Candlestick Charts 

Although we love candlestick charts and use them on a daily basis, we think it’s important to note that candlestick charts are not the mysterious fortunetellers that many people think they are. There is no magic here. These charts are formed using the exact same price data as our bar chart. The true magic behind these charts is that they offer a much more visual way of displaying the data. For this reason they are critical to a traders success. When you look at a candlestick chart, it is incredibly easy to see whether it was a positive or negative day, making it very easy to pinpoint the exact day or minute that our stock or commodity changed direction. Strangely enough, these charts are actually older than bar charts and were developed by Japanese rice traders back in the 1600-1700s, hence the name Japanese Candlestick Charts.

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Candlestick charts can be drawn in two ways. In the classic or traditional method, the candles that appear hollow or white in color signify positive moves, while the candles that are filled in or black in color signify a downward move.

 

On the more modern version of the candlestick chart, upward moves are represented by green candles while the red candles signify a downward move of the entity being tracked.