What are Candlestick Charts?
Candlestick charts originated in Japan more than a century before the West introduced bar and point-and-figure charts. In the 1700s, a Japanese man named Homma observed a connection between rice prices and supply and demand but also noted the significant impact of traders’ emotions on market movements.
Candlestick charts visually represent price moves with different colors, reflecting the emotional aspect of trading. Traders analyze irregular patterns in candlesticks to predict short-term price direction.
Similar to bar charts, a daily candlestick displays the market’s open, high, low, and close prices. The “real body” of a candlestick represents the price range between the open and close of the trading day. A filled or black (or red) real body indicates a close lower than the open, while a white (or green) real body indicates a close higher than the open.
Traders have the flexibility to customize the colors of candlesticks on their trading platforms. They can choose any combination of colors, such as blue and red, to suit their preferences. Many platforms allow users to select their desired colors for candlesticks.