Is a smaller spread always better?

Generally yes, because it lowers your entry and exit cost. But you should also consider factors like slippage, commissions, platform quality and regulation. A very tight spread is not useful if execution is poor.

Why do spreads spike around news events?

News increases uncertainty and volatility. Liquidity providers widen spreads and reduce quote sizes to protect themselves from sudden adverse moves, which shows up on your platform as wider spreads and more slippage.

Can different brokers show different spreads for the same pair?

Yes. Brokers use different liquidity providers, markups, account types and risk models, so spreads can vary even on the same instrument. Comparing typical spreads across brokers is part of choosing where to trade.

Does using limit orders avoid paying the spread?

If your limit order is hit (you provide liquidity), you may effectively capture part of the spread instead of paying it, especially on true ECN/market venues. On most retail platforms, however, you should still assume the spread is a key cost.

CANDLESTICK PATTERNS

Morning Star Candlestick Pattern

Morning Star is a candlestick pattern traders use to interpret short-term sentiment. Used properly, it can help you recognise indecision, rejection, or a potential shift in control — especially at key levels.

Bullish reversalThree-candle patternDowntrend contextConfirmation

Visual: A Morning Star is a three-candle bullish reversal: strong down candle, small indecision candle, then strong up candle closing into the first candle’s range.

Risk note: Candlestick patterns are context tools, not guarantees. Always combine them with market structure, trend context, and risk management.

SECTION 1

What is a Morning Star?

Morning Star is a three-candle bullish reversal pattern often seen after a decline. It signals potential exhaustion of selling pressure and a shift towards buyers.

Key idea

It is essentially a “down → pause → up” sequence. The third candle’s strength is critical.

SECTION 2

How to identify a Morning Star

Candle 1: strong bearish candle.
Candle 2: small real body (often a Doji/spinning top) showing indecision.
Candle 3: strong bullish candle that closes well into Candle 1’s body.

SECTION 3

How traders use Morning Star (practical)

1) Confirmation and location

Most meaningful at support or after a capitulation move. Confirmation can be a break above Candle 3 high or a structure shift.

2) Invalidation

Stops often go below the pattern low (usually Candle 2/1 lows) or below support.

Quality check

A stronger signal occurs when Candle 3 closes above the midpoint of Candle 1 and volume/participation increases.

COMMON PITFALLS

Common Mistakes

Trading the pattern in isolation (no level, no trend context).
Ignoring volatility and spread (especially on CFDs/FX on lower timeframes).
Assuming a reversal must happen (strong trends can keep pushing).
No invalidation plan (always define where your idea is wrong).

SELF-TEST

Quick Checkpoint

Try answering before expanding the model answers.

1) What market context makes this pattern more meaningful?

After an extended move, at a clear level (support/resistance), and with confirmation (structure shift, follow-through candle, or volume/volatility context).

2) What should you do before trading any candlestick pattern?

Define your entry trigger, stop-loss (invalidation), position size, and target logic—then check if the pattern fits the current regime (trend vs range).

FAQ

Frequently Asked Questions

Is the middle candle required to gap?

In some markets (stocks), gaps are common. In FX/CFDs, gaps are less common, so the “pause candle” concept matters more than a gap.

How is Morning Star different from Bullish Engulfing?

Morning Star is a three-candle reversal sequence; Bullish Engulfing is a two-candle pattern.

Where is the best place for Morning Star?

Near clear support or after an extended down move, ideally with evidence of selling exhaustion.

EXPLORE MORE

Related Candlestick Patterns

Doji Pattern Hammer Pattern Hanging Man Pattern Inverted Hammer Pattern Shooting Star Pattern Bullish Engulfing Pattern

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