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  • Beginner
  • Intermediate
  • Advanced
  • Completion
  1. Beginner
    Early Stages for Beginners
    8 Topics
  2. Forex Terminology
    11 Topics
  3. Margin & Leverage
    2 Topics
  4. Personal Psychology Questions
    2 Topics
  5. Psychology for Beginners
    7 Topics
  6. Intermediate
    Identifying Scams
    2 Topics
  7. Brokers for Beginners
    5 Topics
  8. Technical Analysis
    13 Topics
  9. Market Structure
    5 Topics
  10. Completion
    Risk Management for Beginners
    8 Topics
  11. Fundamental Analysis
    9 Topics
  12. Advanced
    Using Indicators
    6 Topics
  13. Technical Analysis (Part 2)
    8 Topics

Understanding Japanese Candlesticks

One of the most important things you’ll learn when it comes to this market is a Japanese candlestick. One simple candlestick can help shape your bias with the overall market direction.

When looking at charts, you can view the market in three different ways: bars, lines, and candlesticks. You can of course use a bar or line chart when trying to learn how to day trade; however, candlesticks are the most commonly used due to the charts being easier to read, and it gives you a clear visualization of how the market is moving.

With Japanese Candlesticks, each candlestick represents a time frame of your choice. Say you are on the 1-hour time frame – that would mean each candle on the chart represents 1 hour in the market. The body of a candle represents where price opened and closed. The wick of a candle represents where price reached its highest or lowest point during that time frame/within that hour.

candletstick

Candlesticks can come in all different sizes! That helps us as traders figure out what price is doing during the time frame you’re analyzing. If the candlesticks are short, there is very low liquidity in the market at that time. If the candlesticks are long, the market is super liquid.

Candlestick Body Sizes

There are two types of candlesticks; one being bullish (up), the other being bearish (down). 

Bullish & Bearish Candles_v2

If price closed higher than what it opened at, then it would be considered a blue or green bullish candle (or whatever color that describes going UP for you). If price closed lower than what it opened at, you will notice a red bearish candle.

Bullish & Bearish Candles example