Japanese Candlesticks in Crypto: Battle Guide to Not Lose Money

Japanese candlesticks are the language of the market. If you don't understand them, you are trading blindly. But here comes the uncomfortable truth: most traders use them incorrectly and that's why they lose money.

What do you really see in a candle?

Each candle shows you four numbers: open, high, low, close. The body is the distance between open and close. The wicks are the extremes that the price touched.

Green = buyers won (close > open) Red = sellers won (close < open)

Simple. But the magic is in the patterns, not in the individual candles.

Patterns that Really Work

Bulls ( when is it going to rise )

• Hammer: Small body + long wick below. Appears at lows. It means that they tried to push the price down and couldn't. Buyers came in strong.
• Three White Soldiers: Three consecutive green candles, each closing higher. Serious buying pressure.
• Bullish Harami: Large red candle + small green candle inside. Sellers lost momentum.

Bajistas (when is it going to drop)

• Hanged Man: Similar to the hammer but after an upward movement. A warning that buyers are getting tired.
• Shooting Star: Small body + long wick on top. They tried to go up, couldn't, sold.
• Three Black Crows: Three red in a row. Total control of sellers.

The Doji: Opening ≈ Closing. Traders are lost. Total indecision. Generally signals a trend change.

What NOBODY tells you

1. Candles alone do not work. Combine them with RSI, MACD, support/resistance lines. Without context, they are just noise.
2. In crypto, the gaps (huecos) hardly matter. The market is open 24/7. There are no “opening gaps” like in stocks.
3. The timeframe is EVERYTHING. A bullish pattern on 15 minutes can be fiction if the daily is bearish. Always check multiple timeframes.
4. The volume lies less than the patterns. A green candle with low volume = weak buyers. A red one with high volume = real panic.

Practical strategy to avoid bankruptcy

1. Understand first, operate later. In demo until you see the patterns like in automatic.
2. Use confirmations. Never trade based on a single candle. Wait for 2-3 more confirmations.
3. Mandatory stop-loss. Define BEFORE entering how much money you are willing to lose. RSI + risk level = no emotions.
4. Analyze across multiple timeframes. If you see a hammer on the 4H, check that the daily is not broken.

The brutal reality

Candlestick patterns work because trading psychology does not change. Fear and greed drive prices. The candles simply visualize that.

But they are not a magic formula. You have to combine it with risk management, diversification, and a plan. If you expect to trade only with candles, you will end up donating money to the market.

Pro tip: The best traders use candles + indicators + on-chain analysis (on-chain). The on-chain data shows where the smart money is. The candles indicate where the herd is going.

Trade with your head. The candles are just a compass, not the complete map.