Time capsule - WiFi - can it be used as a stand alone station?

I have set up my Time Capsule as a WiFi station and it is showing as connected to my iMac, but the amber light it flashing and I cannot get it to go green.  Do I HAVE to connect it to my external router or can it be used as a stand alone WiFI station?  If so, how do I get the light to stop flashing?  The TC was connected by ethernet cable (green light) but that seemed to slow down my access to the Internet so I disconnected that.  Now I can see the back ups but cannot restore from any of them.
Regards
Oldmoondog

The Time Capsule must connect to a modem or other router using a wired Ethernet connection.
The only exception to this would be a setup where you have one Apple router set up as your "main" router connected to the modem.  In that case, it would be possible for the Time Capsule to connect to the main Apple router using a wireless connection.
Assuming that the Time Capsule is operating correctly, and that it has been set up correctly, there should be no speed loss when a Time Capsule connects to a modem or other router using an Ethernet connection.
For example, I have a 50 Mbps Internet connection plan from my Internet Service Provider (ISP). If I cannot the Mac directly to the modem, my speed is usually about 52-55 Mbps.
If I connect the modem to the Time Capsule using Ethenret, then connect the Mac to the Time Capsule using Ethernet, the speed is almost exactly the same, about 51-54 Mbps.

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