Investing & Day Trading Education:  Day Trading Academy

Candlestick Charts

Candlestick is the other most common type of bar chart out there next to bar charts.  More likely than not if you are going to get into day trading then you will most likely use one of these two charts.  You can find all the basic information in candlestick charts such as the opening and closing price, the only difference is there a color algorithm attached to the chart.

Information Shown on Candlestick Charts

Anytime that we look at a candlestick chart we will see the following technical informaion about each bar:

  • Open:  The first price of the bar that appears (first thing to plot)
  • Close:  The last price traded (last part of bar to plot)
  • High:  The highest price traded on that bar
  • Low:   The lowest price traded on that bar
  • Wick & Body: This is what separates a candlestick chart from a bar chart

The one unique thing about candlestick charts is that they split the visual aspect of showing the opening & closing prices with the high and low prices.  It is easier for some people to use the candlestick charts because of the additional visual aspect. For example, if we have a bar that is moving up the body of a candlestick chart may be colored greed and a bar down may be colored red.  Black & White were the original colors used.

Time Frame

Candlestick charts, much like bar charts, can have an array for different types of time frames for any market that you trade.  Candlestick charts are more commonly used with day traders in the stock market.  Futures traders (like myself) use mostly tick charts for their trading since its the simplest of all the charts.

Fibonacci principles are mostly used for tick charts. I strictly trade the futures market, oil and the E-mini S&P exclusively, and generally use larger Fibonacci based charts for crude (1597) and also the ES (610 & 233).  If you would like to see my personal charts have a look at my public market recaps and see my results via the income statements page.

When we refer to volume charts there is also a different array of options.  Most people in my industry use 10 minute or 15 minute charts but there are others that are effective as well.  Traders that use time based charts are usually swing traders that hold for long periods of time and look at daily and also week charts.