Trading
A candlestick shows four prices for one period: open, high, low and close. The body spans open to close and the wicks show the extremes reached. Green usually means the close was above the open. The shape tells you who won the period and how decisively.
The anatomy of one candle
Four numbers, one shape. The body is the distance between where the period opened and where it closed. The wicks, sometimes called shadows, reach out to the highest and lowest prices traded during that period.
| Part | What it is | What it tells you |
|---|---|---|
| Body | Open to close | How decisively the period moved. A long body means one side dominated |
| Upper wick | Close or open up to the high | Buyers pushed here and could not hold it |
| Lower wick | Close or open down to the low | Sellers pushed here and were rejected |
| Color | Green or red | Whether the close was above or below the open |
Five shapes worth recognizing
| Shape | What happened | Typical reading |
|---|---|---|
| Long green body | Opened low, closed near the high | Buyers controlled the whole period |
| Long red body | Opened high, closed near the low | Sellers controlled the whole period |
| Doji | Open and close nearly identical | Indecision. Often appears before a change of direction |
| Hammer | Long lower wick, small body near the top | Sellers pushed down hard and buyers took it all back |
| Shooting star | Long upper wick, small body near the bottom | Buyers pushed up and lost the entire move by the close |
Timeframes change everything
The same asset produces completely different pictures depending on the period each candle covers.
| Timeframe | Each candle covers | Best used for |
|---|---|---|
| 1 minute | One minute | Very short term execution. Mostly noise for everyone else |
| 1 hour | One hour | Intraday structure and entries |
| 4 hour | Four hours | A good balance of detail and signal |
| Daily | One day | The standard for swing decisions and most published analysis |
| Weekly | One week | Long term trend. Very hard to argue with |
The professional habit is to start high and work down. Establish the trend on the weekly and daily, then use a lower timeframe for timing. Trading a lower timeframe against the higher one is how people lose money quickly.
Always read volume alongside
Volume is the number of units traded in each period, usually shown as bars underneath. It is the closest thing a chart has to a truth check.
- A breakout on heavy volume reflects real participation and holds more often.
- A breakout on thin volume frequently reverses, and is sometimes called a fakeout.
- A huge volume spike after a long decline often marks capitulation.
- Rising price on steadily falling volume is a warning that the move is running out of participants.
Common questions
What timeframe should a beginner use?
The daily chart. It filters out most of the noise, produces far fewer decisions, and it is the timeframe most published analysis refers to.
Are green and red always the same colors?
They are conventional, not universal. Some traders use blue and orange, and platforms let you change it. What matters is whether the close was above or below the open.
Do candlestick patterns actually work?
They describe real behavior and they are not predictive on their own. A candle shape at a meaningful level with confirming volume is information. The same shape anywhere else is not.
Where to go next
Read your first chart with help
We open a live chart together, identify trend, mark the levels and talk through what each candle was actually saying. Far faster than reading about it.