1 00:00:00,300 --> 00:00:08,930 So in the end, we will wrap up this course by giving you five golden rules when trading using candlesticks. 2 00:00:09,510 --> 00:00:13,340 So I've been trading since past 10 to 12 years now. 3 00:00:13,740 --> 00:00:20,310 And on the basis of experience that I have obtained after making thousands of trades, these are the 4 00:00:20,310 --> 00:00:28,020 five things that I want to tell you before you start trading the candlestick patterns. 5 00:00:28,710 --> 00:00:34,380 Rule number one, very important, never trade candlestick in isolation. 6 00:00:35,280 --> 00:00:36,470 Don't go long. 7 00:00:36,780 --> 00:00:38,730 As soon as you see a hammer. 8 00:00:39,030 --> 00:00:42,020 No, you cannot trade them in isolation. 9 00:00:42,450 --> 00:00:44,130 We have to use filters. 10 00:00:44,160 --> 00:00:45,520 This is very important. 11 00:00:46,080 --> 00:00:51,870 Many noise investors or traders, they do not use filters at all because they don't know this. 12 00:00:52,200 --> 00:00:58,440 They just know that that these are the candlestick patterns and directly trades on the basis of this. 13 00:00:58,860 --> 00:01:00,150 We do not have to take this. 14 00:01:00,150 --> 00:01:01,140 We don't have to do this. 15 00:01:02,190 --> 00:01:11,040 Third is very important, we are to do back testing, as I told you previously, as will you have learned 16 00:01:11,040 --> 00:01:12,380 these patterns in this. 17 00:01:12,390 --> 00:01:18,150 Schools don't directly go and trade these patterns because that may not give you confidence. 18 00:01:18,420 --> 00:01:20,850 What will give you confidence is this. 19 00:01:21,120 --> 00:01:28,350 We have to do back testing and do a paper trail before putting real money at stake, because this is 20 00:01:28,350 --> 00:01:30,530 what is going to give you confidence. 21 00:01:31,230 --> 00:01:38,030 So you have to devote maybe 10, 20 or even 30 days a month for doing back testing. 22 00:01:39,090 --> 00:01:48,410 I will suggest you do take at least 10 stocks and last five years data on daily chart and try to back 23 00:01:48,540 --> 00:01:53,010 test all these patterns, which I have to try to find out these patterns. 24 00:01:53,010 --> 00:01:59,100 In one year, you will get maybe 15 to 20, either bullish or bearish patterns. 25 00:02:00,000 --> 00:02:02,790 In five years, you will get 50 to 60 patterns. 26 00:02:03,030 --> 00:02:06,990 So try to analyze those 50 to 60 patterns. 27 00:02:06,990 --> 00:02:12,900 Try to find out out of those 50 to 60, how many are winners, how many are losers, those who are winners, 28 00:02:12,900 --> 00:02:15,180 how much money you want, how much money you lost. 29 00:02:15,540 --> 00:02:22,380 If you do that testing like this, you will get a tremendous amount of confidence when you put your 30 00:02:22,380 --> 00:02:23,040 real money. 31 00:02:23,640 --> 00:02:25,920 So this is very important to gain the confidence. 32 00:02:26,760 --> 00:02:35,330 But it may happen that you will lose four to five trades in a row and you will have doubt on these candlestick 33 00:02:35,340 --> 00:02:35,730 patterns. 34 00:02:35,730 --> 00:02:37,740 You will wonder whether these work or not. 35 00:02:38,430 --> 00:02:44,940 But if you do back this thing, you now know that see, for example, 50 trades out of trades. 36 00:02:46,110 --> 00:02:50,370 Thirty five work, OK, and 15 do not work. 37 00:02:50,850 --> 00:02:57,390 Do you know that in the long run you are going to lose in 15 and you are going to gain in 35, but these 38 00:02:57,390 --> 00:03:00,840 15 can come in the initial phase of your trading. 39 00:03:00,840 --> 00:03:01,580 So it may happen. 40 00:03:01,590 --> 00:03:08,520 You start trading and your first, second, third are losers for this winner. 41 00:03:08,700 --> 00:03:11,760 And again, fifth, six, seven, eight, eight losers. 42 00:03:13,010 --> 00:03:19,690 So you may wonder that out of it, only one is successful and seven are losers, so this does not work, 43 00:03:20,000 --> 00:03:27,850 but you have to treat them long enough for law of averages to turn your side. 44 00:03:28,040 --> 00:03:30,680 That why testing is important to give you confidence. 45 00:03:31,100 --> 00:03:36,620 This is, again, extremely important rule that I would like to give you. 46 00:03:36,950 --> 00:03:38,900 Never trade with those Stop-Loss. 47 00:03:38,900 --> 00:03:46,850 Every trade that you make must be with a stop loss, because if you don't use stop loss, market can 48 00:03:46,850 --> 00:03:47,660 go anywhere. 49 00:03:48,350 --> 00:03:54,950 And in that case, you will lose a substantial amount of money if you don't use a stop loss. 50 00:03:55,670 --> 00:04:03,320 So what you should do to ensure that you put a stop loss is that you have to make or create a mindset. 51 00:04:04,070 --> 00:04:09,510 You have to create a mindset that, yes, out of ten, I'm going to lose three. 52 00:04:10,070 --> 00:04:13,700 So when when I lose three, I'm going to lose less. 53 00:04:13,700 --> 00:04:17,980 When I win seven, I'm going to win a substantial amount. 54 00:04:18,410 --> 00:04:25,400 So that is the reason why you should always use stop loss, because it may happen that you make seven 55 00:04:25,940 --> 00:04:29,060 trades in a row in profit and it trade. 56 00:04:29,750 --> 00:04:33,380 You do not you stop loss and market goes down substantially. 57 00:04:33,380 --> 00:04:38,690 You have a bullish position and you lose in that amount that you have one in seven trades. 58 00:04:39,380 --> 00:04:46,340 That has happened to me when I started trading initially, and that happens to many traders when they 59 00:04:46,340 --> 00:04:52,130 start trading because they always think that whenever I put trade, it should it must go in profits 60 00:04:52,280 --> 00:04:53,180 all the time. 61 00:04:53,180 --> 00:04:54,910 That is near to impossible. 62 00:04:55,340 --> 00:05:00,190 There is no trader in this world who will win in all the cases. 63 00:05:00,200 --> 00:05:01,240 No, that does not happen. 64 00:05:02,150 --> 00:05:08,720 And lastly, refer to the cheat sheet till you become experts in next video. 65 00:05:09,090 --> 00:05:15,500 The next slide, I'm going to give you a cheat sheet of candlestick trading, which you can print them 66 00:05:15,500 --> 00:05:20,480 and stick in front of your wall till the time you become expert. 67 00:05:20,510 --> 00:05:23,950 You can use those due and start trading. 68 00:05:24,410 --> 00:05:27,050 So these are the five rules for candlestick trading. 69 00:05:27,560 --> 00:05:31,340 I hope you have had a great learning in this course. 70 00:05:31,340 --> 00:05:38,480 And I'm sure that you are ready to trade with confidence on the basis of knowledge and expertise which 71 00:05:38,480 --> 00:05:41,300 you have given in this particular course.