When a doji candlestick is spotted in the market, first look back to see whether there was enough movement for you to benefit from a reversal. If that gives you sufficient room to cover your spread and make allowance for a little slippage, you can go on to step 2. Step two involves checking an oscillator to be sure that the current price is shown as overbought or oversold. Either the RSI (relative strength index) or MACD (moving average convergence/divergence) can be employed for this purpose. An overbought or oversold market and the doji is a good indication that you can become involved.

You can also look at the trading volume. At this point, you may want to shut just 1/2 the trade. With the other half, you might move the stop to a no-lose position close to your opening price, and let it run in case a major reversal occurs. You do need to know what you are doing and this sort of trading requires a lot of practice, even though it is a easy system. So we recommend checking out these doji candlestick trading systems in a demo account so that you understand how to operate them successfully before going live.