Hey hey, what's up my friend, so in today's episode right, I only share with you three of the biggest candlestick patterns, myths, all right that many traders they fall for right. So so don't fall for this right. So myth number one candlestick patterns right predict. What the markets will do.

Candlestick patterns right can predict whether the market is going up higher or lower, and that's a myth. Why is that? Because if you look at Candlestick, if you understand it right, Candlestick simply fails you right what has happened for a given candle? Let's say you see, a hammer for the candle is simply tells you that at a particular point in time, if it's a daily chart right, the buyers right for that day have to control from the sellers right and push the high price higher closing higher. For the day, that's all it tells you. It's not gon na tell you that hey over the next week, the next money market is going higher.

It can't predict there so don't make the mistake of thinking candlestick patterns or I can predict when a market will do next week next month or next year. It can do any of it. If you want to predict what the markets will do right. Your best bet is to understand the market structure, in other words, look at the trend.

If the price has been steadily, you know grinding higher over the last 200 candles, then guess what next week next month right the price is likely to continue moving higher and that's your best bet right predicting what the markets will do. So don't rely on candlestick patterns right rely on market structure, rely on the trend right. That will give you a much closer prediction number two right. The second myth is this: is that candlestick patterns right, it's the same as price action, trading and nope right that couldn't be further from the truth.

So, let's break it down right. What exactly is price action trading right? You heard that terminal thrown all over the website. All different videos forums talking about price action trading. So what exactly is this? So, according to my own definition of price action trading, it might differ from somebody else.

Right. Price action trading is, in essence, right understanding, the market condition and then using the right trading strategy to trade, their market condition. So if you think about this, our price action trading is not really a strategy, a fixed set of strategy right, it's a way of analyzing and trading the market. So let me give you an example: if you see the market, let's say it's in an uptrend, then as a price action trader, you want to be buying the pullbacks right and selling into the rallies in an uptrend, and if you take things a step further, if You classify the Train as a strong uptrend.

You might be willing to buy the breakout of the swing highs and then maybe you don't write the trend as long as the strong trend remains intact. So that's what I mean by price action trading. First and foremost, you analyze what the market condition is and then find the right trading strategy to trade it, on the other hand, right if market is in a downtrend, then as a price action trader, you look to sell the rallies, sell the break down. Can you see where I'm coming from so compared to candlestick patterns right candlestick patterns? It's it's a obviously, I would say a subset of price action trading because, as a price action trader, there are a few things that you want to be aware of the market structure.

The area of value, what's the entry trigger and the entry trigger Pantera is where candlestick patterns can come into play because, as you know, right candlestick patterns, they can serve as an entry trigger to get you into a tree. Maybe you're bullish. You wan na buy a hammer right could be the signal that you're looking for to to time the market to enter the market. So this is where candlestick patterns comes into play, so I would say, price action trading first, at the top right main candlestick patterns is a subset of price action.

Trading make sense. Okay. Moving on the last one candlestick patterns right is a leading indicator. That is something that you might heard.

I already know indicators are lagging moving. Every stochastic, RSI, diol, legging tools, you should look at the candlestick patterns is take. These are leading indicator and again that couldn't be further from the truth. Why is that? Because if you think about this right, whenever a candle has form - let's say a weekly candle, the price is, let's say close higher.

You have a bullish, engulfing pattern. Well, guess what the move has already happened for the bullish engulfing pattern to form. In other words, you are trading, something that has already happened. The market is already closed higher and that's how you get your bullish engulfing pattern.

So, if you think about this, this is actually a lagging tool as well. I mean it would be a sliding commit to a a moving average or an RSI where taking into account your mathematical formula, but in the grand scheme of things it's still it's a lagging to because it hasn't really happened. So what exactly is a leading indicator? A leading indicator can be like the stock markets, for example, before the economy goes into a recession. The stock markets usually fall first because of expectations, so the stock market can be a leading indicator for what the real economy is doing or how about support resistance.

Before the price comes in to support, you can pull out that level ahead of time in anticipation that buying pressure could come in and push the price higher. That is another leading indicator. However, maybe Fibonacci extension right where you can project the extension ahead of time to find you know where you know a selling pressure might come in to you know, push the price lower. These are leading indicators.

Okay, they are not foolproof right, it's 100 percent, but that is you know my definition of a leading indicator right before something happens right. These indicators can really sort of sort of like no project or predict right. What's going to happen so clearly, right, Candlestick patterns is not a leading indicator because the thing the move has already happened, but that doesn't mean that candlestick patterns are useless because, as I said earlier, they are useful to serve as an entry trigger to enter a trade. They are useful right to help you so-called feel what the market is doing is volatility contracting.

Is volatility expanding and stuff like that, but be aware of the limitations of the tools that you're using or including candlestick patterns, and that's what today's message it's all about: okay, so a quick recap, number one candlestick patterns. It cannot predict right what the markets will do if you're on a pretty water Mathews will do look at the market structure, uptrend, downtrend, etc. Number two candlestick patterns - it is not price action trading, it is more of a subset of price action. Trading is useful to act as an entry trigger to get you into a tree and finally, number three candlestick patterns is not a leading indicator.

It's a lagging indicator, although the degree of lack right, it's a faster than moving average RSI, but the fact is still a candlestick patterns. It's still like the market. Alright. So with that said, I've come to the end of this episode.

We should good luck and good trading. I will talk to you soon. You.