The basics of candlestick charts

When it comes to trading or investing, understanding how to read charts is essential. While some might choose to rely on intuition, it's important to have a strategy based on probabilities and risk management. That's where candlestick charts come in. In this article, we'll explore what candlestick charts are and how to interpret them.

What is a candlestick chart?

Candlestick charts, dating back to 17th-century Japan with their creation credited to a Japanese rice trader named Homma, are a crucial tool in financial analysis. They differ from traditional line and bar charts by offering a richer visual representation of price movements, as they are composed of structures that resemble a candle and represent different periods, ranging from seconds to years.

Candlesticks consist of a "body" representing the price range between opening and closing, with "wicks" or "shadows" extending above and below, illustrating high and low prices. Their unique design allows traders to quickly grasp market sentiment and potential reversals, making them indispensable in technical analysis. 

Whether identifying bullish or bearish patterns, understanding candlestick chart basics is fundamental for anyone delving into the world of investment and trading.

Understanding how candlestick charts work

To create a candlestick, four price points are needed: open, high, low, and close. The open is the first recorded trading price, while the high and low represent the asset's highest and lowest prices during the timeframe. The close refers to the last recorded trading price. 

These four points determine the shape of the candlestick, with the distance between the open and close called the body, and the distance between the body and the high/low referred to as the wick or shadow. The overall range of the candlestick is the distance between the high and low.

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How to use candlestick charts

Popular with stock market traders, candlestick charts are often considered easier to read than traditional bar or line charts. They provide a simple representation of price action at a glance, as each candlestick represents the battle between buyers (bulls) and sellers (bears) during a specific time period. A longer body indicates stronger buying or selling pressure, while if the wicks are short, it means the high or low of the period was near the closing price.

The colour of the candlestick can vary, but generally, green means the asset closed higher than it opened, while red signifies a lower closing price. Some traders prefer black and white representation, where up movements are hollow candles and down movements are black candles.

Examples of single candlestick charts

Doji: A Doji has a small body with upper and lower wicks of roughly equal length, resembling a cross or plus sign. It signifies market indecision and potential reversals.

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Hammer: The Hammer exhibits a small body at the top with a long lower wick, resembling a hammer. This candlestick advocates for a potential bullish reversal after a downtrend.

Shooting Star: The Shooting Star has a small body at the bottom with a long upper wick, resembling a falling star. It hints at a potential bearish reversal after an uptrend.

Spinning Top: A Spinning Top has a small body and short upper and lower wicks. It denotes market indecision, with neither bulls or bears in control.

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Marubozu: A Marubozu features a long body with no wicks, indicating strong buying or selling pressure. A bullish Marubozu has a long green body, while a bearish one has a long red body.

These single candlestick patterns offer traders valuable information for decision-making in various market conditions.

Bullish and bearish candlestick charts

Bullish and bearish candlestick patterns are critical indicators in financial analysis, offering insights into market sentiment. Bullish patterns signal optimism, suggesting potential price increases. Examples include the Hammer, signalling a possible price reversal upward, and the Three White Soldiers, indicating strong buying momentum.

On the other hand, bearish patterns imply pessimism and potential price declines. The Shooting Star, for instance, hints at a reversal downward, while the Three Black Crows signify a bearish trend.

These candlestick patterns provide traders with visual cues regarding market sentiment, helping them make informed decisions. Recognizing these patterns empowers investors to gauge the market direction and make strategic moves in response to prevailing sentiment.

Candlestick charting strategies

Candlestick charting strategies are powerful tools for traders, providing insights into market sentiment and potential price movements. These strategies encompass various approaches to maximise trading success:

1. Trend reversal strategies

These strategies focus on identifying shifts in market direction using candlestick patterns. Traders look for reversal patterns like the Hammer or Shooting Star to pinpoint potential trend changes. These patterns offer valuable entry and exit points for both bullish and bearish trends, enhancing the trader's ability to capitalise on market reversals.

2. Continuation strategies

Continuation strategies involve using candlestick patterns to trade in the direction of the existing trend. Traders seek patterns that confirm the ongoing trend, such as the Bullish Engulfing pattern during an uptrend or Bearish Engulfing during a downtrend. Effective use of these patterns provides confirmation signals and risk management techniques to stay aligned with the trend's momentum.

