What is Candlestick?
Sham (candlestick)
In short
A chart bar for one period: the body shows open and close, the wicks show the high and the low.
Also known as: sham, candle
A candlestick is a chart shape showing price movement over one period. Each candle is built from four prices — OHLC: open, high, low and close. The period depends on the timeframe: one candle is one day on a daily chart, one hour on an hourly chart.
Anatomy
- Body — the part between open and close. If the close is above the open, the candle is bullish (usually green or white); below, it's bearish (red or black).
- Wicks (wick) — the thin lines above and below the body, marking the period's high and low.
What a candle tells you
- Big body, small wicks — one side (buyers or sellers) clearly dominated.
- Small body, long wicks — there was a fight but no clear winner (similar to a doji).
- Long lower wick — price was pushed down but buyers drove it back up (a hammer).
Combinations of candles — engulfing, stars and others — are called candlestick patterns. But a single candle says little without context: where it formed (support/resistance), in what trend and on what volume matters. A candle is only "final" once its period closes — an open candle can still change.
Green candle: close above open. Red: below. Wicks show how far price went and came back.
Example
Illustrative daily candle: open $100, high $104, low $98.50, close $103.
- Close > open → a bullish (green) candle.
- Body: $103 − $100 = $3.
- Upper wick: $104 − $103 = $1. Lower wick: $100 − $98.50 = $1.50.
- Full range: $104 − $98.50 = $5.50; the body is about 54.5% of it.
Reading: during the day the price dipped, but buyers pushed it back up to close near the top of the range.
Mistakes and tips
Don't judge a candle before it closes — its shape can change completely in the final minutes.
Don't trade off a single candle: confirm with levels, trend and volume.
The same candle carries different weight on different timeframes: a daily candle says more than a 5-minute one.
Frequently asked questions
- What do green and red candles mean?
- Green means the period closed above its open — price rose. Red means it closed below the open — price fell. You can change the colours in chart settings.
- How do you read a candlestick chart?
- Look first at the body's size and colour, then the wicks, then compare the candle with previous candles and key price levels.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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