So in the end, we will wrap up this course by giving you five golden rules when trading using candlesticks.
So I've been trading since past 10 to 12 years now.
And on the basis of experience that I have obtained after making thousands of trades, these are the
five things that I want to tell you before you start trading the candlestick patterns.
Rule number one, very important, never trade candlestick in isolation.
Don't go long.
As soon as you see a hammer.
No, you cannot trade them in isolation.
We have to use filters.
This is very important.
Many noise investors or traders, they do not use filters at all because they don't know this.
They just know that that these are the candlestick patterns and directly trades on the basis of this.
We do not have to take this.
We don't have to do this.
Third is very important, we are to do back testing, as I told you previously, as will you have learned
these patterns in this.
Schools don't directly go and trade these patterns because that may not give you confidence.
What will give you confidence is this.
We have to do back testing and do a paper trail before putting real money at stake, because this is
what is going to give you confidence.
So you have to devote maybe 10, 20 or even 30 days a month for doing back testing.
I will suggest you do take at least 10 stocks and last five years data on daily chart and try to back
test all these patterns, which I have to try to find out these patterns.
In one year, you will get maybe 15 to 20, either bullish or bearish patterns.
In five years, you will get 50 to 60 patterns.
So try to analyze those 50 to 60 patterns.
Try to find out out of those 50 to 60, how many are winners, how many are losers, those who are winners,
how much money you want, how much money you lost.
If you do that testing like this, you will get a tremendous amount of confidence when you put your
real money.
So this is very important to gain the confidence.
But it may happen that you will lose four to five trades in a row and you will have doubt on these candlestick
patterns.
You will wonder whether these work or not.
But if you do back this thing, you now know that see, for example, 50 trades out of trades.
Thirty five work, OK, and 15 do not work.
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
15 can come in the initial phase of your trading.
So it may happen.
You start trading and your first, second, third are losers for this winner.
And again, fifth, six, seven, eight, eight losers.
So you may wonder that out of it, only one is successful and seven are losers, so this does not work,
but you have to treat them long enough for law of averages to turn your side.
That why testing is important to give you confidence.
This is, again, extremely important rule that I would like to give you.
Never trade with those Stop-Loss.
Every trade that you make must be with a stop loss, because if you don't use stop loss, market can
go anywhere.
And in that case, you will lose a substantial amount of money if you don't use a stop loss.
So what you should do to ensure that you put a stop loss is that you have to make or create a mindset.
You have to create a mindset that, yes, out of ten, I'm going to lose three.
So when when I lose three, I'm going to lose less.
When I win seven, I'm going to win a substantial amount.
So that is the reason why you should always use stop loss, because it may happen that you make seven
trades in a row in profit and it trade.
You do not you stop loss and market goes down substantially.
You have a bullish position and you lose in that amount that you have one in seven trades.
That has happened to me when I started trading initially, and that happens to many traders when they
start trading because they always think that whenever I put trade, it should it must go in profits
all the time.
That is near to impossible.
There is no trader in this world who will win in all the cases.
No, that does not happen.
And lastly, refer to the cheat sheet till you become experts in next video.
The next slide, I'm going to give you a cheat sheet of candlestick trading, which you can print them
and stick in front of your wall till the time you become expert.
You can use those due and start trading.
So these are the five rules for candlestick trading.
I hope you have had a great learning in this course.
And I'm sure that you are ready to trade with confidence on the basis of knowledge and expertise which
you have given in this particular course.