3. Combination strategies with other technical indicators

To increase trading accuracy, traders often combine candlestick patterns with other technical indicators like Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD). This approach offers a comprehensive view of market conditions, enhancing decision-making and reducing false signals. Learning to integrate candlestick patterns with these indicators is crucial for traders looking to refine their strategies.

Incorporating these candlestick charting strategies empowers traders to make informed decisions and navigate the complex world of financial markets with greater precision and confidence.

What candlestick charts can’t illustrate

Although candlesticks provide a good overview of price action, they don't provide all the details for a comprehensive analysis. For example, they don't show the details of what happened between the open and close, only the distance between these two points. Additionally, candlestick charts can contain a lot of noise, especially when analysing lower timeframes.

What are Heikin-Ashi candlesticks?

Apart from traditional candlestick charts, there are other methods to calculate and interpret candlesticks. One such method is the Heikin-Ashi technique, which stands for "average bar" in Japanese. Heikin-Ashi candles rely on a modified formula that uses average price data to smooth out price action and filter market noise. This technique makes it easier to spot trends, patterns, and possible reversals in the market.

Traders often use Heikin-Ashi candles in combination with traditional candlesticks to avoid false signals and increase the chances of identifying market trends. Green Heikin-Ashi candles with no lower wicks indicate a strong uptrend, while red candles with no upper wicks suggest a strong downtrend.

However, it's important to note that Heikin-Ashi candlesticks have their limitations. Since they use averaged price data, patterns may take longer to develop, and they may not show price gaps or obscure other price information.

In conclusion

Candlestick charts are a fundamental tool for traders and investors. They provide a visual representation of price action and allow for analysis across different timeframes. By studying candlestick charts and patterns, combined with an analytical mindset and practice, traders can gain an edge in the market. However, it's also important to consider other methods, such as fundamental

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Whether you're engaging in trading or investing, mastering risk management is crucial for your financial journey. It's about ensuring your hard-earned money is protected and your decisions are well-informed. In this article, we'll delve into the importance of risk management and discuss five essential strategies to consider.

What is effective risk management and why is it important?

Effective risk management is a vital process that assists individuals involved in investment and trading in recognizing, evaluating, and addressing potential risks associated with their activities.

Essentially, it enables investors and traders to make well-informed decisions, optimize outcomes, and pursue sustained financial well-being despite fluctuations in the market. It's crucial because it safeguards your assets and enhances decision-making. By proactively identifying risks, you can implement measures to protect your resources and mitigate potential setbacks. Employing these risk management approaches equips you with an efficient set of tools to minimize risk within your investment portfolio.

The 4 pillars of a risk management strategy

Any established risk management process encompasses these four primary methods:

Accepting risks

This means being aware of and willingly taking on the risks associated with an investment without pouring extra resources into avoiding them. It's a smart move when the potential loss isn't too significant.

Transferring risks

This method entail shifting the burden of risk to a third party, typically for a fee, thus reducing direct responsibility.

Risk avoidance

After doing a risk assessment, opting not to invest in assets with potential risk altogether eliminates the chance of facing potential losses.

Risk reduction

Diversifying your portfolio across different assets or industries helps minimize the financial impact of risky investments, providing a more balanced and protected risk strategy approach.

The four pillars of risk management - acceptance, transferring risks, risk avoidance, and diversification - are crucial components of a robust risk management strategy, vital for safeguarding investments.

5 risk management strategies to implement

Below we will explore five essential risk assessment strategies that will empower you to make informed decisions and protect your investments. They also provide the answer to the burning question: why is having a reliable risk management strategy important?

1. Set both stop-loss and take-profit points

A stop-loss order sets a predetermined price for an asset at which the position will close. The stop price is set below the current price and, when triggered, helps protect against further losses. A take-profit order works the opposite way, setting a price at which you want to close your position and lock in a certain profit.

 To better explain this risk strategy let's assume you purchased a stock at $100 per share.

Stop loss: You set a stop-loss order at $90 per share. If the stock's price drops to $90 or below, the stop-loss order will trigger, and your position will automatically be closed, helping to limit your potential losses.

