In stock market, a candle stick represents price action for a certain period (1 minute, 5 minutes, 15 minutes or 1 day). In order to create a candlestick chart, you must have a data set that contains open, high, low and close values for each time period you want to display. The hollow or filled portion of the candlestick is called “the body” (also referred to as “the real body”).
The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.
Now, we already have a glimpse or idea of what a candle stick is. This is the beggining of understanding the psychology of buyers and sellers in the stock market. There are several kinds of candle stick.
As we go along, variations of candle sticks will guide our decisions in trading the market.
On my next post, we will go deeper on candles sticks' psychology . . .
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