@ Discover the power to place your Stop guided by a long Wick

Trading instructor April 6, 2012 03: 00 GMT  many new traders will tend to decide where they will put their judgment based on the amount of seeds they are comfortable losing. This number is May 10, 50, 100, 200, or whatever. The point is that the number is arbitrary and probably has nothing to do with the price action that we see on a chart.
A more efficient way to decide where place your stop is to seek a purchase support levels or levels of resistance in a sale. When the purchase would be go below a level of support and for the sale of the judgment would be above a level of resistance. (Of course the placement of these cases must respect the rule of 5% of the money management.)
Take a step further and well tune is still more, a better guide for the placement of the decision is to long fuses, if they are present, in the analysis. Look at chart 1 hour of the GBPJPY below for a visual…

Note the rectangles that are pointing out some longer bits on this table. Also note that after a long candle wick made an appearance, often the price moves in the opposite direction from the long wick for a time. In other words, if the longer fuse is under the body of the candle, the price tends to go up. Conversely, if the longer fuse is above the body of the candle, the price tends to move down.
These long hair, those who are longer from the other bits that are around them on the chart, have a story to tell. A long Wick at the bottom of the candle means that sellers have not to push the price down in significantly…that is an aspect of creating the long fuse.
However, the vendor numbers were not large enough the price at this low level. Buyers were able to push the price goes back to this low level, thus showing the force. (This is the second aspect of creating the long Wick). Given that buyers have triumphed in this sense, there is the possibility that their power will be see and in view of this force, the price may increase.
(In the case of long hair over the body of a candle, the reverse scenario would be true and prices may fall.) Then how a trader can it use in their trade?
As always, we must first take note of daily developments. If the trend is downwards, as it is on the graph above, see a candle (or several candles in fact better still), with long hair on top, load to a more potential price go disguise you in the direction that the market has taken the pair. Therefore, to continue with the example of the downward trend, the pair retraces…that, against stalls trend…and to a level of resistance or a Fib, I will for long hair on top of the candles forming along this line of resistance for two reasons.
These long bits indicate the potential of the pair of trade to the disadvantage in the sense of a daily trend. The top of the wick extended provides an excellent guide for a trader to place their judgment. The justification of the judgment that the placement is that buyers pushed prices to the top of the wick but it could not grow beyond that point. Thus, placing the case just above the wick is a level which has a much lower probability of is hit. Bottom Line: Taking note of long bits forming to support or resistance levels, especially when they report potential movement in the sense of a daily trend, can create a beneficial "edge" for the operator especially for placement of stop.