Is there a candlestick pattern that guarantees any kind of future profit?
I would go even farther than Victor's answer.  There is little evidence that candlestick patterns and technical analysis in general have any predictive power.   Even if they did in the past, of which there is some evidence, in modern times they are so easy to do on computers that if they worked algorithmic traders would have scanned almost all traded stocks and bought/sold the stock before you even had a chance to look at the graph. While the best technical traders who are very good at quickly using pattern recognition across many indicators as Victor mentioned might be able to add some advantage.  The odds that a pattern so simple to code such as Bullish Engulfing would have predictive power is tiny. I love technical analysis, and use candlesticks as part of my technical analysis system for trading mutual funds in my 401K. However, I would never use a candlestick chart on its own.  I use combination of candlesticks, 2 different EMAs, MACD, bollinger bands, RSI and hand drawn trend lines that I constantly tweak.  That's about as much data input as I can handle, but it is possible to graph it all at once and see it at a glance if you have the right trading platform. My approach is very personal, not very aggressive, and took me years to develop. But it's fairly effective - 90% + of my trades are winners. The big advantage of technical analysis is that it forces you to create repeatable rules around which you base your trading.  A lot of the time I have little attention at all on what fund I am trading or why it is doing well in that particular market condition. It's basically irrelevant as the technical system tells when to buy and sell, and stops you trying to second guess whether housing, chemicals, gold or asian tigers are is doing well right now. If you don't keep to your own rules, you have only yourself to blame. This keeps you from blaming the market, which is completely out of your control. I explain many of my trades with anotated graphs at http://neurotrade.blogspot.com/ I did a historical analysis a few years back of all well-known candlestick patterns against my database of 5 years worth of 1-minute resolution data of all FTSE100 shares.  There wasn't a single pattern that showed even a 1% gain with 60% reliability.  Unfortunately I don't have spread data other than for a handful of days where I recorded live prices rather than minutely summaries, but my suspicion is that most of the time you wouldn't even earn back the spread on such a trade. "By definition, there are no guaranteed profits. There are sometimes arbitrage opportunities, which are more accessible to some investors than others. In this case, I'm not referring to HFT as that is covered elsewhere on this site already.  At certain times, in certain equity markets, candlestick charts were used for profitable trading, though more for trades set up for weeks or months, not day trading. I am referring specifically to Nikkei 225 equities, in the 1980's and 1990's. I don't know why it was effective, and it hasn't worked for me since then. I recommend reading and heeding this answer. Some people DO use technical analysis (see ""TA is not..."" section) as a primary trading strategy, but they are not going to divulge their methods, not here nor anywhere else." John Person has a pattern called the High Close Doji that is probably the most reliable signal in the world of candle patterns. I would check out Candle Stick and Pivot Point Trade Triggers. It all I use in trading stocks + forex. Nothing is guaranteed - candlesticks are not crystal balls nor is any part of technical analysis. Candlestick patterns used correctly and in combination with other western technical indicators can increase the probability of a trade going into the derived direction, but they are not a guarantee - which is why you should always use stop losses with your candlestick or any trading. In saying that, another candlestick pattern that can provide high probability trades is the Doji, or a combination of Dojis in a row at a market extreme. Note that both Engulfing patterns and Dojis work best at price extremes (highs and lows) and in combination with other technical indicators such as an overbought momentum indicator at a market high, or an oversold momentum indicator at a market low. EDIT - An Example Here is a sample trade I placed on the 17th October and am currently 15.6% in profit on. See the chart below as it shows taking the trade on the open of the following day after a bullish engulfing pattern appeared at the bottom of a downtrend on the 16th in combination with the Slow Stochastic crossing over in the oversold region (below 20%). I would consider this a high probability trade and have placed an initial stop loss at 10% below my open price in case the trade went against me. As the price moved up I moved the 10% stop loss up as a trailing stop loss. My profit target is set at 25% or $4.00. A good poker player lowers the bet on the downside and increases it on the up, by 3 to 10 times. They'll win, and then when the mood swings, generally 3 -5 consecutive downs, it`s time to reduce the bet back to 1. I gambled for a year fulltime - a guest of the house you might say, and I managed to make a living using this system.
