Doji Stock Charts for Beginners

Stock Trading for Beginners - Doji Candlestick

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Beginners to the stock market should not trade blind, they should make sure they get at least a basic understanding of stock market charts and what they mean. The most widely used form of stock market charts now used are candlestick charts, which were developed by the Japanese. There are a very lage number of candlestick patterns in existence but there are basically twelve patterns that you really need to get to know as a beginner. The first of these is the Doji, which is known as a single candlestick reversal pattern.

It can be either positive (bullish) or negative (bearish). The bullish Doji is found at the bottom of a down trend. The bearish Doji is found at the top of an uptrend. Its body is almos non-existent because the closing price is almost the same as the opening price. For the Doji candlestick pattern to be valid reversal signal there has to be a trend. The reversal also needs to be confirmed by prices trading below or above the Doji as the case may be. If the trend before the Doji candlestick was sideways then the Doji is not valid and should be ignored.

The doji means that neither bears nor bulls are in charge, and reveals indecision, which is also a strong signal that a change in the markets may be imminent.

There are three types of Doji - normal, gravestone doji and dragonfly. In all three the opening price is very close to the closing price. In the normal Doji the price rises then falls then rises again and ends in the middle at the opening price. In the gravestone doji, the price rises then falls to close at the low. The gravestone doji is considered more bearish. In the dragonfly the price rises from the open then falls then rises and closes at the high - this is considered more bullish.

Take a look at this excellent video on the Doji candlestick chart pattern



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