Price activity of every asset, or stock is presented by realtime charts. You will need to learn how to read these charts to become successful. The first thing, you need to know are candlesticks.

The candlesticks have four parts and it’s really important for you to remember it because they are used on a daily basis. Wicks represent the lowest and highest points reached. The body consists of two parts, a top and a bottom, which represents the Open and Close prices. . A candlestick can represent price activity for almost any time frame. When a trader selects a time period, the candle represents that time frame. Depends on you if you want to have every minute showed by 1 candle, or 1 day by candle.

Color styles

The most basic feature of a candlesticks is its color. The two most common color schemes is black & white and red & green. Usually you will find white/green candles representing bullish activity. Bullish activity is when the price has gone up. The black/red candles represent bearish activity which is when the price has gone down.

candlesticks

History

The Japanese were the first to use technical analysis to trade one of the world’s first rice futures markets in the 1600s. A Japanese man by the name of Homma who traded the futures markets in the 1700s discovered that although there was link between supply and demand of the rice, the markets were also strongly influenced by the emotions of the traders. Homma realized that he could benefit from understanding the emotions to help predict the future prices. He understood that there could be a vast difference between value and price of rice. This difference between value and price is as valid today with stocks, as it was with rice in Japan centuries ago.

Why you should use them

Candlesticks are used in every analysis platform like MetaTrader, jForex or every broker platform. Of course, no one can predict the future but candlesticks can really help you to tell, where the market’s gonna go in next minutes/hours/days/years. We should say, that candles are the most important thing in trading analysis. That’s why we will talk about them in next few tutorials.