Sunday, May 27, 2012

How to Read Candlestick Chart?

Stock charts are usually represented with Candlestick chart to show the stock price at a certain period window.

Source: Wikipedia

Black candle means the price opened at the high and closed at the low and the white candle is the other way round. So if you look at the candlestick chart and if there are a lot of the black candles, it basically means that the bears are in control. In other words, the stock trend is moving downward. Similarly if you see a lot of white candles, bulls are in control and stock trend is moving upward. So usually more white, the better!

Candle Stick Components
  • High - The highest price for the period window (e.g. 1 day)
  • Open - Opening price
  • Real Body - Black refer the stock is closed at lower. White refers to the stock is closer at higher.
  • Close - Closing price.
  • Low - The lowest price of the period window (.e.g. 1 day)

Note: The period window could be 1 minute, 5 minutes, 60 minutes, 1 day 1 week, 1 month and so on. It depends on what kind of stock traders you're. For example, 1 minutes and 5 minutes period window will be useful for day traders. 1 day period windows may suitable for traders who do not have time to monitor the stock very closely.  Weekly and monthly will be suitable for long term investor like me. :D

Other posts that you may interested related to stock fundamental:


kampunginvestor said...

Sorry bro, I have no interest in candlestick chart. Not my cup of tea. :) No offense yea!


ChampDog said...

Hey, what's up? No problem. Just wonder the reason - it is because too simple or the representation of the information doesn't really matter for investor?

kampunginvestor said...

I am fine bro. How about you? ^^ Yup to me that is not important as an investor AND if all stocks move up and down based on technical analysis, then we no need to work d lor.. :)

ChampDog said...

Almost forgot, you're the fundamental guy! :)

Financial Planning Education said...

Nicely illustrated Champ.

kampunginvestor said...

Bro, how can you forget I am a fundamental guy? ^^ Important fact leh.. :)

ChampDog said...

Hahaha.... "almost" only. :)

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