I guess I get where they're coming from but um I would consider these just called Wicks okay but you can

see how easy it is to look and you can see this is the high of the candle where we Wick up this is where the candle

closes so this is the closing price of the candle this is the opening price of a candle and this is the low of the

candle so I would recommend just studying that for a little bit and maybe saving that to your chart um

but you can see if I just like if I go to this Candlestick right now on the one minute chart okay

this this is a red candle at the time now does it mean it's going to close as a red candle no this could this could go

all the way back up so you're going to see it just did close this red candle so see how on that new candle form see how

it just we just opened right there so this is always always always going to be the opening price until it closes again

so you can see there's 41 seconds 40 39 38 until this candle actually closes again but for now but the whole time

this is going to be the opening price this is not going to change but the wick during the candle may change like you

may see us fluctuate up and down the wick can change but wherever we open at this is never going to

change so this one you can see this is a bearish candle so here would be the opening of the candle here' be the close

and during that whole candle price actually went from 1845 1.25 all the way down to 1844

8.25 however price did not close here before the time ended okay it closed right here after the minute went by

because I'm on the one minute time frame it's just every single candle is one minute so see how that candle opened

up green right here but see and see how it was green when we had this wake up but before the candle closed it came

back down again so this means okay when this candle closes there's a red candle and that's that so again it's pretty

straightforward how these work um again this is like again this was the opening price of the candle and because price is

trading higher than what the candle opened at for now it's a green candle but you got to realize there's 20

seconds left this candle could Wick back down below this opening price and come down here and this could be a red candle

before the before the time runs out so let's see there's 10 seconds left again it's only if we go below this

opening price this opening candle okay so it looks like this candle is going to be

maintained um so the candle did close green but again this that could have been a red candle if we traded back

below the opening price and closed below it um so yeah that's kind of how a

candlesticks work um I would just recommend studying this okay it doesn't really take a lot of time to understand

this um and yeah so there's something called C Candlestick patterns and this is just another one open price high

price close low there's something called candlestick patterns and I us and I still like I

mean I'll show you what patterns I use and I'll show you like a bunch of these so

again these AR cananas like patterns um there's like different so obviously when we're looking at the

chart here um you can clearly see that a lot of these have different shapes and sizes

okay and they all mean something but do they really when you get to where I am you I do not care

about Candlestick patterns but I still think it's important for you to understand because I actually do use

some like candlesticks like some candlesticks to me are more important than other candlesticks and I'll explain

why so um let me let me show you this chart so I think the main one and the most the the ones

you'll see the most of the hammer the inverted hammer or sometimes called the shooting

star and AD doe candle so ad DOI and the Hammers are the one like I use the most and I don't even use these but when I

started these are the ones I use the most and it's important to understand them because like I said if you're ever

in a Discord chat or something and someone says this you're going to know what it means all right so all a hammer

candle is is when price Wicks down so see how Price Right Here Wicks

down and then before the candle closes we close back Above So a hammer kind of you can see it kind of looks like a

hammer right that's why it's called a hammer candle so see how we come down we Wick down but then before price closes

down here it Wicks back up that's usually a really bullish signal because it's like sellers want to and by the way

when I say sellers and buyers I don't believe in true sellers and buyers and the markets all an algorithm and you're

going to understand that as you continue your journey but anyways sellers were down here one point and it looked really

bearish but when buyers push it up right before the candle closes that's actually a bullish signature in price which is

why it's called the hammer candle which is why this is a reversal candle pattern so typically when you see this you'll

see some sort of reversal or some sort of Bounce and you can see that next candle did indeed bounce and we did go

um up a little bit so I think it's important to understand that this is a hammer um and let me see if I can show

you a few more examples um and you're going to see them all over the chart to be honest

so this one is an all right one uh see how the wick is kind of the same size as what the body is they're kind of the

same size typically you want to be you want the wick to be a little bigger they want the wick to be like

this and then you want to see like the candle to be like this so this is like the typical thing you want to see it um

now this would not be a hammer candle why because this you can see and buyers are both in control see how there's a

wick here and a wick here and the bodies in between this doesn't really tell you much this tells me more right sellers

were in control but at the last second buyers took control and closed the candle up here forming into a little

