Have you ever heard of the term ‘candlestick chart’? Many of you might say yes while many of you might say no. We would say the chances are pretty less for the investors not to know about this chart. The reason behind this is this chart is one of the most popular financial charts that is used in the trading market. This is one of the three major charts in the Forex market.
Though it is often used in other trading sectors, it is widely seen in the currency exchange market and the main reason behind this is its simple and easy mechanism. This is one of the strongest technical tools used by traders. This chart is highly monitored by the Forex participants to know about the whereabouts of the market. That means, there is no way an investor can get away without knowing about this chart. So, today we will be talking about how we can properly accelerate this chart in our trading.
Understanding the basics
The definition of a candlestick chart is the chart that is used to represent all the data in the form of a candle. Here, each candle represents the price of a commodity within a specific time. So, an accumulation of several candles together can be useful to identify any kind of trend in the market. These can also give a proper insight into the market sentiments.
Now, in this chart, there are two types of candles. One of them is the bearish candle and the other is the bullish candle. These candles are the indicators of the price range in the moving market. We all know that since the price fluctuations occur in a short time, the opening and closing price of a commodity doesn’t remain the same. Therefore, the candle that represents the price range where the opening price is lower than the closing price is called a bullish candle. This candle signifies that the market is moving upwards and is a suitable time for the investors to sell some stocks.
On the contrary, the bearish candle is the figure which denotes the price range where the opening price is higher than the closing price. So, it indicates that the market is falling and makes it a suitable place for the participants to buy some stocks. But remember, you need a professional platform to trade with the candlestick charts. Visit website here and see the features of SaxTrader. By choosing a reliable platform, you can get access to error free price feed and thus you will trade better.
Highs and lows
Now apart from the opening and closing prices, two terms remain involved with this chart. They are the highs and the lows. So, in a market, within a specific time, the opening price may go to an extremely high and an extremely low level. These highs and lows are much helpful to demonstrate how much the price of that commodity has moved within that specific time. When the difference between the highs and lows is very high, we can conclude that a breakout is nearing. On the other hand, if the gap isn’t much notable, we can say that the market is moving sideways and no actual trend is persisting.
Price gaps are an important yet simple mechanism that helps the investors to understand their profit-making opportunities in a trade. The difference between the opening and closing price of a commodity in a candlestick chart is known as the price gaps. These price gaps are fundamental in the Forex market. These are great ways to understand the market sentiments and the volatility within a short while.
The biggest advantage of using this chart is that the bearish and the bullish candles remain in two different colors. When you can identify the bearish ones from the bullish ones, it becomes easier for you to analyze the chart which ultimately assists in your trade.