Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “Candlestick or Japanese Candlesticks”
Is a way to chart prices that displays the high, low, opening and closing prices for
an asset for a specified time frame.
The wide part of the candlestick is called the "real body" and tells investors whether
the closing price was higher or lower than the opening.
Depending on the time frame of the chart, each candle represents a time period of a
specific length, except for the most recent, unfinished candle.
The candlestick's shadows show the high and lows and how they compare to the open and
close.
A candlestick's shape varies based on the relationship between the high, low, opening
and closing prices.
Candlesticks are represented by two different colors depending if they are bullish (the
closing price was higher than the opening price) or bearish (the closing price was lower
than the opening price).
The different body colors help us to quickly tell if the candlestick is bullish or bearish
and can be set to any color.
Candlesticks reflect the impact of investors' emotions on security prices and are used by
technical analysts to determine when to enter and exit trades.
Candlestick charting is based on a technique developed in Japan in the 1700s for tracking
the price of rice.