The candle and its anatomy
One candle is price over a slice of time: where it opened, where it closed and how far it got to travel.
The candle and its anatomy — what it is?
A candle is a compressed record of trading over one slice of time. Four numbers: open, high, low and close. Everything else on the chart is built from them.
The body of the candle is the distance between the open and the close. It shows who won over that slice. The wicks are the high and the low, where price reached but couldn't hold.
Colour is secondary. What you read is not the colour but the ratio of body to wicks: a long wick below means sellers dragged price down and buyers brought it back before the close.
The candle and its anatomy — how it is built?
One candle = one slice of the timeframe. On H1 a candle closes every hour, on M15 every fifteen minutes. An unclosed candle can still change completely, so decisions are made on closed ones.
The candle and its anatomy — common mistakes
Looking at colour instead of the ratio of body to wicks.
Making a decision on an unclosed candle — it will repaint.
Treating a long wick as a "market error". A wick is the footprint of liquidity being taken, the most informative part of the candle.
Forgetting that the same candle looks different on different timeframes.
Related to
Glossary
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
- open
- the first price of the period.
- high
- the highest price of the period.
- low
- the lowest price of the period.
- close
- the last price of the period. Considered the most important of the four: breakouts are confirmed by the close.
- candle body
- the rectangle between the open and the close.