If we had to come up with one simple drawing, one simple symbol, that would represent investment uncertainty and a potential financial trend reversal, it would be a long vertical line with a short horizontal line through the middle of it. As it turns out, no one is going to ask us to come up with anything like that, because someone else...already has.
The image we just described—the long vertical line with another short line across its middle—is a variation on the long-legged doji, called the “rickshaw man.”
We see these on candlestick charts, and they essentially tell us two things. First, there wasn’t a whole lot of difference between the opening price and closing price of this security. That’s why that horizontal line is so thin. Second, there was a wide range of trading activity during that same period of time, which means investors aren’t really sure how to proceed.
This is why the vertical line has such long tails. Some investors are feeling a little bearish, while others are ready to embrace a little more bullishness. The overall result is a candlestick pattern that reflects this uncertainty. While we can’t say for sure that every rickshaw man is going to lead to a trend reversal, they often do. Not immediately, but like…pretty soon. So if we suddenly see one hanging around our favorite candlestick chart, we might want to consider buying or selling soon.
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Finance: What is a Chartist?26 Views
Finance allah shmoop What is a chartist Well here's a
chart and here's a chart and here's a chart All
right Well these are pages from the investing bible of
a chartist A chartist is an investor really a traitor
as they tend to own stocks for a much shorter
period of time than a longer term Really invest or
type person a chartist relies solely on the patterns The
pattern's right there These are all patterns imputed by the
charts that they you know sitting poor threw for hours
and hours So check out this chart see how the
plotted data closely follows the characteristic line there The characteristic
line basically is plodded through all those dots Yes So
they're going to stare at that try to figure out
where that line is going in the future right Get
the crystal ball or all right Well let's look at
this one where the data forms what looks like Well
the head and shoulders of someone who you know doesn't
have a neck that's Just common pattern in trading And
you know if you stopped looking at it and two
thirds of the way through there it's heading down Well
Maybe you'd be short the stock for a few days
and then you see it bottoming and then you'd be
long and try to make money that way Good luck
All right len look at this chart Where is right
here where the data appears to We'll break away from
the established pattern which was all just kind of boring
Lee along down here And then suddenly everything goes up
Yeah start doing its own thing Well maybe the company
reported a good quarter or ah you know the government
cut taxes again Everything went up So these were the
tools of the chartist The chart's a chartist is the
opposite of a fundamental investor meaning that she doesn't know
or care what the company does for a living Really
she doesn't care about their p e ratio nor their
profit margins nor their debt levels on their balance sheet
nor much of anything fundamental about how their business runs
Chartist just care about the pattern they glean from the
charts and all the charts always work until they don't
And what happens when the meteor hits that is that 00:02:06.0 --> [endTime] predictable on a chart Ah
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