Understanding Candles Without Wicks in Trading

Aug 23, 2024

Trading Candles with No Wicks

Introduction

  • Discussion about market candles that open and close without top or bottom wicks.
  • Aim to help traders understand and master trading in these scenarios.

Importance of Understanding Wicks

  • Confusion arises when candles have no wicks.
  • The video aims to clarify how to trade and what these candle formations indicate.

Scenarios to Cover

  1. Candle Opens with No Top Wick

    • Expected price movement: bullish.
    • Example: If the candle opens with no top wick and begins to flip down, it may create a bottom wick.
    • Trade Strategy: favorable for entries as it allows better positioning without concern for a bottom wick.
  2. Candle Opens with No Bottom Wick

    • Expected price movement: bearish.
    • Common Confusion: Should you enter at the break of the high?
    • Timeframe Relevance:
      • On the 4-hour timeframe, candles usually have both wicks (80-90% of candles).
      • Lack of bottom wicks can spark concern.
    • Example: If trading on lower timeframes but a higher timeframe shows no bottom wick, it can become problematic.

Trading Without Wicks

  • Higher vs Lower Timeframes:
    • On a higher timeframe (e.g., 4-hour), the absence of a bottom wick can signal trouble when trading.
    • On a lower timeframe (e.g., 15-minute), it may not require as much caution if there's a quick burst of volume.
    • Trading Strategy:
      • If trading at London open, take trades even with a 15-minute candle without a bottom wick, trusting momentum.

Candles Closing with No Wicks

  • 50/50 Chance:
    • When a candle closes without a top or bottom wick, the likelihood of continued movement is about 50% for both directions.
    • This creates uncertainty and indicates mixed results.
    • Volume Impact:
      • When there's high volume, it can lead to a better understanding of price direction.
      • Anticipate price action and look for the next candle to confirm direction.

Conclusion

  • Summary of key points discussed.
  • Importance of recognizing market context and candle formations for better trading decisions.
  • Encouragement to engage with the community and join live trading sessions.
  • Closing remarks and expression of gratitude for viewer engagement.