Trading Basics: Candlesticks


Today I’m going to go over something you
see all the time, but may not fully understand. We’re going to talk about the boxes that
represent prices on trading charts. In the biz we call them “candlesticks”
and they contain a surprising amount of information for just a few lines. These candlesticks show 4 distinct numbers:
The opening price during that time period, the closing price during that time period,
the highest price during that time period, and the lowest price during that time period. The space between the entry price and the
exit price is called the body and the “sticks” are called the shadows. The body of the candlestick will look different
depending on if the exit price was lower or higher than the entry price. Different exchanges have different methods
for distinguishing the two scenarios. Let’s take a look at an example to see what
I’m talking about. Here’s the XMR/BTC (Monero vs. Bitcoin)
chart on the Poloniex exchange. The “Candlesticks” setting (which might
be called the “period” on some exchanges and software) is set to 15 minutes, which
means each one of these candlesticks represents a 15 minute period of time. On Poloniex, if the body is green, that means
the exit price was higher than the entry price (the price increased over that time period). If the body is red, that means the exit price
was lower than the entry price (the price decreased over that time period). Different exchanges distinguish the two types
of bodies in different ways, but more often than not it’s pretty obvious by just taking
a look at the chart. You can hover over a candlestick with your
mouse and see the values of all these different numbers. You’ll see the open price, the close price,
the highest value and the lowest. If you have any questions or more information
to add about candlesticks, let me know in the comments. Bye!

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