James_gsx had a good question on how to interpret a DOJI and I thought we could start a thread discussing different candlestick patterns. We can start a new thread as questions warrant.
The DOJI is visually depicted as when the open and close are the same. While there are a number of different kinds of doji's, there are 3 kinds of doji's in my opinion:
1)
An even doji - this doji looks like a perfect plus sign + where the open and close are the same and the high and low are an even distance from the open and close as well.
Example:
2)
A bearish doji - this doji, while having an open and close identical, has a large upper shadow, indicating bulls tried to push the price higher and the bears brought it back down.
Example:
3)
A bullish doji - this doji, while having an open and close identical, has a large lower shadow, indicating bears tried to push the price lower and the bulls brough it back up.
Example:
Here's a little doji 'cheat sheet' along with some other kinds of bull/bear doji's:
The question then becomes what doji's do you play and how? In other words, do you only play a long on a bullish doji? If so, why? If not, why not? There is no right answer here as it depends on you as a trader and the timeframe being used. As I mentioned previously, the lower the timeframe, the more flexible you need to be in my opinion.
Good trading!