Candlesticks
Candlestick charts are thought to have been developed in the 18th century by legendary Japanese rice trader Homma Munehisa. The charts gave Honma an overview of open, high, low, and close market prices over a certain period. This style of charting is popular for it’s of ease in reading and understanding. TradeWithPros utilizing candlesticks in all of its chart analysis.
Candlesticks are composed of the body as well as an upper and lower shadow known as the wick. The wick illustrates the highest and lowest traded prices of a stock. The body represents the opening and closing price trades. The colors of the candlestick body are the users choosing. TradeWithPros using green for positive, or up candles and red for negative, or down candles.
At TradeWithPros, if the stock went up, the body is green, with the opening price at the bottom of the body and the closing price at the top. If the stock went down, the body is red, with the opening price at the top and the closing price at the bottom. A candlestick need not have either a body or a wicks.
The following illustrates a candle’s construction:
Candlestick charts are a visual aid for decision making in stock, forex, commodity and options trading. There are many different candlestick patterns that traders look for to help in establishing a trade.