Candlestick Chart for Beginners is a blog post for, you guessed it, helping beginners learn how to read a candlestick chart. When I first started to trade, I kept hearing the term candlestick charts. However, like many beginners, I had no idea what a candlestick was. I soon learned though, that candlestick charts are another form of technical analysis and professional traders know that candlestick charts have special powers that bring endless profits into their trading accounts. The truth of the matter is that a candlestick chart has the same information as a bar chart. But, for the record, I now 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. There are only four data points displayed. The four data points are the Open, Close, High and Low. These four data points that make up a candlestick chart are the same four data points that make up a bar chart. The only difference between the candlestick chart and the bar chart is the look of the individual trader’s chart.
Three Basic Types Of Candlesticks That Make Up A Candlestick Chart
There are three types of candlesticks; the bullish candle, the bearish candle, and the neutral candle, or also referred to as a “Doji.” I’ve included illustrations below to help you visualize exactly what I’m talking about.
The first kind of candlestick that I’m going to explain is the bullish candle. An example of a bullish candle would be when the close is higher than the open. 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 one minute, five minutes and sixty minutes, etc. define a period. A range or customer bar type can also determine a period.
The second type of candlestick is the bearish candle. Most candles are bearish when the close is lower than the open. The red candlestick in the illustration below would be considered a bearish candle. The black wicks, or as they are sometimes referred to as shadows or tails, represent the high and low of the period. Most charting platforms will have different colors for bullish candles and bearish candles. Some charting platforms have hollow bodies or filled in bodies of the candle to represent bullish or bearish.
The third type of candlestick is a neutral candle, or also referred to as a “Doji.” A neutral or Doji candlestick can be defined by the open and close near the same price. The illustration below shows a neutral or “Doji” candle. When beginners first look at a neutral or Doji candle, they/ beginner trader usually miss the power of this type of candle. The neutral or Doji candle can signal that a possible reversal is coming. Neutral or Doji candles also make up other types of advanced candlestick patterns that I will cover in the next video.
Learn How To Read A Candlestick Chart For Beginners Video
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