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Chapter 9, Part I. Candlesticks – what are they? Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    But now let’s shift to candles directly. Sometimes they are called like “candles” instead of “Candlesticks” for short.

    Let’s remember the previous picture that we’ve already seen before:

    [​IMG]

    Well, there are no restrictions for using of candles in sense of time frame. You may use them at any time frame – monthly, weekly, daily… even on 1-minute or annual charts, if the market has sufficient liquidity and history. So, what does candlestick chart tell us?



    1. Any candle shows the high, low, open and close price for a single trading period, depending on time frame. Say, on monthly chart each single candle presents a single month, on s 5-minute chart – one 5-minute period.

    2. If close price is above the open one, i.e. during this particular period that represents by candle, price increases – then the candle has a hollow body (usually painted white or green);

    3. If, vice versa, close price below the open one, i.e. during this particular period that is represented by this candle, price decreases – then the candle has a colored (filled) body (usually painted black (Rolling Stones forever!) or red);

    4. The colored (filled) part of candle is called “Body”;

    5. The spikes (lines) that comes from the body to the upside and downside – thin lines are called “Shadows” and point at:

    - high price by the top of upper shadow;

    - Low price by the bottom of the lower shadow of a particular period that is represented by the candle.



    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.



    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
    fran alvarez likes this.
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