One of the vital indicators that facilitate traders interpret candlestick charts are candlestick patterns. FatLoss4Idiots They are quite important when one is engaged in the conception of basic systems that would indicate a trend formation so you can commence trading.
Candlesticks have a formation that displays the open, high, low and closing price of a currency, stock or commodity over a duration. The period covered is mostly user selectable.
5 minutes is universal for day traders but you could select 15 minutes in some instances. Longer periods could be chosen for longer term trades.
The candle body signifies the diversity of the close and open points. Burn The Fat If it’s green/blue (for colored charts) or white then the lower borders of the rectangular body is the open and price went higher during the consideration period. If it is black (or red on a colored chart then the opening price is the top boundary and the price plummeted.
In candles, vertical lines pointing up from the top and down from the bottom are called wicks. The highest rate ever obtained during the period is the top of the upper wick section. On the other hand, the lowest value is the bottom of the lower wick component.
The advantage of this kind of analysis is that the trader can without delay see whether prices rose or fell over the period. Bear markets are signified by green or white candles whilst bull markets are illustrated by red or black candles.
The relationship of open and close values to high and low values can be discerned spontaneously. You may have a candle that is extensiovely solid, without the wick.
The name for this is Marubozu pattern. eat stop eat This signifies that the opening and closing prices were never approached in either direction by the low and high prices.
If the shape is black or red, the opening rate was the high and the closing rate was the low. If it is white or green, the opening value was the low and the closing value was the high.
A long body indicates a fairly steady direction either downward or upward. A elongated wick either top or bottom illustrates a reversal.
For accurate trend index a candlestick should be considered in conjunction with the others that preceded it. You then can go ahead to make more thorough candlestick patterns that will signify probable future trends.
Note: Forex investing can be dangerous, may end up in significant losses, and is not suited for everyone.