Monday, June 21, 2021

Business

How to read a candlestick chart

PUNJAB NEWS EXPRESS | May 31, 2021 03:03 PM

Trading, investing, selling, buying are such important factors of our life that even with the youngest generation, it is a must. People from all age groups are starting to gain knowledge about it, they are starting to learn more and understand how to trade. Most of them have already invested in share markets, stocks, mutual funds or cryptocurrency. All of these methods help you make money at a young age. But for that, you need to learn a lot about the factors of trading. Investment is primarily made to obtain an additional source of income or gain profit from the investment over a specific. That is why it helps so much to the economy. period.

To check on your investments on currencies you apply to various websites or applications. These websites act like brokers for the money you invest. They may even handle it and give you the profits. Most of these applications have several analysis pages. These pages show the charts of that particular day or predictions of what is to come. One such analysis is called the candlestick chart. It is a chart that displays the analysis of the stock market on that particular day.

A typical Candlestick Chart is a financial chart that is used to describe the stock market prices of that particular day. You can read this chart to know exactly where and when to invest or sell your shares. There are other types of candlestick charts as well. They may vary from a single day to 20 days or a month. These charts were developed in the 18th century by a Japanese rice trader. Candlestick charts have 4 main components called the open price and close price and the high price and the low price. And these components are depicted in the form of a candle, with a wick, a body, and a lower wick or shadow.

Looking at each of the factors in the candlestick chart:

  1. Open Price

The open price depicts the price at which the share was bought during the formation of the new chart. If the price has gone up the chart will turn green and if the price has reduced it will turn red.

  1. Close Price

This portrays the last price it was invested at during the formation. If the close price is higher than the open price it turns red but if it is the opposite it turns green again. 

  1. High Price

Next, the high price depicts the highest price it was traded at, as the name suggests. But this is not shown through any colour. If there is a wick on top, it shows the highest price. If there is no wick, that means the open price is also the highest. 

  1. Low Price

The lowest price is shown with the help of the shadow or the lower wick. However, if that isn’t available, that means the open or the close chart is the lowest price for that day or month, based on the chart. 

Apart from this measurement, the colour of the chart as we saw above, depicts the direction in which the chart will move, higher or lower. Then comes the range. The range is the difference between the highest and the lowest price which can be measured by subtracting the two. Thus, you need to keep a note of such information while reading the candlestick chart. 

There are several other types of charts that are used to read the day to day analysis of your stock market. The candlestick is proven to be one of the easiest and most professional types of chart. The analysis is done and the way it is displayed is easy to understand by both beginners and experienced traders. Thus, reading a candlestick chart should be helpful.

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