Learn How To Read A Candlestick Chart For Beginners

The topic of this blog post will be on ” learn how to read a candlestick chart for beginners.”

When I first started to trade, I kept hearing the term candlestick charts, but I was not sure what a candlestick was.  Candlestick charts are another form of technical analysis.   Professional traders know that candlestick charts have special powers that will bring endless profits into their trading account.  The truth of the matter is that a bar chart has the same information as a candlestick chart. For the record, I use candlestick charts in my Stock, Forex, and Futures day trading and swing trading

How To Read  A Candlestick Chart

The way to read a candlestick chart is simple, and there are only four data points displayed.  The four data points are the Open, Close, High, and Low.  The Same four data points that make up a candlestick chart are the same four data points that make up a bar chart.  The only difference is the look of the trader’s chart.

 

Three Basic Types Of Candlesticks That Make Up A Candlestick Chart

Below you will be able to see illustrations of the Three basic candlestick types.  The three types of candles.  The first kind of candle would be the bullish candlestick, an example of a bullish candle would be when the close is higher than the close.  The green candlestick below is an excellent example of a bullish candlestick, the black wicks at each end of the candle represent the high and low of the period.  Timeframes, such as 1 Minute, 5 minute or 60 minutes, etc. define a period.  A range or customer bar type can also determine a period.  

Candlestick

The second type of candlestick is the bearish candle.  Most candles are bearish when the close is lower than the open.  Most charting platforms will have different colors for bullish candles and bearish candles.  Some charting platforms simply have hollow bodies of the candle or filled in bodies to represent bullish or bearish.  The red candlestick in the illustration above would be considered a bearish candle.  The black wicks, shadows or tails as they are referred to represent the high and low of that period.

The Third type of candlestick would be a neutral type. A neutral candlestick type can be defined by the open and close near the same price.  When beginners first look at this type of candle the beginner trader does not see the power of this kind of candle.  The neutral candle or also referred to as a “Doji” can signal that a possible reversal is coming. Doji candles make up some other advance candlestick patterns that I will cover in the next video.  The illustration below shows a neutral or “Doji candle.

Doji Candlestick

 

Learn How To Read A Candlestick Chart For Beginners Video

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