Knowing how to read candlestick charts is necessary for both stock trading and foreign FOREX trading. Candlesticks are a record of movements in prices that may help a trader to identify trends and spot upcoming breakouts and reversals or retracements. Many traders can develop profitable trading systems almost totally on the supposition of candlestick charts, and many more systems rely on them as a first or first signal. The chart is made up of a collection of blocks or candles, each one showing the open, close, high and low costs over a period. These can be costs of anything: stocks, commodities, currencies or whatever. The open and close prices may be the prices for a day’s trading but usually you have control over the period and you can set your chart to show a candle for each hour, for five minutes or whatever. If you are coming up with systems around this type of chart you may probably need to test your signals over more than one time period before you open a trade. If shown in monochrome, the candle will be unshaded or white for a fee that rose in the period. In this example the open price is the base of the candle’s wide block and the close price is the head of the block. In this case of course the upper edge of the body is the open price and the lower edge is the close.

In all cases, the high in the period is the top of the vertical line or wick stretching upward from the pinnacle of the block. You might have green or blue for a bullish period when the price was rising and red for a bearish period when the price was falling.