Skip to main content

What Are Candlesticks & What Do They Mean?

Many of you who have seen a stock chart have probably seen a chart that contains multiple red and green boxes with lines coming off the ends. This is known as a candlestick chart and is the most common type of chart used by traders. A candlestick is a bar that represents a stock price’s opening price, closing price, high price, and low price.




    An opening price is what the stock price initially starts at the beginning of a period while a closing 4 price is what the stock price ends at the ending of a period. If a candlestick is green, that means the bottom of the bar is the open and the top is the close, essentially meaning the share price increased. If a candlestick is red, that means the bottom of the bar is the close and the top is the open, essentially meaning that the stock price decreased

    The slim bars that come off the top and bottom of the candles are called wicks. The top wick is the highest a share price sold for and the bottom wick is the lowest a share price sold for during a period of time. You can see an example of this in the picture given. Candlesticks are a home to many patterns that traders use to determine the direction of a stock’s price and we will get to that later on in the paper.

    Candlesticks often follow patterns that can help an investor determine which direction a stock is going to move. Recognizing these patters as they form can be an important part of your strategy by allowing you to buy at a low part of the pattern and sell at a high part.

Popular posts from this blog

What is Catalyst Trading? - How to Trade Upcoming Events

 Catalyst Trading is when you play off of the hype in anticipation to an event that affects a stock's price. This is a very simple way to try to capture profits in, usually, a smaller time frame than most investments. There are many different types of catalysts that can cause a stock price to increase and there are many resources to use to find these catalysts. It is important to understand that just because there is a catalyst, it does not mean that the stock price will be affected by it. When researching into different catalysts, it is clear that some provide higher returns than others. Also, it is important to research into the stock that has the catalyst. An easy way to tell if it is worth investing is looking into that specific stock's previous catalysts. If that stock has previously reacted positively to catalysts, then it is reasonable to assume it will do so again.  With that being said, let's look into some different types of catalysts that are easy to track: Earni...

What are ETFs & How Do You Trade Them?

 An Exchange Traded Fund (ETF) is similar to a Mutual Fund in the fact that it is a group of stocks that you can buy through one ticker symbol. However, ETFs usually often contain stocks that all have something in common (Such as an index, market, etc.). They are popular for investors who want to trade both in the long-term and the short-term, depending on which ETF you choose to invest in. In this article, we will discuss different types of ETFs and how to trade some of them efficiently. Index ETFs     One of the most common ETFs that are used/recommended by many investors are Index ETFs. Index ETFs  are a group of stocks that are included in one popular index that you can invest in, basically allowing you to invest in an index. One of the most common Index ETFs is the S&P 500 ETF. Three of the most popular S&P 500 ETFs are: 1.)  SPDR S&P 500 ETF Trust (SPY) 2.)  Vanguard S&P 500 ETF (VOO) 3.)   iShares Core S&P 500 ETF (IVV)...

What are Bullish Reversal Patterns & How Do You Read Them?

Bullish Reversal Patterns are universal patterns that candlesticks can follow that signify a change from a downwards movement to an upwards movement of share price. Identifying these patterns may help when trying to predict if the stock is a good buy. However, it is important to remember that even though a pattern begins to form, it does not always need to finish. There is no guarantee that a pattern will follow through to the end. With that being said, here are some of the most popular Bullish Reversal Patterns: Double Bottom      Above is an example of the Double Bottom pattern. This can be identified by the two identical bottom points the share price reaches. Some investors like this pattern for its relative price, short-term trading, and long-term trading opportunities. Since the share price hits a bottom, it is most likely relatively cheap and likely has a low RSI . This allows for lots of upwards potential and profit in the long run. On the other hand, the Doubl...