Forex candlesticks charts are widely used in the forex world as part of the trading process. forex candlesticks
on charts are generally regarded as being more effective than bar
charts because they can give vital clues as to a currency’s future
movements.
Within the forex field a forex candlesticks describes the open, high, low and close price of the trading period in a single candle. If you’re looking at a 15 minute chart, then each candle represents a 15 minute time frame. An hourly candle represents price movement in one hour. Etc.
Forex candlesticks were originally derived over 200 years ago by the Japanese, who used them for the purpose of doing analysis of the rice markets. The technique evolved over time into what is now the candlestick technique used in Japan and indeed by millions of technical traders around the world.
Forex candlesticks are visually more attractive than standard bar and line charts and they make for a clearer market reading, once understood.
The major component of forex candlesticks is the body, i.e. the part that forms the rectangular shape between the open and close points. While traditional Japanese candlesticks use black and white bodies, forex candlesticks are green and red as these colours are thought to better define the market direction, and are visually more striking. A green body means that the close is higher than the open and as a result the price has increased over the period, whereas in a red body the closing price is lower than the opening price and the value has decreased over the period.
Within the forex market a trading period can be a week, a day, an
hour or even less. What period is most appropriate depends on the market
and the nature of the trade. In my personal experience, trading periods
under an hour are not the way to move forward as it is more tying and a
lot more stressful, with no greater rewards.
The extension lines at the top and lower end of the forex candlesticks bodies are called the shadows. The pinnacle point on the upper shadow is the high price of the period, while the lowest point on the lower shadow represents the low price of the period. If there is no shadow on the upper end of the candlestick body, it means that the close price (in the case of a green period) or the open price (in the case of a red period) = the high price.
Conversely, if there is no shadow at the lower end of the candlestick body, it means that the open price (in the case of a green period) or the close price (in the case of a red period) = the low price of the trading period.
There are no calculations required to interpret forex candlestick charts. They are a simple visual aid representing price movements in a given time period. Each candlestick reveals four vital pieces of information:
The advantage of forex candlesticks is that they clearly denote the relationship between the opening and closing prices.
It is important to understand that forex candlesticks display the relationship between the open, high, low and closing prices. This means that they cannot be used to chart securities that have only closing prices. Interpretation of forex andlesticks charts is based on the analysis of patterns. Currency traders predominantly use the relationship of the highs and lows of the candlewicks over a given time period. However, forex candlesticks charts offer identifiable patterns that can be used to anticipate price movements.
All forex candlesticks and patterns indicate where price should move in the future. This is not an exact science, however these patterns play out more often than not and that’s why they are very powerful tools to use with your trading. The key is to recognize these patterns and know when to trade them and when “not” to trade them.
There are 21 main types of forex candlesticks which over time with experience you will come to terms with. I am not going to go into too much detail of the types of forex candlesticks. I go into much more depth about the different types of forex candlesticks and how to trade them via my forexmentorpro service. What’s more, for a limited trial period you can join forexmentorpro for just $1
View video here http://youtu.be/KpB6FTsDAvE
Within the forex field a forex candlesticks describes the open, high, low and close price of the trading period in a single candle. If you’re looking at a 15 minute chart, then each candle represents a 15 minute time frame. An hourly candle represents price movement in one hour. Etc.
Forex candlesticks were originally derived over 200 years ago by the Japanese, who used them for the purpose of doing analysis of the rice markets. The technique evolved over time into what is now the candlestick technique used in Japan and indeed by millions of technical traders around the world.
Forex candlesticks are visually more attractive than standard bar and line charts and they make for a clearer market reading, once understood.
What forex candlesticks are and how to read them
The major component of forex candlesticks is the body, i.e. the part that forms the rectangular shape between the open and close points. While traditional Japanese candlesticks use black and white bodies, forex candlesticks are green and red as these colours are thought to better define the market direction, and are visually more striking. A green body means that the close is higher than the open and as a result the price has increased over the period, whereas in a red body the closing price is lower than the opening price and the value has decreased over the period.
The extension lines at the top and lower end of the forex candlesticks bodies are called the shadows. The pinnacle point on the upper shadow is the high price of the period, while the lowest point on the lower shadow represents the low price of the period. If there is no shadow on the upper end of the candlestick body, it means that the close price (in the case of a green period) or the open price (in the case of a red period) = the high price.
Conversely, if there is no shadow at the lower end of the candlestick body, it means that the open price (in the case of a green period) or the close price (in the case of a red period) = the low price of the trading period.
Understand what forex candlesticks charts consist of.
There are no calculations required to interpret forex candlestick charts. They are a simple visual aid representing price movements in a given time period. Each candlestick reveals four vital pieces of information:
- the opening price,
- the closing price,
- the highest price
- the lowest price and the fluctuations during the time period of the candle.
The advantage of forex candlesticks is that they clearly denote the relationship between the opening and closing prices.
It is important to understand that forex candlesticks display the relationship between the open, high, low and closing prices. This means that they cannot be used to chart securities that have only closing prices. Interpretation of forex andlesticks charts is based on the analysis of patterns. Currency traders predominantly use the relationship of the highs and lows of the candlewicks over a given time period. However, forex candlesticks charts offer identifiable patterns that can be used to anticipate price movements.
All forex candlesticks and patterns indicate where price should move in the future. This is not an exact science, however these patterns play out more often than not and that’s why they are very powerful tools to use with your trading. The key is to recognize these patterns and know when to trade them and when “not” to trade them.
There are 21 main types of forex candlesticks which over time with experience you will come to terms with. I am not going to go into too much detail of the types of forex candlesticks. I go into much more depth about the different types of forex candlesticks and how to trade them via my forexmentorpro service. What’s more, for a limited trial period you can join forexmentorpro for just $1
View video here http://youtu.be/KpB6FTsDAvE