The Hammer candlestick pattern is a powerful entry trigger. If you were to trade it, your stop loss is at least the range of the Hammer (or more). But won’t it be great if you can reduce the size of your stop loss and improve your risk to reward?
According to most textbooks:
Whenever you spot a Hammer candlestick pattern, you should go long because the market is about to reverse higher.
And that’s what you do.
But the next thing you know…
The price immediately reverses and you get stopped out for a loss.
And you wonder to yourself:
“Wait a minute, isn’t a Hammer candlestick a bullish signal?
“Why did the market reverse against me?”
“What’s going on?”
Well, let me tell you a secret…