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Basics of candlesticks.


There was a Japanese trader who invented the candlestick and charting

​​methodology and the name of that legendary rice trader was Muneshia Homm​a and since then all traders use candlestick to understand the price movement of any stocks.

Muneshia Homma was also known as a God of trader in his days.

What is a 'Candlestick' and its interpretation?

Candlestick displays the high, low, opening and closing prices of a stock for a specific period.

  • Candlesticks shows the expectations and emotions (fear and greed) of the buyer and seller in the market.

  • If you are a trader then price price action is more important than the news, earnings, and etc.

  • It actually shows the the volatility of the market and the show the psychology of the buyer and seller.

Candle Formation

In order to create a candlestick chart, we need four price value of any stocks, high, low and close values

As you see on the below  image filled portion(Green or red) of the candlestick is called “the body of a candle”. The long thin lines above and below the body called “wicks” and “tails”. The high is on top of the upper shadow/wick and the low is on the  bottom of the lower shadow/wick.

If the price of a stock  is higher than its opening price, a green candlestick is formed with the bottom of the body representing the opening price and the top of the body representing the closing price.

If the stock closes lower than its opening price, a red candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.

If you prefer a video explanation of candlesticks, then please see our you tube video Basic of candlestick.

Disclaimer:The information above is for informational  purposes only and does not meant for trading advice or a recommendation to buy or sell any stock, option, future, commodity, or Forex .Trading of any these segment are subject to market risk please do your own analysis before investing or trading as Past performance never guarantees future results and shall not be responsible for any losses that may arise to any person who has made investments based on the contents we shared on the site and explained on our tutorial.

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