It is single candle with doji in the middle and long upper and lower shadows. The opening and closing price of Long-Legged Doji is almost same. Its formation indicate the future direction of underlying security, commodity or stock. Some traders mark Long-Legged Doji as signal to start consolidation period, where price of security from more than one long legged dojis before breakout to form a new trend pattern.
Long-Legged Doji is more significant when it is formed during strong downtrend or uptrend. The long upper and lower shadow suggest that buying and selling pressure is at equilibrium and trend reversal may occur. There are three ways to trade Long-Legged Doji. Since the pattern indicate that buying and selling forces are at equilibrium. So price can move in any direction. If price of security move above the long legged doji, enter long position with a stop loss below the lower shadow. If price move below the long legged doji, enter short position with stop loss above the upper shadow. The third way to trade long legged doji is when it form consolidation. When prices touch top of upper shadow, enter short position, when price touch lower shadow, enter long position.