in this video i'm going to talk about candlestick charts
how to understand them how to read them and how to create those charts so very often you'll see them
in trading in stock market trading or currency cryptocurrency etc so to really understand these
let's go through a basic example so what i'm gonna do here i'm gonna open
right here netflix stock price and when you create a candlestick chart you do it for a
particular period of time so in this particular case we're going to look at a single trading
day so if you look here when the market opened in the beginning of the day the price was 662.91
then during the day it went lower and then as you can see it went up
all the way up to here and then finally by the end of the day when the market closed it was 671.66
so during the day our price goes up and down and we start at a certain price and
we end at a certain price so let's try to keep track of a few metrics here the first
one is going to be our opening price opening price right here if i roll over it it's 662.91
so i'm going to write it down
similar to this if i go by the end of the day it's 671.66 so again i'm gonna write it down
so this is going to be our close then we're going to check for the lowest amount during that period
so if i go through this we can see that down here is the lowest amount so that's 659
and then finally if we go back to this we're going to get our highest amount
which is going to be right here 675.57
so this was for this period of time for this day so i'm just going to call this day one
just some text so now using this data i should be able to create a candlestick
chart so i'm going to select this go to insert go to chart and right here we're going to scroll up
instead of column chart i'm going to scroll down and choose candlestick chart
it didn't guess my columns and rows correctly for some reason let's scroll down here see the switch
rows and columns i'm going to do that and now it seems like we're doing better see low is that low
column open is open close is closed so we got that now right and period would be this first column
that defines the period now to be able to actually see what's going on here we want to probably make
this range a little smaller instead of going from 0 to 800 we want to choose a smaller range here
so for that i'm going to customize this go to this vertical axis and see
there is minimum and maximum value so for minimum value i'll go a little lower than our low
so let's try like 600 so let's go a little higher than that let's do 640 something like that
and if i just move this like this we should be able to see our candlestick
and what you're going to see here in this graph is that we get this
body of this candlestick and then we get this line that goes up and down now let's try to
understand what's going on here so if you look here the bottom of this body right here
that's going to show us the opening price for this so open was 662 662.91
and by the end of the day when we close that's this line that's this 671 number right there
now during that day if you remember we had also some highs and lows so sometimes it was
trading for a higher amount sometimes it was trading for a lower amount and the minimum was
here so this shows what that minimum amount was so we called it low in this case and then finally
we have the maximum amount during that period and that's our high so that's what this whole
thing illustrates so we have open close low and high so usually when you get candlestick chart
you'll get two types of bodies they can be in different colors sometimes one of them
is empty the other one is full so that's the way you illustrate the difference but you're
gonna have two different types so one of them is gonna be this and let's create another example
and for that i'm gonna use this amazon example so again in this case for this amazon
stock you can see how our opening price was this much so i'm going to write it down
again and we have our close by the end of the day here this gray area is
after market so we'll go here that's our number i'm going to write it down
and then my lowest and highest amount during the day so the maximum is here
and if we look at this our minimum would be here
so now i'm going to make another chart from this data
and again i'll define the minimum
something like that and we could also define maximum but i'm just going to leave it at this
so i'm just going to put this on the side of the other one now if you look at this one this doesn't
show up full like this one did and the reason for that is when i was looking at netflix the price
during opening was lower than closing the value increased now if we go to amazon example here
during opening it's higher compared to closing so value decreased and that's why for
this amazon example we got this empty body and for this one we get this
full body depending on how this is illustrated sometimes you'll see this is green this is red
or different colors so it doesn't really matter but the main thing here those are the two types of
bodies you're gonna get and in this example if the price shrinked then
basically your open is here on top and your close is here and for this one it's the opposite your
open is down here and closes down here because by the end of the day it was a higher price
and that's pretty much the base of understanding what candlestick charts actually do now usually
you wouldn't probably look at them in isolation like this for a single period you would probably
look at it over multiple periods and compare them to each other now when we say period
like in this particular case i chose my period to be one day for trading right
but you could illustrate this candlestick on any period you pretty much want to illustrate it
for example you could do this for three hour period or you could do it for half of the day
sometimes you even do it for like 15 minutes or five minutes and things like this so for example
if i was doing this for let's say half of the trading day then we would grab like middle of
the day and we would basically check see the beginning how much it was how much it was by the
end of that period which is half of the day and then we would check what's the minimum and maximum
within that section and then we would do the same for the next half which would at this point be
our next period now in this example that i'm illustrating i'm just going to go with days
so we would compare let's say one day to another and for that you basically need to get the same
information for each day now if you have more periods
for each period you basically add another line so you'll have your day 2 day 3 day 4 and you'll have
your numbers now for that i already have this data here we have our period i can rename this
maybe call this like day 1 or something and drag this down so your first column needs to
be text if you have dates it would not work so i have period then i need low open close high
maybe we'll just do currency for this so now if i wanted to create this i would simply just select
that information not including dates because our first column is our periods
as text and we'll go under insert to our chart and basically just choose our
candlestick if it's not automatically selected it's probably worth to make sure that you have
your lows opens and closes they match and at this point to be able to actually visually see
this better i'm going to change my minimum amount so i'll go to vertical axis and do minimum to be
right around here probably so i'll try about 2500 see what that looks like i could go higher 2600
something like this and you can see for each one of those lines we basically draw one of
those candlesticks and you'll see for days when our price increased we'll get this blue full
candlestick for the days when it decreased we'll get this one that's not full so now
we can clearly see for which days our price increased and which days it actually decreased
and we can also see the range for that day like what was the price range from
the minimum amount to the highest amount for that particular day so again if i just
push this to the side here see we have our day one right here and it started at this price 2688
and it increased by the end of the day so we have a higher amount that's why we got this and then
we got the next day when it decreased now i can do this in excel 2 this was like google sheets
example if i do it in excel we have a little more flexibility what colors we can give these things
in google sheets currently we can't one other thing to remember in excel is that your columns
are in a little different order so here you have to have open high low close in that particular
order first column would still be your periods you don't need these dates this is the data we
need to build that same chart we go under insert and here we'll have this newer charts that fall
under this like waterfall and all the stuff that appears here and right here see we have this stock
and the first one if i roll over that see it says high low close now we also want to have
open so the second one if i roll over it says open high close low so i'm going to click on that and
it's basically just going to draw this chart for me and you can see in excel it illustrates it
differently so the empty one is the one that actually grows and this one is the one that
actually shrinks but we can change this so what i could do i could click on this box
that's the empty one go to format and choose this background color to let's say make it green color
when it goes up and then i can click on this one and i can make it red color
which is commonly how you're gonna see these in many platforms and obviously when opening and
closing are very close for example this one then the actual body of this is very small
so it almost looks like a line now here in excel if i wanted to also change the minimum here
i could click here in this vertical axis right here press ctrl 1 and that's going to give me
this panel where i can actually manually set what the minimum should be so i can go here and do 2600
hit enter and there we go now it shows like this so we can still control our minimum and maximum
and now after this hopefully when you look at this you should clearly understand what's happening
with charts like this thanks for watching please subscribe and i'll see in the next video