Section I · The Japanese Candlestick Bible · Chapter 12
The 10 most common mistakes
The ten mistakes that cost the most when trading candles – and the fix for each one.
Video lesson with voice-over and charts · 2 minEnglish subtitles
1. Trading without context
Trading every hammer and every engulfing, wherever it appears. Solution: only at a level and in the direction of the trend.
2. Entering before the close
A candle can change its shape until the last second. Solution: wait for the close.
3. Ignoring the higher timeframe
A bullish engulfing on M15 in a strong daily downtrend is a trap. Solution: D1/H4 sets the direction.
4. A stop that's too tight
A stop right at the low of the wick gets taken out by the spread and the noise. Solution: a buffer beyond the wick.
5. Memorizing shapes
Learning the names without understanding the psychology. Solution: ask “who won, and how convincingly?”
6. Chasing big candles
Entering after three soldiers or a big marubozu at the top. Solution: wait for a pullback.
7. Trading during the news
Candles during NFP/CPI are chaotic. Solution: wait 15–30 minutes after the news.
8. Trades without 2R
If there's no room to the next level – the trade isn't worth it. Solution: skip it.
9. Oversized lots
Even the best pattern loses sometimes. Solution: 1–2% risk and a lot-size formula.
10. No trading journal
Without statistics you don't know which patterns work for you. Solution: record every trade with a screenshot of the chart.
Exercises
Test yourself on the chart
0 of 2 correct
1“Tweezer Bottom”: you go long (buy) at the close. Where do you put the stop-loss?
Tap the chart where you would put the stop-loss.
2Why is a stop right at the low of the wick a mistake?
Key points
- Trade only at a level and in the direction of the trend.
- Wait for the candle to close.
- A buffer beyond the wick, 1–2% risk and a journal for every trade.