Hammer pattern okay so that's that um let me look for a hammer at the top real quick so this would I mean these

two examples right here these would be like a an inverted inverted Hammer okay now you can

see there's a small Wick here but for the most part it's the same concept it's the same concept of there is a lot of

buyers here but at the last second sellers push down the wick making the body close down here and

you can just see it's a nice reversal pattern same thing right here we actually get two hammer so we get

another one here and buyers at one point had price go up to this high but at the last second you can see sellers push it

right back down all right so you can clearly see how that works and the psychology behind like why it's called a

hammer why it's called I mean some people call this a shooting star all

right so I'm going to go to one more example again you'll see these all over the

chart so I mean this is not a bad example here so again another Wick where at one point price is way up here and it

looked like it was going to close but the last second sellers push this candle down right before it closes and again

you can to see it's a nice reversal pattern so to me these don't really mean much because I don't trade using candle

patterns um now keep in mind um I used to but to me they don't

really mean much anymore but I think it's a good start for learning trading and I think you should understand what

they are okay now the other can pattern that you should know

is a dogee so dogee is when price opens and closes at the same spot and all this really means when you see a bunch of do

dogey candles it's really sign not the trade um because it's like it shows an

indecision between buyers and sellers so an example would be like right let me see find

example so I mean right here okay see this candle right here see how there's a wick on both sides and a

really small body in the opening and closing price is really close that just shows that buyers and sellers are not

control it's just it's neutral it's probably choppy and you probably don't want to trade it so that's really when I

see dogee that's kind of what I'm thinking um just don't trade um another one would be like right

here so here's another doy candle see how the opening and closing price are at the same exact level at this 1833 1.5 so

again this is the same exact level all right and it just shows that buyers or sellers neither are are in control and

um it just it it means stop trading don't trade okay you do not want to trade that

because the biggest thing that when I first started learning I didn't understand that you to be profitable not

trading is good I don't understand I thought you had the trade like if I ever seek this a lot of

times I will not trade because I don't want to get chopped up I don't want to buy and get chopped up and then just for

price to go my way right that's not ideal you want to allow this to take out and then you

want to allow us to break the range and then you can trade don't trade while we're getting all these dogee choppy

candles because uh you will become unprofitable if you overtrade something like this because you will get wrecked

or what happen is you'll sell price will or you'll buy price will go hit your stop loss or whatever it may be and then

it'll just go back up why because it's choppy and price will just typically just go like this so it's not like

you're wrong but it's also not like you're right because price is chopping around so ad doe candle just

a um sign let me move my face cam real quick a DOI candle is just a sign that it's an indecision you want to typically

s out the market now there's all these other ones uh you can study these I mean you can

Lally just type in Candlestick pattern cheat sheet um I'm going to I'm going to go

over one more another one is a bearish engulfing or bullish engulfing so what that basically means

is when a when we get a super super bullish candle so for example this one right

here and then we get another like a super green candle and then we get another red candle which maybe overtakes

that green candle that considered an engulfing candle because let me just let me just draw it real quick so let's say

this is a green candle all right let's say we're going up but then the next candle is just

completely red okay let's say the next candle is complete red and the body just takes

overtakes this whole candle okay so this is the red candle here and then this is the green candle

here so it's engulfing because again it's it engulfs this whole candle and this is another really good reversal

pattern and I I actually do use this sometimes um but it has to line up with the narrative it has to line up with how

I trade and and using for Val gaps and and everything else I'm going to get to at a later standpoint um like a good

example of this would be something like this see how we get this really really red candle here but then immediately

it's just Boughton back up right here with an immediate green candle so this to me like I would almost combined these

two green candles because think about momentum when we have momentum down which you can see this is a strong body

and again a strong body what strong candle means is basically when there's almost no Wicks so on this candle here

it's a strong body or a strong momentum down because look how tiny the Wicks are so these Wicks are barely noticeable I

would consider this a lot of sellers in control so when you immediately see this momentum shift back up

with now buyers in control it's a real really really good reversal because it's like well all these all this

momentum with all these sellers in control literally just got bought back up the next candle so what does that

tell me that tells me that these guys are probably getting stopped out or probably wrong

okay and that's something I still use to this day it's just it's a really really good pattern even here look at this so

we have a big big down down candle right here I'm going to circle this really big down

