Best Forex Trading Signals
While barcharts are useful, Candlestick charts are much more visual and therefore it is easier to spot patterns within the charts. Both types of charts provide the same information; open, close, high and low prices. But the Candlestick chart creates a box between the open and close values, visually reducing possible rare extremes to the prices.
Japanese Candlesticks visually provide a clear and easy to identify set of patterns that are highly accurate in predicting market trends. The average investor doesn’t need to rely on a professional broker for advice. Since the broker makes money whether you do or not, a broker doesn’t always have your best interests at heart.
As mentioned, Candlestick charts display the high, low, open, and close for a given security or market each. It is different from a bar chart in that a narrow line (called shadow or wick) shows the day’s price range. In other words, the high and the low.
The best way to explain is by using a picture:
Candlesticks are formed using the open, high, low and close.
A market price closing higher than where it opened will produce a hollow (i.e. not filled) candle.
A market price closing lower than where it opened creates a solid (i.e. filled) candle.
A wider body marks the area between the open and the close, referred to as the Real Body or body.
The thin lines poking above and below the body display the high/low range and are called shadows.
The top of the upper wick/shadow is the “high”.
The bottom of the lower wick/shadow is the “low”.
In reality, it doesn’t matter what colors you choose for your charts. Many investors will use the color red for the solid candle (price went down) and green for the “hollow” candle (price went up). Whatever you choose to use, it gives a dramatic visual indication of the days market prices.
Candlestick trend analysis is easy to use, thus great for beginners, but extremely powerful and accurate; therefore even the professionals use them constantly.
The signals and patterns are easy to see. Memorizing the Japanese Candlesticks names and descriptions of the candlestick trading formations is not necessary for successful trading.