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

Are You a “Monkey See, Monkey Do” Trader?

As a stock option trading coach, I frequently get clients that tell me that they have been trading for many years. In discussion before their first coaching session, I uncover that they have been using a service that tells them what stock, when to enter, at what price, and when to exit. These services provide what I call – “Monkey See, Monkey Do” trading.

While there is nothing wrong with using these services if your trading account shows a good profit. In addition be sure to consider how much your actual trading skills are improving – and if improving your trading skills is a personal goal of yours or not.

If you want to develop trading skills you will need to begin with the basics of how to select stocks for your watchlist, how to qualify stocks for potential entry, how to develop entry rules, how to select the proper option strike and month, how to manage your open trades, how and when to exit your trade, and how to conduct a post-mortem on your closed trades.

I can help you with your stock option trading. You will learn more, learn quicker and lower your risk. Contact me today:

Jo – Your Options Trading Coach