candle and then look look what happens after these two green candles just eat those up up look it we just Trend up

after that see how we kind of the market just Trends up after that so you can see how powerful these actually are

um and you have to think of it from a psychology standpoint right from a psychology standpoint if I'm a seller

here and I'm like oh we're going down but then I see these two candles and this whole candle just bought right back

up okay what do you think you would be thinking You' probably be like oh my God I'm about to get wrecked we're about to

go the opposite what I'm doing so what do you do you get out of your position now when you get out of your

position you're buying back the mark you're buying back market shares Market contracts and when you buy back those

shares that causes the market to go back up so think about all these guys shorting or selling a position and

they're buying back here because like oh I I'm going to get wrecked here we're not going down They're just causing the

market to go back up again okay so um bullish engulfing and bearish engulfing are pretty important I think

those are the ones I use the most um and yeah they're just pretty good even this one right here look at this

one right here so a giant down candle with no Wick so I'd consider this a strong body and a giant up close candle

here which I would consider this a strong body as well so when you see this strong

momentum down get eaten up with strong momentum back up that means it's probably a short-term reversal and you

can see we go up the next few candles so that's what you should know about Candlestick patterns um I mainly I

love bullish engulfing and bullish and bearish engulfing um just remember a strong candle will

look like this okay this is what a strong candle look like no matter if it's bullish or bearish a weak candle

will look something like this okay where there's almost nobody and there's an indecision between

sellers and buyers these are the two things you should know about candles and don't spend your whole life being

like Oh I'm going to trade base off of this knowing Candlestick patterns are just it's like secondhand nature to me I

don't pay attention to them but some like Let me Give an example based off of screen time let's

say I'm in a trade so let's say I'm let's say I'm shorting right here so let's say I'm short here oops so let me

uh X this out real quick um let me go to another

example let's say I'm long right here so let's say I'm taking a buy and I want a long right here

does this candle really give me confidence that we're going to keep going up not

really it's just kind of like a it's just an indecision candle but then we get this candle do

you think this is going to add conviction or add confidence to the trade am in or do you think it's going

to kind of destroy my confidence probably add confidence and when I see a cand like this I might size up so I

might bua again and my average might move up so sometimes when you see like this momentum or this strong candle it

just it makes you more confident to trade and this is this is this is why understanding Candlestick patterns help

me with psychology because when I see something like this it helps my psychology because it's like okay now we

have momentum I have a good feeling about this right when you're in a trade you don't want to see like you don't

want to take a Buy and see all these like weak candles you don't want to see this you want to keep seeing momentum

and these big candles go up because that's going to serve you the best especially psychology wise

now I'm going to talk about what this is in the future so this is so called accumulation I'll talk about this at

some point um but I just want to say you're not trading based off the how big the

candles are but it's important to understand when you're in a trade to kind of pay attention to okay are we

getting momentum are we getting strong candles should this work in my favor and sometimes if we aren't I will cut the

position right like let's say let's say right here I see two ground candles so I'm like oh this is a good

short this is a good reversal I see a hammer candle right here see how this is a hammer candle so I'm going to take a

short and my stop loss is going to be at the high all right now let me play a few candles it's like okay we've chopped

around we're not we lost momentum right there's no good strong candle down here so so instead of maybe keeping my stop

loss out right here I might cut cut the position instead for minus $200 instead of letting it go even more red why might

I do that because you don't want to see candlesticks like this you want to see the momentum continue down right you

don't want to see momentum back up and you can see it would have saved me anyways right so see how this kind of

chop here and this lack of acceleration back downwards kind of helps and this is actually something that will will take

you two to three years to learn very very Advanced but sometimes it will cut positions early if I'm not seeing

any strong candles in my direction after like five or six candles and again that will be a screen time thing you will

learn that through screen time and you will not be able to learn that just after this course okay I promise you if

you're still here in three to four years and you come back to this video you're going to remember exactly what I said

you're going to be like oh now I get what you're saying but you're ideally not going to understand what I'm saying

right now so that's kind of how I use candlesticks um and I kind of talked a

little bit about what why screen time is important there just based off of candlesticks I think the key is I think

you should Rec uh I think you should uh know what a strong versus weak candle is just for the sake of when you're getting

in position or getting out of position whatever um and yeah that is it for this video have a good one peace