Table of Contents

Table of Contents

Mastering Triple Candlestick Patterns: Your Guide to Three Outside Down Signals

Three Outside Down Candlestick Patterns

Nowadays, everyone is looking for another source of income and trading has remained to be a popular choice amongst the masses. Despite their age and work timings, people are eager to trade with any amount they have in savings and learn any strategy available that promises them good returns. One such popular strategy is candlestick pattern which is used for swing trading, i.e. a trade to be completed in a week or two. Due to its simplicity and accuracy when aligned with other strategies, candlestick patterns are always finding their place in the Top 5 Online Stock Market Courses in India.

There are several candlestick patterns, but one stands out amongst the bunch – Triple Candlestick pattern. This candlestick pattern is further classified into two types as per the momentums, i.e. three outside up and three outside down candlestick patterns.

What does this candlestick pattern signify?

This candlestick pattern on a basic candlestick chart signifies a reversal in the trend of the market or the instrument. If the market is bullish, after appearance of this candlestick pattern, the outlook would turn bearish. Similarly, if the outlook is bearish, this pattern tells that the trend could reverse and turn bullish. In simple words, the current movement has lost its momentum for slight time and might signal opposite movement from here on. To learn more about trends and reversal, you can refer to stock market courses online free with certificate.

Identification of Triple Candlestick pattern:

In this candlestick pattern, we need three consecutive candlesticks appearing in a sequence.

Three Outside Up Candlestick Pattern

In the Three Outside Up Candlestick Pattern, condition is market or asset being in downtrend. It is a bullish candlestick pattern. The sequence of the candlestick pattern should be as follows:

  1. The first candlestick should be bearish.
  2. The second candlestick should be bullish, have a long body and cover the first candlestick.
  3. The third candlestick should also be bullish and must have a closing higher to that of the second candlestick.

Three Outside Down Candlestick Patterns

In the three outside down candlestick patterns, condition is market or asset being in uptrend. It is a bearish candlestick pattern. The sequence of the candlestick pattern should be as follows:

  1. The first candlestick should be bullish.
  2. The second candlestick should be bearish, have a long body and cover the first candlestick.
  3. The third candlestick should also be bearish and must have a closing lower to that of the second candlestick.

If one trades using three outside down candlestick patterns or three outside up candlestick patterns strategy, they could close their trade in the next 5 candlesticks or at the nearest support/resistance. It is important to note that the SL could be placed at the lowest/highest of these patterns respectively. People using this strategy could also use this strategy as primary signals to take actions but could also use them as secondary signals in alignment with strategies such as support resistance and price action to take better decisions.

One of the biggest mistakes that people do while trading with basic candlestick charts, or even three outside down candlestick patterns, that they put their entire capital in one trade. One must understand that they could risk a maximum of 2-5% of their trading capital for that trade. It is also important to understand that one could diversify their trading capital into 3-10 trades, rather than putting all their money in one trade using three outside down candlestick patterns strategyor any other strategy.

Unfortunately, in efforts to make trading their secondary income, people start trading recklessly. We need to understand that no one could make consistent profits from three outside down candlestick patterns or other strategy trade and this is why we need to place SL. If our SL is hit, we must exit the trade and respect the markets. Contrarily, people take it on their hearts and start revenge trading by doing multiple trades just to recover the loss.

There is one simple psychological hack to overcome this habit, often taught in best stock market courses in Delhi. One must understand the fact that markets would open the next day and you would be able to trade the next day. It was not the last day you have traded and simply, today was not the day when markets aligned with your strategy. If one focuses on their trading psychology along with strategy such as three outside down candlestick patterns, they could make stock market trading their secondary source of income.

Interestingly, big money is made in investing into fundamentally sound stocks in the long term. To learn more about picking stocks for the long term, you can sign up for our stock market free webinar. Alternatively, you could also learn trading and stock markets by doing a search for stock market classes near me.

Our blogs are made for educational purposes only, and we do not provide investment recommendations. We are not SEBI-registered advisors and do not accept cryptocurrency payments. We present publicly available facts and data, not favoring any company.

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