Take profit: You set a take-profit order at $120 per share. If the stock's price rises to $120 or above, the take-profit order will trigger, and your position will automatically be closed, locking in your desired profit.

Stop-loss and take-profit orders help you manage your financial risk in two ways. First, they can be set up in advance and will be executed automatically. There's no need to be available 24/7, and your pre-set orders will be triggered if prices are particularly volatile. This also allows you to set realistic limits for the losses and profits you can take. 

It’s better to set these limits in advance rather than in the heat of the moment. While it can be strange to think of take-profit orders as part of a risk management strategy, you shouldn't forget that the longer you wait to take profit, the higher the risk the market could fall again while waiting for an additional upside.

2. Have an exit strategy in place

An exit strategy is a predefined plan for investors and traders to exit their positions and leave their investments or trades. It's vital as it safeguards capital and reduces potential losses. 

With a clear exit strategy, decisions are objective, avoiding emotional biases and market fluctuations. It also ensures timely profit-taking, preventing missed opportunities and significant losses from holding onto investments too long. 

Using exit strategies like limit orders helps maintain discipline and rationality, avoiding impulsive decisions driven by emotions such as greed or hype. By implementing an exit strategy, traders can navigate the markets with a level-headed approach.

3. Diversification implementation

Diversification is a crucial investment strategy that involves spreading your investments across different assets to manage risk effectively. By diversifying, you can reduce the impact of market volatility on your overall portfolio. 

Investing in various asset classes, such as stocks, bonds, real estate, and commodities, ensures that your portfolio isn't overly dependent on a single asset's performance. This minimizes the risk of significant losses during market downturns. 

To create a well-diversified investment portfolio, consider factors like risk tolerance, financial goals, and time horizon. Allocate your investments strategically to achieve a balanced and resilient portfolio that can weather various market conditions.

4. Use the 1% rule

The 1% rule is a risk management strategy where you limit the amount you risk on an investment to just 1% of your total capital. For instance, if you have $10,000 to invest, you'd avoid risking more than $100 on a single trade. 

To implement this rule, you can purchase $10,000 worth of a stock or cryptocurrency and set a stop-loss order at $9,900, limiting potential losses to 1% of your total investment. Alternatively, you could invest $100 in a stock without a stop-loss order, ensuring a maximum loss of 1% if the asset's price drops to zero. 

This rule is applicable across all investment types, however, it is more important in volatile markets as it prevents excessive risks and potential heavy losses due to greed or high expectations.

5. Position sizing and risk-reward ratio

Position sizing and risk-reward ratio are fundamental concepts in effective risk management for investors and traders. Position sizing refers to determining the appropriate amount of capital to allocate to each trade, considering the risk tolerance and total portfolio size. By sizing positions correctly, investors can minimize the impact of potential losses on their overall portfolio.

Calculating the risk-reward ratio involves assessing the potential profit against the potential loss for each trade. A favorable risk-reward ratio ensures that potential gains outweigh potential losses, increasing the probability of overall profitability.

Balancing potential gains and losses through appropriate position sizing and risk-reward ratio is crucial for achieving long-term success in the financial markets. By aligning these factors, traders can optimize their trading strategies and protect their capital while seeking profitable opportunities.

In conclusion

ffectively managing risk is considered crucial for investors and traders aiming for financial success. By incorporating these five diverse risk management strategies, you can potentially navigate the markets and safeguard your investments.

Manage risk by embracing diversification to potentially mitigate the impact of market volatility, set stop-loss and take-profit points to automate risk management, and establish a clear exit strategy to potentially secure profits and minimize losses. Adhering to certain principles, such as the 1% rule, may be considered to potentially avoid excessive risks, and understanding position sizing and risk-reward ratios may be beneficial to potentially optimize trades.

It's worth noting that each individual's financial situation is unique, and it may be advisable to consult with a licensed financial advisor to receive personalized guidance and recommendations tailored to your specific needs and goals. With these tools at your disposal, coupled with conducting thorough risk assessments and vigilant risk monitoring, you will better prepared to navigate the ever-evolving landscape of finance.

