Which candlestick patterns should a beginner know?

• Doji. Open and close almost equal. Indecision; after a strong move it can mark a pause.
• Hammer. Small body at the top, long lower wick, after a fall. Sellers pushed price down and buyers took it back.
• Shooting star. The mirror: small body at the bottom, long upper wick, after a rise. Buyers were rejected.
• Bullish engulfing. A rising candle whose body covers the whole body of the falling candle before it.
• Bearish engulfing. A falling candle whose body covers the whole body of the rising candle before it.

These five cover most of what the longer pattern lists say in other words. Learn them well before adding more.

Once these five are familiar, add two three-candle patterns: the morning star after a fall (a long falling candle, a small candle, then a long rising candle that closes well into the first one) and its mirror, the evening star, after a rise. The same rules apply: they count only once the last candle has closed, at a level you marked earlier.

A hammer in the middle of nowhere means little. The same hammer on a support zone you marked on the 4h chart, after a pullback in an uptrend, tells you something: buyers defended a level that mattered before.

Three checks before you act on any pattern:

1. Location. Is it at a level you marked earlier?
2. Closed. Has the candle closed? Until it does, a hammer can still turn into a big falling candle.
3. Timeframe. Patterns on 1h and above carry more weight than the same shape on 1m.

Say a 1h hammer forms on support with a low at 1.0812 and a high at 1.0838. One plan is a buy stop at 1.0840, just above the high, so you only enter if buyers follow through. The stop loss goes below the wick, at 1.0808. That is 32 pips.

On a $10,000 account at 0.5% risk you can lose $50. At $10 per pip per lot, 32 pips cost $320 per lot, so the volume is $50 ÷ $320 ≈ 0.15 lots. In the ticket, Risk % does this sum for you, and Risk at SL should show about $50.

The same patterns read the same way on XAUUSD, BTCUSDT or GBPJPY. What changes is the size of the candles, and so the size of the position.

• Trading every pattern. Most patterns form away from any level. Skip them.
• Jumping in early. Acting before the candle closes turns a pattern into a guess.
• A stop inside the wick. The wick is where price was rejected; a stop inside it is easy to reach.
• Ignoring the calendar. A pattern minutes before high-impact news can be wiped out by one candle. Check the Calendar tab first.