"There are three (or four) ways that a company can grow: (Crowdfunding is a relatively new (in mainstream businesses) alternative financing method where people will finance a company with the expectation that they will benefit from the product or service that they provide.) Obviously a startup has no prior income to use, so it must either raise money through equity or debt. People say that one must borrow contingent on their salary. Banks lend money based on the ability to pay the loan back plus interest.  For individuals, their income is their primary source of cash flow, so, yes, it is usually the determining factor in getting a loan.  For a business the key factor is future cash flows.  So a business will borrow money, say, to buy a new asset (like a factory) that will be used to generate cash flows in the future so that they can pay down the debt.  If the bank believes that the use of the money is going to be profitable enough that they will get their money back with interest, they'll loan the money. Equity investors are essentially the same, but since they don't get a guaranteed payback (they only get paid through non-guaranteed dividends or liquidation), their risk is higher and they are looking for higher expected returns. So the question I'd have as a bank or equity investor is ""what are you going to do with the money?""  What is your business strategy? What are you going to do that will make profits in the future?  Do you have a special idea or skill that you can turn into a profitable business?  (Crowdfunding would be similar - people are willing to give you money based on either the social or personal benefit of some product or service.) So any business either starts small and grows over time (which is how the vast majority of businesses grow), or has some special idea, asset, skill, or something that would make a bank willing to take a risk on a huge loan. I know, again, that people here tend to turn blind eyes on unfortunate realities, but people do make giant businesses without having giant incomes. The ""unfortunate reality"" is that most startups fail.  Which may sound bad, but also keep in mind that most startups are created by people that are OK with failing.  They are people that are willing to fail 9 times with the thought that the 10th one will take off and make up for the losses of the first 9.   So I would say - if you have some great idea or skill and a viable strategy and plan to take it to market, then GO FOR IT. You don't need a huge salary to start off.  You need something that you can take to market and make money.  Most people (myself included) either do not have that idea or skill to go out on their own, or don't have the courage to take that kind of risk.  But don't go in assuming all you need is a loan and you'll be an instant millionaire.  You might, but the odds are very long." A derivative in finance is simply any asset whose value is based on the value of another asset or based on the value of a group of assets. A derivative contract is a type of contract (usually a 'standardized contract') with specific payout instruction based on the price changes of a different asset. The basic idea is that it becomes easier to make a claim to an asset or property (and profit from this claim), without needing to physically transfer it (or even the title to said asset), and use much less capital to do so (reduce risk). They become problematic when multiple people may have claims to the real asset, or when the value of the derivatives changes very quickly or are hard to calculate. There are also liquidity problems the further you get from the real asset. This is not a problem for all kinds of derivatives contracts. And you must recognize that derivatives are used colloquially in a way that has nothing to do with reality to cause fear in people/investors that are not financially savvy. Many derivatives also have dubious or no economic purposes such that regulators don't allow them to be traded since they can't see how it is different from gambling. This is seen in financial markets that are less liberalized or cultures with puritanical backgrounds. Typically the trick is to convince regulators that the derivative or financial product helps with reducing risk and hedging and it will get approved. I've mentioned some terminology, but this depends specifically on what kind of derivatives contract you become interested in. Swaps, Credit Default Swaps, Futures, Options, Options on Futures, Leveraged Exchange Traded Funds, Inverse Leveraged Exchange Traded Funds, warrants, and more all have their own terminology. How to trade them in a simulation? It all depends on which financial product you really become interested in. First, you need to understand how modern insurance companies operate. On the front end, they write contracts with customers, collecting up front premiums, and promising to pay out to cover future losses. Efficient premiums cover exactly what's paid out; if you charge too much customers leave for competition, and if you charge too little the company goes under, or at least loses money. Large armies of people are employed to accurately guess future risks, hopefully to the point of certainty you have in human mortality.  So over time, they will pay back those premiums. And there's a constant stream of new premiums coming in to replace money going out. So there's this effective pool of money they can use to buffer against large losses with; it's called float. And when the pool of money remains relatively constant, they can invest it longer term than the people who comprise the underlying risk. Large insurance companies like Berkshire Hathaway function in this manner; it's where Warren Buffet finds capital to invest while hiding from Wall St in Nebraska. The way these companies profit is by making sure the equation works:  Profits = Premiums - Payouts + Return on float Payouts could be just payments for insured risk. But they could also be for the whole life insurance you're running across from time to time. These contracts offer the insured the chance to invest their money with the people who invest the float. And as long as the return on float is greater than the return they're offering, it's still profitable for the company. Since this guarantees suboptimal returns for you, it's usually a good idea to buy term insurance (much cheaper) and invest the difference yourself. Here are a few things I've already done, and others reading this for their own use may want to try.  It is very easy to find a pattern in any set of data. It is difficult to find a pattern that holds true in different data pulled from the same population.  Using similar logic, don't look for a pattern in the data from the entire population. If you do, you won't have anything to test it against. If you don't have anything to test it against, it is difficult to tell the difference between a pattern that has a cause (and will likely continue) and a pattern that comes from random noise (which has no reason to continue). If you lose money in bad years, that's okay. Just make sure that the gains in good years are collectively greater than the losses in bad years. If you put $10 in and lose 50%, you then need a 100% gain just to get back up to $10.  