Best Candlestick PDF Guide – Banker’s Favorite Fx Patterns

Best Candlestick PDF Guide – Banker’s Favorite Fx Patterns

The best candlestick PDF guide will teach you how to read skin candlestick charts and what each candle tells you. Candlestick trading is the most common form of trading and the easiest to understand. The candlestick pattern strategy outlined in this guide will reveal to you the secret of how the bank trades the Fx market.

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When you first start your trading journey, you will be bombarded left and right with new concepts. It can be scary and confusing to assimilate everything. This trading tutorial will show you how to read candlestick charts for beginners.

We will explain candlesticks in a way that you will remember. If you are a more advanced trader, this candlestick PDF guide is also for you. We will share with you a powerful candlestick pattern strategy.

Wait, because we are going to show you some of the best candlestick patterns that only institutional traders know about.

Let’s start with the basics of candlestick trading and how to read candlestick charts correctly.

See below:

Understanding Candlestick Charts for Beginners

If you let go of everything you own on your chart, you are left with a simple candlestick chart. What you see on the chart below is raw price data which in Forex jargon is also referred to as a naked price action chart.

Note #1: Unlike Renko charts, which we have discussed in previous chart trading guides, skin candlestick charts incorporate a time element.

The most important information you need as a trader is current and historical prices. Candlestick prices will tell you what price is doing at any given time. Candlestick price charts also give you a unique insight into market sentiment.

A candlestick price chart consists of many individual candles of different shapes, which form different candlestick patterns.

There are three types of candlestick candles:

• Bullish candle – This is a green candle and it shows that the price has increased in the selected time period. In other words, the closing price is higher than the opening price.
• Candlestick bear – This is a red candle and it shows that the price has decreased over the selected time period. In other words, the closing price is lower than the opening price.
• Neutral candle – This is a candle without a body and the opening price is the same as the closing price.

In addition to opening and closing prices, candlestick charts also provide us with information about the highest and lowest prices over the selected time period.

The bars above and below the body are called shadows. In Forex jargon, they are also called ‘wicks’ or ‘tails’.

In technical analysis, Japanese candlesticks can display various types of price formation that are at the base of many candlestick pattern strategies. If you want to explore the most popular chart patterns, please see our step-by-step trading guide here: Chart Trading Strategy Patterns Step-by-Step Guide .

For now, we will focus on the best candlestick patterns that are widely used by banks against retail traders.

 

Candlestick Pattern Strategy

If you want to take advantage of what the candlesticks are showing, let’s explore the best candlestick patterns you can use. We will show some candlestick patterns explained with examples. If you understand the psychology behind what the candles are showing, it can make your life as a trader much easier.

Not only that, you will get a possible picture of the battle between buyers and sellers. Chart patterns can also be used to trigger your trades.

In this best candlestick PDF guide, we will reveal the secret candlestick patterns used among bank traders. This forex candlestick pattern we are talking about the ORB Nr4 pattern developed by hedge fund manager Toby Crabel.

Toby Crable is probably one of the profitable traders. Although in 2005, Toby Crabel was described by the Financial Times as “the best-known trader on the trend side of the counter,” he is still an unknown name in the retail industry.

The reason why we mention Toby Crabel’s work is because he is the father of the ORB pattern, aka the Breakout Range Breakout pattern. The ORB pattern is considered the most powerful trading tool of the last 25 years.

This powerful trading technique has helped legendary guru trader Larry Williams to turn $10,000 into $1 million in less than a year.

Step # 1 How to Identify ORR Nr4

An ORB pattern is defined as a trade taken at a fixed value of the opening range.

Opening Range Opening Trades are more effective if taken after an intraday that has a smaller daily range than the previous 3 days. This is what Nr4 stands for. You have three candles followed by another candle, with a narrower daily range than the previous three days.

Note #2: Day 4 doesn’t necessarily have to be an inside day, it just has to have a smaller daily range than the previous 3 days. However, intraday tends to produce a higher success rate.

This is how the actual ORB Nr4 pattern looks like on a Forex candlestick chart:

The ORB Nr4 pattern can be one of the best candlestick patterns for intraday trading as well. You simply apply the same rules outlined in this guide to your favorite intraday chart

What if we told you that 40% of the time, the first trading hour can tell you today’s high and low. Our candlestick pattern strategy incorporates this price behavior so you can better manage your risk and set your targets.

Basically, you can become a skilled trader.

As with all our trading strategies, we will first give you the rules of the trade by going through real live trading examples using the best candlestick patterns mentioned through this PDF guide.

Step #2: Identify the best candlestick pattern and mark the high and low of the 4th candle

When you are looking for an ORB Nr4 candlestick chart pattern keep two things in mind:

• The daily range of the 4th candle should be narrower and smaller than the previous 3 candles.
• The price range of the 4th candle also needs to be within candle number 3.

The ORB Nr4 pattern in the chart above is a bullish candlestick pattern as it leads to a bullish movement.

The daily narrow trading range suggests a contraction. And contraction always leads to expansion. This is a general type of rule as the market moves from periods of contraction to periods of expansion.

This is why this ORB Nr4 candlestick pattern is so powerful.

Step #3: Switch to 1h TF and Buy if we break high, Sell if we break low candle Nr4.  

Our trade was taken the next day after the Nr4 pattern appeared. To have a clear view of short-term price action, we need to shift our focus to the one-hour time frame.

Note #3: Only Buy or Sell if a breakout occurs within the first 5 hours of a new trading day.

We use the Breakout Range Opening technique to time the market and have effective trade entries.

Trading based on the ORB – Nr4 candlestick chart pattern will show your profits instantly.

Now, if the trade doesn’t show you profit immediately, then your trade becomes more vulnerable. As a general rule, if after the first trading hour your trade is not in the green, you can safely close the trade in the market.

Of course, you can only do that if your stop loss is not triggered at the same time.

Now, let’s outline where to place our protective stops and where to exit our profitable trades.

See below:

Step #4: Place SL below NR4 day low, Take profit by using back SL below each candle 1h low 

To buy a trade, hide your stop loss below the Nr4 day low. The ORB – Nr4 pattern tends to precede strong trend day activity, so your stop loss should rarely be hit.

Our take profit strategy is quite simple and it is slightly modified from the original strategy highlighted in the book “Day Trading with Short Term Price Patterns and Range Opening” written by Toby Crabel.

Although the ORB nr4 pattern tends to lead to trend trading days, we are more conservative and want to quickly take profits. We prefer to direct our SL below each low 1h candle and wait for the market to reverse to take profits.

Conclusion – The Best Candlestick Patterns

The best candlestick PDF guide is the result of a series of research that led us to find tradable market tendencies The price of any market follows some mechanical laws that can be observed through candlestick chart patterns. Having entry rules that can be determined based on candlestick patterns can help aspiring traders.

Some of the best candlestick patterns are easier to predict when you have a framework developed around these chart patterns. As a trader, it is your duty to incorporate these trading concepts into your understanding of the market. Be sure to read about our shooting star candle guide!

If you combine the two things, you can develop a candlestick pattern strategy.

Thank you for reading!

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