candlestick chart

How do I read a candlestick chart?

Investing in the stock market can be very risky. But because of the risks involved, there is a higher return possibility. The higher the risk of an investment is, the higher the return that is possible to receive. There are many people that invest in the stock market. There are thousands upon thousands. Some of these people are very successful at what they do and some are not.

A lot of the skills of being a good investor have to do with being able to read stock charts and analyze them. It has to do with finding a type of analyzing (either technical or fundamental) that works best for you and working hard at it. You have to be able to do your research. You have to be able to look at a stock chart and understand its symbols and signals.

There are many different types of stock charts that are used. One way that tends to be the most common as well as the most reliable and providing the most information is candlestick charting. Candlestick charting has been around for hundreds of years and is used by many people. If you understand how to read a candlestick chart then investing could become easier for you.

Candlestick charting, like other charting, is used to show the price movements of different companies over short or long periods of time. They can show from one day to forty years or more. They show the history of different companies and the trends that have occurred in the past. They can be very valuable.

A candlestick chart is kind of like a line chart combined with a bar chart. It provides information that you would find it both these types of charts. People who use technical analysis to analyze stocks most often use this type of chart. It provides a lot of valuable information and is very easy to read.

A candlestick chart is called a candlestick chart because the main part of the graph is like a candlestick; it has a wick and body. It's different in that the wick comes out both end of the body. There is basically one candlestick that is given for each day. This candlestick shows the opening and closing prices of the stock as well as the highs and lows. It also shows how those prices relate to early prices and if those prices and tending to go up (bull market) or down (bear market).

The wick shows the day's high and low. The top of the wick represents the high and the bottom represents the low. The body of the candle represents the day's open and close. If the body is hallow that represents an up trend. It means that the opening was lower than the closing. In this case the top of the body would represent the closing price and the bottom would represent the opening price. If the body of the candle is filled in, it means the price went down and the closing price was lower than the opening price. In this case, the top of the candle body would be the opening price and the bottom would be the closing price.

If the wick on top of the candle body is longer than the wick on bottom, that represents a bear trend. It means the prices are going down. If the wick on the bottom of the body is longer than the wick on top, that represents a bull trend. It means the prices are going up. The longer the wick, the more reliable the signal. The wick, unlike the body, is the trend as it relates to past prices while the body is the trend for the day.

Being able to read candlestick charts is a great tool when it comes to analyzing stocks, especially for those who use technical analysis.