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Using Dojis for Short Term Trading

Doji bars are one of the single most useful single bar patterns that any trader can identify. They can be used for entries, exits or to determine position bias. “Doji” is a term used by Japanese candlestick chartists that refer to a bar where the open and close of a bar are in close approximation to each other. They don’t have to be exactly the same, but close. For our purposes we use a definition where the open and close are within 25% of the days trading range of each other. It doesn’t matter if the “Doji” occurs near the top, middle or bottom of the days trading range, just that they are close. For example, if the days range: (High – Low) is 10 cents, then the open and close would need to be within 2 ½ cents of each other to qualify as a Doji.

The underlying theory of the
Japanese Candlestick approach is:  More...

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