Doji Candle Explained by Trading Coach Jo

A Doji candle has a small body with a long upper wick and long lower wick. Long means longer than the length of the body of the candle. Below is an example of what a typical Doji candle looks like.

A recent client of Trading Coach Jo, recognized a Doji, but did not understand how to interpret this potential signal. Following is my simplified explanation:

After identifying a Doji, the most significant thing is to note where this Doji occurs on the chart. If a Doji appears at support or resistance, it could mean a reversal. I suggest that you wait for the next candle to confirm a change in direction.

If a Doji appears other than at support or resistance, it simply signifies indecision. You will notice that a stock that is stagnant in a horizontal channel, may have several Dojis with a short time period – all showing that the stock does not know which way it intends to move.

Be sure to watch for Doji candles at support and resistance. Noticing this pattern can give you advance notice of a pending move in the opposite direction.

Here’s to your option trading success,

Coach Jo

Take a Break from Trading – Enjoy the Holidays!

Hey traders – I don’t know about you, but once my December option spreads expire this Friday, I will take a break from trading until a few days after the New Year. It is very important to me to take a break. I encourage you to do the same. Spend time with friends and family. Acknowledge yourself for all that you have learned and accomplished this year. Thank those that have supported your efforts.

If you find yourself reacting to this idea, stop and think about it. Is trading the goal or is it the means to an ideal life style? Have you turned trading into a JOB? I surely hope not!

I wish you and your family a very happy and restful Holiday Season! See you in the New Year!

Ho, Ho, Ho!

Coach Jo

Opening Range for Exchanges – Trading Coach Jo

Need more validation of a stock move? In addition to the Opening Range (OR) for an individual stock, also consider the stock’s exchange.

If the stock symbol has 4 letters, it is traded on the NASDAQ. For example, if you are waiting for a strong move on AAPL, check to make sure that AAPL has actually broken out of it’s 30 minute OR. As another validator, check the NASDAQ to see if it also is trading outside of it’s OR.

For stock symbols with less than 4 letters, check the NYSE. You would want the NYSE to be trading outside of it’s OR. Whether it is trading up or down does not matter. We only want to validate the momentum of the trade to make sure that the stock is moving in the intended direction.

Remember that the more true validators in your favor, the greater the probability of success.

Best regards,

Coach Jo

The Opening Range – Trading Coach Jo

In the current market, I am seeing that stock moves don’t seem to have much momentum behind them. A stock may break out of it’s channel for a short time, only to have it go back into that channel. One thing a trader can do is to pay attention to the opening range. Different traders use different time frames for different strategies.

Some use the first 30 minutes. After 8AM MST, I mark the charts that I am interested in by a horizontal line at the high and a horizontal line at the low of the time period beginning when the market opens to 30 minutes after open.

If a stock seems to be breaking out of it’s pattern, yet has not broken out of it’s OR, I don’t trade it. If it breaks the OR, that is one sign of validation that this stock may have the power to continue to break to new highs or new lows. If it breaks up, we buy calls. If it breaks down, we buy puts.

Trading Coach Jo clients back test to see if paying attention to the OR would hae been a good thing. Check it out for your trading practice. Let us know what you have found.


Coach Jo