Complete beginners guidance of candlestick patterns

In this guide you will learn about complete beginners guidance of candlestick patterns  , fully beginners guidance and in simple words.

If you want to succeed in stock market trading, learning candlestick patterns is one of the most important steps. Candlestick patterns help traders understand price action, market psychology, and trend direction.

In this beginner-friendly guide, you will learn:

• What is a candlestick?

• How to read candlestick charts

• Types of candlestick patterns

• Most important candlestick patterns for intraday trading

• How to use candlestick patterns with indicators like VWAP, MACD, Pivot Points

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🕯️ What Is a Candlestick?

A candlestick shows the price movement of a stock during a specific time period (5 min, 15 min, 1 hour, 1 day, etc).

Each candlestick has 4 parts:

• Open – Price where market opened

• Close – Price where market closed

• High – Highest price

• Low – Lowest price


Structure of a Candlestick:

• Body – Difference between open and close

• Wick (Shadow) – Shows high and low prices


Colors:

• 🟢 Green (Bullish) → Price closed higher than opened

• 🔴 Red (Bearish) → Price closed lower than opened



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📈 Why Candlestick Patterns Are Important?

Candlestick patterns help you:

• Identify trend reversal

• Spot trend continuation

• Find entry and exit points

• Understand buyer and seller strength


They work very well in:

• Intraday trading

• Swing trading

• Options trading

• Forex and crypto



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🔰 Types of Candlestick Patterns

There are 3 main types:

1. Bullish Reversal Patterns (Market may go up)


2. Bearish Reversal Patterns (Market may go down)


3. Continuation Patterns (Trend may continue)




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✅ Important Bullish Candlestick Patterns

1. Hammer 🔨

• Small body, long lower wick

• Forms after a downtrend

• Indicates trend reversal upward


2. Inverted Hammer

• Small body, long upper wick

• Appears near bottom

• Signals buying pressure


3. Bullish Engulfing

• Big green candle covers previous red candle

• Very strong buy signal


4. Morning Star ⭐

• 3 candle pattern

• Indicates strong reversal from downtrend



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❌ Important Bearish Candlestick Patterns

1. Shooting Star 🌠

→ Small body, long upper wick

• Appears after uptrend

• Indicates price may fall


2. Hanging Man

→ Looks like a hammer but forms at the top.

•Signals trend reversal downward


3. Bearish Engulfing

→ Big red candle covers previous green candle

• Strong sell signal


4. Evening Star 🌙

→ 3 candle pattern

• Signals trend reversal from uptrend



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🔁 Continuation Candlestick Patterns

1. Doji

• Open and close almost same

• Shows indecision

• Breakout decides direction


2. Spinning Top

• Small body, long wicks

• Market is confused

• Often appears before big move



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🧠 How to Trade Using Candlestick Patterns (Smart Way)

❗ Never trade using candlestick patterns alone.

Always combine with:

✅ VWAP (you already use this)

✅ MACD

✅ Pivot Points

✅ Support & Resistance

✅ Volume


Example Strategy:

If Bullish Engulfing forms near Support or VWAP → Look for BUY

If Bearish Engulfing forms near Resistance or Pivot → Look for SELL



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⚠️ Common Mistakes Beginners Make

→ Trading every pattern ❌

→ Ignoring trend ❌

→ Not using stop-loss ❌

→ Not waiting for candle close ❌



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🛡️ Risk Management Rules

• Always use stop-loss

• Risk only 1–2% capital per trade

• Don’t overtrade

• Trade only best setups



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🏁Final Words

Candlestick patterns are the language of the market. If you learn to read them correctly and combine them with indicators like VWAP, MACD, and Pivot Points, your trading accuracy will improve a lot.

For beginners, first practice on paper trading before using real money.

If this blog makes sense to you give your feedback in comments and stay tuned.

In the next blog i will share the full guidance about chart patterns.

At the end of the day

Trading isn’t about timing in the market it’s about time in the market.