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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.

Visualize price activity

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

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.

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.

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.

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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