Read candlestick charts


  1. Familiarize yourself with candlesticks.
    If you’re not yet familiar with candlesticks, start by opening your trading software and selecting a simple stock chart. Change the chart type to "candlestick.” As you can see, each candlestick consists of a body (which can be filled or hollow) and wicks above and below. The body shows where the price opened and closed during the interval, while the wicks show the highest and lowest prices.
  2. Practice reading candlestick colors and shapes.
    Identify and mark at least 10 hollow (typically white or green) and 10 filled (typically red or black) candlesticks on your chart. Hollow candlesticks indicate that the closing price was higher than the opening, suggesting buying interest. Filled candlesticks suggest selling pressure, as the closing price was lower than the opening.
  3. Learn to spot basic candlestick patterns.
    Look for patterns like Dojis and Spinning Tops in your chart from the past month. A Doji, where the open and close are almost the same, signals indecision. A Spinning Top has a small body with longer wicks and also indicates uncertainty.
  4. Simulate trading decisions based on candlestick signals.
    While you shouldn’t rely on candlestick signals alone when trading, understanding them is a good start when making trading decisions. To assess your understanding of these patterns, you may use a demo trading account to make trades based on candlestick patterns you identify, without using real money. This practice helps you gain confidence in interpreting candlesticks and understanding their implications in real-time market conditions. Record your decisions and outcomes to review later.
  5. Keep a trading journal.
    Start a journal documenting the candlestick patterns you acted on and the outcome of each trade. Note the context in which you made each trade, including what the candlestick pattern suggested and other influencing factors (like economic news). Review this journal to learn from your actions and refine your strategy.


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