How to read candlestick charts: a beginner's guide with practice
Each candle shows four prices: open, high, low and close. Learn to read the body, the wicks and the colour, then practise on a live chart.
A candlestick shows four prices for one period: open, high, low and close. The thick body spans open to close; it is green when the close is above the open and red when it is below. The thin wicks reach the period's high and low. Read the colour first, then the body's size, then the wicks.
The parts of a candle
Practice: tap the candle with the biggest body
The four prices in every candle
Every candle covers one period: one minute, one day or one week, depending on the chart's setting. During that period, price did four things you can read straight off the candle.
| Price | Where it is on the candle | What it tells you |
|---|---|---|
| Open | One end of the body | The first trade of the period |
| Close | The other end of the body | The last trade of the period |
| High | Top of the upper wick | The highest trade of the period |
| Low | Bottom of the lower wick | The lowest trade of the period |
The colour tells you which end of the body is the open. On a green candle the close is above the open, so the open is the bottom of the body. On a red candle the close is below the open, so the open is the top. This site uses green and red; some charts use white and black, or hollow and filled bodies. The logic is the same.
Read a candle in three steps
- Colour: did price close higher or lower than it opened? Green, buyers ended the period ahead. Red, sellers did.
- Body size: how far did price travel from open to close? A tall body is a decisive period. A tiny body is a draw, which is how a doji is defined.
- Wicks: where did price go and come back from? A long lower wick means sellers pushed price down and buyers pushed it back up before the close, the story behind a hammer. A long upper wick is the reverse, as in a shooting star.
In the practice chart above, you look for the biggest body: the one period where price travelled furthest from open to close, whatever its colour.
Read candles in a row, not one by one
A single candle is one period of a longer story. Before you read anything into one candle, look at the ten or twenty before it:
- Direction: are closes mostly rising, falling or flat? Many patterns mean nothing without this. The same shape is a hammer after a fall and a hanging man after a rise.
- Typical size: is this candle bigger or smaller than its neighbours? A body twice the usual size stands out; the same body on a wild chart is ordinary.
- Location: is price near a level where it turned before? That is support and resistance, and it matters more than any single candle.
Timeframes change the picture, not the rules
A daily candle contains every trade of that day. Zoom in to hourly candles and the same day becomes six or seven candles; zoom out to weekly and it is one fifth of a candle. A pattern on a five-minute chart and the same pattern on a weekly chart are read the same way, but they describe very different amounts of trading. Beginners often switch timeframes until they find the pattern they hoped to see. Pick one timeframe before you look.
Common mistakes
- Reading colour as a forecast. A green candle says buyers won that period. It does not say they will win the next one.
- Ignoring the wicks. A green candle with a long upper wick closed well below its high: buyers were pushed back before the close.
- Forgetting the period. A candle is only finished when its period ends. Until then the close, and so the colour, can still change.
What a candlestick chart does not tell you
A chart shows prices, not reasons. It does not show news, a company's results, who was trading or why. It does not show volume either, unless the chart adds a separate volume panel (the practice charts on this site do not, yet). The charts on this site are simulated for practice, so you can learn the reading skill without any real company attached to it.
Frequently asked questions
What do green and red candles mean?
Green means the period closed above its open: price rose from the first trade to the last. Red means it closed below its open. The colour describes that one period only. It is not a prediction of the next candle.
What is the wick of a candle?
The wicks (also called shadows) are the thin lines above and below the body. The top of the upper wick is the period's highest price and the bottom of the lower wick is its lowest. A candle with no wick opened or closed at its extreme.
Which timeframe should a beginner use?
Daily candles are the usual starting point: each candle is one trading day, the charts move slowly enough to think, and most pattern descriptions were written for daily charts. Whatever you pick, decide before you look, and read every candle in that timeframe the same way.
Can you predict the price from candlesticks?
No chart reading predicts prices reliably. Researchers have tested candlestick strategies on stock prices, and no pattern comes with a dependable success rate: results depend on the market, the period and trading costs. Candles describe what happened in each period, which helps you read a chart, not foresee it.