Ok so in previous
blog we talked about different types of charts we use in Technical analysis, if
you have visited this website for the first time then you can go to "Different types of charts used for Technical analysis" for it.
So Candle chart or
Japanese candle chart as the name indicates was first developed by Munehisa
Homma, a Japanese rice trader of Financial instrument.
The daily candlestick line contains the market's open,
high, low and close of a specific day. Candlesticks are usually composed of the body (black /
white or green / red), and an upper and a lower shadow. Shadows are also known
as wicks of the candle. The area between the open and the close is called the real body,
price excursions above and below the real body are shadows.
The wick illustrates the highest and lowest traded prices of a security during
the time interval represented. The body illustrates the opening and closing
trades. This real body represents the range between the open and close of that day's trading.
When the real body is filled in or black (or in red color), it means the close was lower than the open. If the real
body is empty (or in green color), it means the opposite: the close was higher than the
open.
Candle when forms looks like:
Further Candles can be of different period hourly, daily,
monthly etc.
Different candles forms different shapes which helps a
trader to identify the future movements and make profit out of it.
An example of four hours candle stick chart is :
Hope you all like the article; if you have any other doubt
related to charts please ask us in comment box.
We’re going to break down stock trading training for beginners so it doesn’t seem scary. One of the first things you need to do when you start out is to pick a good broker. A stock broker is going to be where you do all your business. Picking one that has large commissions and fees can be detrimental to a beginner.
ReplyDeleteAn important second step is going to be learning how to read a stock chart. The stock chart holds all of the clues to which direction the stock is going to move. Watch our ThinkOrSwim video on charts setup.
Another great resource for learning to read a chart is stockcharts.com. They have a chart school for any questions that you might have. Charts can look like Greek when you’re starting out. The more you look at a chart, the more you’ll understand it and be able to predict trends.