Lesson 5 of 6 · 6 min
Doji
Step 1
What it is
A doji is a candle whose open and close are almost the same. Buyers and sellers ended the period about level.
It shows indecision, and that is all. A doji is not a signal to buy or sell. It is a reason to look at what the next candle does.
Traders watch for it because a pause after a long move can mean the move is losing force.
Step 2
See it on a chart
A doji on heavy volume after a long fall, and a next candle that closes up.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- A clear move before the doji.
- Heavy volume into the doji.
- A next candle that closes past the doji.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- Price closes past the far wick.
- The next candle closes in the old direction.
When not to take it
- It formed in a quiet market with no earlier move.
- Several dojis in a row show that nothing is happening.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
After a long rise on growing volume, a doji formed and the next candle closed down. Mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: needing to act
A doji is the market saying it does not know. Very often, the right response is to say the same. If you find a pause hard to sit through, notice that. Waiting is a skill you can practise.
Read about routineStep 6