Every piece of information to make a successful trade, lies in the candlestick
A Candlestick chart is a charting type you can find on any trading platform these days.
They resemble candlesticks but they reveal every bit of information you need to trade the markets.
And after you finish reading this article, you’ll see why it’s the only chart I use.
The Up candle, Down candle and the Doji candle - Revealed
1. Up candle
First, I want you to think of the up candle as a buying candle. Here’s why.
We need to address all the different prices that took place within an up candle. And to do this we need to look at three components.
The first component of the up candle is the body.
The body will show you the prices that traded only between the open price of the candle and the closing price.
With an up candle, you’ll see that the closing price is higher than the open price.
This tells you the buyers pushed the price up.
This brings us to the second component of the up candle – the colour.
Because the closing price is higher than the open price, this makes the body of the candle GREEN.
When you see a number of up (green) candles, you’ll generally see the price of the currencies going up in trend.
You can change the colour of the candle in your trading platform.
And the third component is the wick.
The wick reveals all the prices that were traded between:
The open price and the low price of the candlestick
The closing price and the high price of the candlestick
Depending on the time lapsed with each up candle, you’ll be able to see all the buying and selling prices that took place.
Moving on to the next candle.
2. The Down candle
With the down candle I want you to think of it as a selling candle. This means that there was selling pressure where, the sellers won.
Now that you understand the three components of the up candle, this will be a cinch.
The down candle has a body where the closing price is LOWER than the open price.
And so prices between the open and close price, will reveal a RED colour candle.
Note: Think of red for down or danger.
And then all the other prices that were not included between the open and closing prices, will show you the wick.
For a red candle’s wick you’ll see:
3. The Doji candle
The prices between the open and the high of the candle
The prices between the close price and the low of the candle
This is the third and final candle.
In short, the open price is equal to the closing price.
And so this candle will resemble a flat cross, as there’s no body.
You’ll tend to find these Doji's where no one wins between the buyers and the sellers.
The only difference between the up, down and Doji candle is there Doji has no body or colour.
And those are the three candles you’ll ever need with the candlestick chart.