What to do with Doji?
Beginning forex traders, having come across the candlestick pattern Doji, get lost and start making rash actions. They close and open positions, change stop-loss, etc. Naturally, such rush leads to losses. So how to be with doji, what to do when such a candlestick appears on the chart?
What is Doji?
A doji is a candlestick that has equal or almost equal opening and closing prices. There should also be shadows on both sides of the candlestick that are about the same size.
A doji indicates an agreement between buyers and sellers, or the absence of players, or a testing of a level. This formation can either be a reversal formation or it can lead to a continuation of the trend. We can say that the Doji is the yellow color of a traffic light.
How to trade the Doji?
The Doji candlestick pattern can be taken as a reversal signal only in one case. If the following conditions are met (simultaneously):
• Doji was preceded by a strong, and clearly visible extended trend.
• Before the doji there was a full-body candlestick of medium or large size (relative to the current chart) in the direction of the trend.
• There is a confirmation, i.e. after the doji there was a candle opposite to the dominant trend.
• Only if these three conditions are present, we can consider an entry against the trend after the doji appears. In all other cases, the doji is simply ignored.
Stop Loss is placed behind the doji's extreme point, Take Profit at the nearest support/resistance level. Since the doji pattern is not strong, we do not take big targets.
Important Points
• It is highly desirable to have a support/resistance level as well as for any Price Action setup.
• The doji maximum is a level, the break of which will mean that the trend is still in force.
• Other timeframes should not be overlooked
• On timeframes less than H1 the doji means NOTHING.
• Always wait for confirmation
• If the market is moving sideways, just ignore the doji.
• Only the FIRST doji is important
• Short shadows are desirable for a reversal
UKOIL
EURUSD
Conclusion
The Doji pattern is mostly just a confusing trading pattern. In 95% of cases, it should simply be ignored. You can only trade the Doji if you fulfill 3 conditions at the same time: a clear trend, a full-body, non-small candlestick in the direction of the trend before the Doji, and a confirming candlestick against the trend after the Doji.
Beginning forex traders, having come across the candlestick pattern Doji, get lost and start making rash actions. They close and open positions, change stop-loss, etc. Naturally, such rush leads to losses. So how to be with doji, what to do when such a candlestick appears on the chart?
What is Doji?
A doji is a candlestick that has equal or almost equal opening and closing prices. There should also be shadows on both sides of the candlestick that are about the same size.
A doji indicates an agreement between buyers and sellers, or the absence of players, or a testing of a level. This formation can either be a reversal formation or it can lead to a continuation of the trend. We can say that the Doji is the yellow color of a traffic light.
How to trade the Doji?
The Doji candlestick pattern can be taken as a reversal signal only in one case. If the following conditions are met (simultaneously):
• Doji was preceded by a strong, and clearly visible extended trend.
• Before the doji there was a full-body candlestick of medium or large size (relative to the current chart) in the direction of the trend.
• There is a confirmation, i.e. after the doji there was a candle opposite to the dominant trend.
• Only if these three conditions are present, we can consider an entry against the trend after the doji appears. In all other cases, the doji is simply ignored.
Stop Loss is placed behind the doji's extreme point, Take Profit at the nearest support/resistance level. Since the doji pattern is not strong, we do not take big targets.
Important Points
• It is highly desirable to have a support/resistance level as well as for any Price Action setup.
• The doji maximum is a level, the break of which will mean that the trend is still in force.
• Other timeframes should not be overlooked
• On timeframes less than H1 the doji means NOTHING.
• Always wait for confirmation
• If the market is moving sideways, just ignore the doji.
• Only the FIRST doji is important
• Short shadows are desirable for a reversal
UKOIL
EURUSD
Conclusion
The Doji pattern is mostly just a confusing trading pattern. In 95% of cases, it should simply be ignored. You can only trade the Doji if you fulfill 3 conditions at the same time: a clear trend, a full-body, non-small candlestick in the direction of the trend before the Doji, and a confirming candlestick against the trend after the Doji.
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bit.ly/3spSQqC
🔻FREE Telegram channel🔻
t.me/DeGRAMChannel
🔻Contact for Paid SIGNALS🔻
t.me/DeGRAMForex