A Black Swan event (popularized by Nassim Taleb, if memory serves) is something that is unpredictable but will almost certainly happen at some point. For example, a significant natural disaster will almost certainly impact the United States (or any other large country) in the next year or two. However, at the moment we have very little idea what that disaster will be or where it will hit.  By the same token, there will be Black Swan events in the financial market. I do not know what they will be or when they will happen, but I do know that they will happen. When building a system, make sure that it can survive those Black Swan events (stay above the death line, for any fellow Jim Collins fans). Recreate your work from scratch. Going through your work again will make you reevaluate your initial assumptions in the context of the final system. If you can recreate it with a different medium (i.e. paper and pen instead of a computer), this will also help you catch mistakes. Exactly, the way you phrase the question makes it too vague to explain. Futures are very complicated instruments, and you should not be going after futures contracts if you are not educated in exactly how they work.  I recommend getting a text on [derivative markets](http://books.google.com/books?id=6fNJGQAACAAJ&amp;dq=Fundamentals%20of%20Derivative%20Markets%20McDonald&amp;source=gbs_book_other_versions) and learn all the ropes before jumping in at all. This is how I've understood this concept. Fibonacci nos/levels/ratios/%s is based on concept of sequential increment. You may find lot of info about Fibonacci on net. In stock market this concept is used to predict psychological level. While a trend is form, usually price tend to accumulate/consolidate at these level. How the percentage/ ratio make impact is  - check any long trend...Now draw a fibbo retracement from immediate previous high and connect it's low. You will see new levels of intermediate trend. In broader term you will find after reversal a leg (trend) is formed, then body and then head which is smaller; then price reverses. The first leg that forms if it refuses to break 23.6% or 38.2% then the previous trend may continue. 50% is normal; usually this level is indecision phase. Even 61.8% is seen as indecision but it is crucial level as it is breakout level towards 100%. Now if the stock retraces 100% then it is sign a new big trend is forming. Now for day trader 23.6%,38.2% and 50% level are very crucial from trading purpose. This concept is so realistic that every level is considered and respected. Suppose if a candle or bar starts at 23.6% level and crosses 38.2% and directly hits 50%. Then the next bar or candle will revert and first hit 38.2% and then continue with the trend. It means price comes back, forms it area at this level and then continue whichever direction the force directs it. You never trade fibo alone, you need help of oscillators or other tools to confirm it. If you have no paycheck, I presume you are doing your own business. That is included. Also, that is only limited to business, Studies, personal growth and other things are different again.  Oh, and if you can predict with high probability a high profit event in 5 years time, considering today's climate, I'm V.impressed. I'm relying on having as many basis as possible covered. It's a bit like a lottery (Though the odds are a lot better), the more tickets you have, the better your chances of hitting the big one. "You are probably going to hate my answer, but... If there was an easy way to ID stocks like FB that were going to do what FB did, then those stocks wouldn't exist and do that because they would be priced higher at the IPO. The fact is there is always some doubt, no one knows the future, and sometimes value only becomes clear with time. Everyone wants to buy a stock before it rises right? It will only be worth a rise if it makes more profit though, and once it is established as making more profit the price will be already up, because why wouldn't it be? That means to buy a real winner you have to buy before it is completely obvious to everyone that it is going to make more profit in the future, and that means stock prices trade at speculative prices, based on expected future performance, not current or past performance. Now I'm not saying past and future performance has nothing in common, but there is a reason that a thousand financially oriented websites quote a disclaimer like ""past performance is not necessarily a guide to future performance"". Now maybe this is sort of obvious, but looking at your image, excluding things like market capital that you've not restricted, the PE ratio is based on CURRENT price and PAST earnings, the dividend yield is based on PAST publications of what the dividend will be and CURRENT price, the price to book is based on PAST publication of the company balance sheet and CURRENT price, the EPS is based on PAST earnings and the published number of shares, and the ROI and net profit margin in based on published PAST profits and earnings and costs and number of shares. So it must be understood that every criteria chosen is PAST data that analysts have been looking at for a lot longer than you have with a lot more additional information and experience with it. The only information that is even CURRENT is the price. Thus, my ultimate conclusive point is, you can't based your stock picks on criteria like this because it's based on past information and current stock price, and the current stock price is based on the markets opinion of relative future performance. The only way to make a good stock pick is understand the business, understand its market, and possibly understand world economics as it pertains to that market and business. You can use various criteria as an initial filter to find companies and investigate them, but which criteria you use is entirely your preference. You might invest only in profitable companies (ones that make money and probably pay regular dividends), thus excluding something like an oil exploration company, which will just lose money, and lose it, and lose some more, forever... unless it hits the jackpot, in which case you might suddenly find yourself sitting on a huge profit. It's a question of risk and preference. Regarding your concern for false data. Google defines the Return on investment (TTM) (%) as: Trailing twelve month Income after taxes divided by the average (Total Long-Term Debt + Long-Term Liabilities + Shareholders Equity), expressed as a percentage. If you really think they have it wrong you could contact them, but it's probably correct for whatever past data or last annual financial results it's based on."