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Candlesticks Basics

Candlesticks are also known as Japanese Candlesticks, because it originated in Japan in the 1700´s by a samurai named Homma Munehisa, who used the charts and candlestick to trade rice.

Source: Winco.io

Candlestick chart is a financial chart used to keep track of the market´s price movement and sentiment. Each candle represents the price movement of a stock, a market, a cryptocurrency, a currency, etc. within a period of 5 minutes, 10 minutes, 1 hr. or 1 day. The periods available will change according to the platform. So for example if you choose to see the daily (1 day) movement of a stock, a candlestick will represent the price movement for that day only.

A single candle carries and shows a lot of important information:

1. Open Price

2. Close Price

3. High(est) Price

4. Low(est) Price

5. The Body

6. Upper Shadow

7. Lower Shadow

Open Price: Shows the price of the stock when the market opened. Notice that the Bullish candlesticks the open price start at the bottom and the Bearish candlesticks start at the top.

Close Price: Shows the price of the stock when the market closed. Notice that the Bullish candlesticks the close price starts at the top and the Bearish candlesticks start at the bottom.

High: Shows how far up the market was pushed showing the highest price it reached in that day.

Low: Shows how far down the market was pushed showing the lowest price it reached in that day.

The Body: Will change in length according to the open and closing prices.

a) The stick or the body is colored black or white, and in the more modern charts they are green or red.

b) Black or Red sticks represents a BEARISH stock = Decreasing market, which means that for that period (1 minute, 1 Day, 1 month etc) the market closed with a lower price than it opened.

c) White or Green sticks represent BULLISH stock = Increasing market, which means that for that period the market closed with a higher price than it opened.

Upper Shadow: is the line, the wick or the tail sticking out of the body on top of the candlesticks, and it shows the length in which the stock travelled upwards.

Lower Shadow: is the line, the wick or the tail sticking out from under the body of the candlesticks, and it shows the length in which the stock travelled downwards.

Below you can see a real BITCOIN/US DOLLAR candlestick chart where you can see candlesticks opening prices, closing prices, upper shadows, lower shadows and whether they are green/bullish or red/bearish;

We hope this has given you a better insight about candlesticks.

The Winco Team

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