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Browse Topics:    Trading Strategies    Research & Analyze    

The 5 Basics of Candlestick Charts

Candlestick charts have their own unique characteristics that may fit within your particular trading style. Learn how this helpful price chart provides a visual representation of price movement and why you may want to incorporate it into your technical analysis.

1
Visualize price activity

Visualize price activity and determine entry and exit points with candlestick charts. View the opening and closing of a period.

2
Assess the real body

The candlestick’s rectangular real body represents the relationship between opening and close for a period. The larger the body, the greater the gap between prices.

3
Understanding shadows

Shadows, also known as wicks, are the lines above and below the candlestick body. The upper tip represents the highest trade of a period, while the lower tip represents the lowest trade.

4
Colors provide insight

A red body indicates the stock closed at lower prices than the opening, while a green body indicates the stock closed at a higher price than the opening. A small body may indicate bulls or bears are fighting for control. A large body may represent a lot of activity.

5
Time intervals

Charting security activity across different timeframes provides you a holistic view of trends. Depending on your strategy, choose a short-term interval (one minute to one hour), long-term interval (daily or weekly charts) or both.


Different chart types reveal different insights. Find Out How >

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