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Tap, announces a temporary suspension of XTP locking/fees payment for all its users, reflecting a steadfast commitment to regulatory compliance and global collaboration.

In alignment with our regulatory-first vision, Tap announce the temporarily suspending XTP locking and fee payment in XTP. This strategic move reflects our dedication to regulatory compliance in every aspect of our operations.

At Tap, we prioritize responsibility alongside innovation. This temporary suspension underscores our commitment to regulatory compliance and our ability to effectively serve all our users in the United Kingdom, aligning with the new FCA regulations set in place.

In accordance with the Financial Conduct Authority's (FCA) financial promotion rule, we regret to inform our UK residents that the utilization of XTP for locking or payment is temporarily suspended. The FCA has classified the use of digital assets for obtaining discounts as a financial incentive, thus preventing its extension to any UK resident.

The temporary suspension of services in the UK has necessitated a pause in functionality across our entire platform due to its unified nature. Nevertheless, our team remains unwavering in our commitment to restoring Locking/Paying Fees in XTP for our global community. 

While this transition may present temporary challenges, it also represents an opportunity for growth and collective progress.

We extend our heartfelt appreciation to our users for their unwavering support and patience as we navigate through this transition. Rest assured, Tap remains steadfastly committed to delivering an unparalleled digital asset experience that is compliant, secure, seamless, and transformative for users worldwide.

TAP Partners with Notabene to Implement Innovative Solutions Ensuring Adherence to Cryptocurrencies’ Travel Rule

Tap is proud to announce its new partnership with Notabene, in a concerted and strategic response to strengthen its compliance operations, by utilizing the market-leading solutions to ensure ongoing compliance with the Travel Rule for cryptocurrencies. Embracing the ever-evolving regulatory landscape, this partnership underscores TAP's dedication to ensuring consumer trust and guaranteeing pre-transaction regulatory compliance requirements at all times.

Tap has always taken pride in its regulatory-first approach, emphasizing the importance of consumer trust and operational transparency. Tap's decision to partner with Notabene is grounded in a multitude of strategic rationales. Notabene's all-encompassing SafeTransact platform, renowned for its excellence in identifying and mitigating high-risk activity before it occurs, provides compliance teams with the tools to make data-driven choices and enhances operational efficiency by seamlessly integrating the Travel Rule into compliance processes.

Notabene's notable offering includes its SafeGateway solution, which facilitates VASP-to-VASP interaction across protocols. This positions them as strong contenders in the cryptocurrency compliance solutions sector. This underscores why TAP views this partnership as a positive step toward maintaining a competitive edge in the fintech compliance landscape.

Comment from Kriya Patel, CEO of Tap

“I am delighted to be able to announce our strategic partnership with Notabene and I look forward to growing the relationship together whilst navigating through to meeting and maintaining our current and future regulatory requirements in our industry. 

The partnership with Notabene was a natural one. They share the same values as Tap by focusing on  customer-driven product needs, whilst allowing us to maintain a regulated and security-first approach.”

Comment from Pelle Braendgaard, CEO of Notabene

"We are pleased to collaborate with Tap, their commitment to compliance and customer trust aligns seamlessly with our mission. Together, we can advance the industry while ensuring the highest standards of security and transparency."

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Welcome to the delicious world of cookies! But hold on, we're not talking about those sweet treats you munch on during tea time. We're here to unveil the mysterious and oh-so-important cookies that exist on the vast landscape of the internet. 

These cookies aren't tangible, instead, they're small pieces of data that roam around cyberspace, shaping and enhancing your online experience. In this article, we break down what cookies are exactly and how they impact our online interactions. 

What are cookies?

These digital marvels play a vital role in enhancing our online experiences. So, what exactly are cookies and why does your computer store them?

When you're hopping from one website to another, your computer keeps a small file on behalf of each website you visit. This file is the cookie. The name "cookie" actually comes from a programming term called a magic cookie, coined by the programmer, Lou Montulli, and adds flavour to your online adventures.

But why do computers store these little files? Cookies help web servers remember you, ensuring a smooth and personalised browsing experience. Let's say you perform an action on a website, like switching to a dark mode or logging in with your credentials. Your computer takes note of this and saves the information in a cookie.

