Candlestick charts are the language of trading. Once you can read them, you can read any market in the world. This lesson teaches you exactly what each candle means and how to interpret them.
What OHLC Means
Every candlestick contains four pieces of information:
- Open — the price when the time period started
- High — the highest price reached during the period
- Low — the lowest price reached during the period
- Close — the price when the time period ended
These four numbers tell you a complete story about what happened during that time period — whether it was one minute, one hour, or one day.
Green vs Red Candles
Key Concept
Green (or white) candle: Close is higher than Open — the price went UP during this period. The bottom of the body is the Open, the top is the Close.
Red (or black) candle: Close is lower than Open — the price went DOWN during this period. The top of the body is the Open, the bottom is the Close.
Wicks (Shadows)
The thin lines above and below the body are called wicks or shadows. The upper wick shows the high, the lower wick shows the low. Wicks represent prices that were reached but not held — they show rejection.
Example
A candle with a long lower wick on a daily chart means: at some point during the day, the price dropped significantly, but buyers stepped in and pushed it back up before the close. This is a sign of buying pressure — the market rejected those lower prices.
Timeframes
Each candle represents a specific time period. Common timeframes:
| Timeframe | Each Candle = | Used By |
|---|---|---|
| 1-minute | 1 minute of trading | Scalpers |
| 5-minute | 5 minutes of trading | Day traders |
| 1-hour | 1 hour of trading | Intraday traders |
| 4-hour | 4 hours of trading | Swing traders |
| Daily | 1 full trading day | Swing traders, beginners |
| Weekly | 1 full trading week | Position traders |
Key Concept
Daily charts are best for beginners. Lower timeframes have more noise (random, meaningless movements). Daily charts show the bigger picture and give you time to think about your decisions. You do not need to watch charts all day.
Body Size and Wick Size
Large body, small wicks— strong, decisive move. Buyers (or sellers) were in complete control. This candle "means it."
Small body, long wicks — indecision. The market tried to move but got pushed back. Often signals a potential reversal or pause.
Learning to read the story each candle tells is a skill that takes practice. Watch live charts, identify patterns, and over time it becomes second nature — like reading words instead of individual letters.
Risk Disclaimer: Trading financial markets involves significant risk of loss. The content on this page is for educational purposes only and does not constitute financial advice. Past performance is not indicative of future results. You should not trade with money you cannot afford to lose. 70-80% of retail investor accounts lose money when trading CFDs and spread bets. Consider whether you understand how these products work and whether you can afford the high risk of losing your money.