Knowing how to read candlestick charts is essential for both stock trading and foreign FOREX trading. Many traders may be able to develop worthwhile trading systems virtually wholly on the basis of candlestick charts, and many more systems depend on them as a first or first signal. The chart is made from a series of blocks or candles, each one showing the open, close, high and low prices over a period. The open and close prices may be the prices for a day’s trading but in most cases you have command over the period and you can set your chart to show a candle for each hour, for 5 minutes or whatever. If you are coming up with systems around this kind of chart you may possibly need to check your signals over more than one time period before you open a trade. In this case the open price is the base of the candle’s wide block and the close price is the head of the block. If the price dropped in the period, the body of the candle will be shaded, either black or a color. In all cases, the high during the period is the apex of the vertical line or wick stretching upward from the apex of the block. The low during the period is the bottom of the vertical line or wick running down from the bottom of the block.
Some charts these days are shown in 2 colors.