When you revisit that website in the future, your computer hands back the stored information from the cookie to the website. It's as if your computer is acting as a helpful assistant, reminding the website of your preferences, saved settings, and even items left in your virtual shopping cart.

The bottom line is that cookies are an integrated service that allow for a seamless and tailored browsing experience. 

The different types of cookies

As with its baked goods counterpart, not all cookies are created equal. Each type serves a unique purpose in enhancing your online experience. Here's a breakdown of the most common cookie varieties:

Session cookies

These are temporary cookies that exist only during your browsing session. They hold information about your activities on a website, ensuring smooth navigation. Once you close the browser, session cookies vanish, leaving no trace behind.

Persistent cookies

Unlike their transient cousins, persistent cookies stick around even after you close the browser. They store information like login details or preferences, making your return visits more personalised and convenient.

First-party cookies

These are created by the website you are visiting. They help to remember your preferences and settings, making your browsing experience smoother.

Third-party cookies

These cookies come from external sources, often embedded in the website you're visiting. They track your browsing habits, allowing advertisers to deliver targeted ads based on your interests.

Cookie consent and those pop-up banners

When you visit a website, you may have noticed those cookie consent banners or pop-ups that demand your attention. Turns out they are quite important. Implementing these notifications helps websites comply with data protection regulations and respect your privacy. 

They also play a vital role in helping users understand the importance of giving consent and being aware of how their data is used. So, next time you encounter a cookie consent banner, remember it's there to protect your rights and ensure transparency in the online world.

How cookies track and analyse your behaviour

Cookies have become a powerful tool for tracking and analysing user behaviour on websites. They enable website owners to gather valuable analytics data and gain insights into visitor patterns and preferences. 

By utilising cookies, website administrators can track the number of page views, monitor the time users spend on their site, and gain a deeper understanding of how visitors interact with different elements. This data helps them optimise their websites, improve user experience, and tailor content to suit audience preferences. 

On top of that, cookies also play a crucial role in targeted advertising, allowing marketers to display ads based on users' browsing habits and interests. So, the next time you encounter a personalised ad, you can thank those little, but mighty, cookies for their clever insights.

How you can manage your cookies

Managing and controlling useful cookies gives you more control over your online privacy. Through browser settings, you can choose to accept, reject, or delete cookies. Taking control of your cookie preferences allows you to customise your browsing experience and limit the data collected by websites. 

Additionally, various cookie management tools are available, making it easier to handle cookies across different websites. It's important to understand the implications of accepting or rejecting cookies, as it can affect website functionality, personalised experiences, and even the relevance of advertisements. Find the right balance that suits your privacy preferences and browsing needs.

Conclusion

In the vast realm of the internet, cookies are the unsung heroes that make our online experiences seamless and personalised. These small files, stored by our computers on behalf of websites, play a crucial role in remembering our preferences, settings, and actions. 

So, the next time you encounter a cookie consent banner or notice the personalisation of a website, you'll know it's all thanks to these small but mighty digital gems called cookies. 

Public Announcement from the Tap Team

Regarding Bittrex Global's Upcoming Closure

We are aware of the recent announcement from Bittrex Global that the exchange will be shutting down its operations. This news undoubtedly has an impact on XTP (Tap Token) holders, as Bittrex Global has been the primary listing venue for the token. We want to assure our community that we are working hard on a solution to minimise any disruption to XTP trading and liquidity.

We were equally taken aback by the announcement, just as much as our community.
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Our Immediate Actions

We are meticulously evaluating multiple options to offer XTP a new primary listing marketplace. We are determined to provide our users with an uninterrupted trading experience. In the meantime, please be reassured that XTP will continue trading on Bittrex Global until the exchange's closure.

Our Commitment to Transparency and Communication

We understand that this news may cause some uncertainty among our users. We are committed to keeping you informed of any major developments during this process. Our dedicated support team is readily available to offer professional assistance and provide comprehensive information to users who intend to transfer their XTP to their Tap wallet.
Please don't hesitate to get in touch with our support team, and we will ensure a seamless and guided transition for all our users.

Thank you for your continued support.

We appreciate your understanding and patience as we work through this situation. We are confident that we will find a solution that will be in the best interests of our community.