Introduction Of Japanese Candlestick

Candlesticks provide unique visual cues that make reading price action easier. Trading with Japanese Candle Charts allow speculators to better comprehend market sentiment. Offering a greater depth of information than traditional bar charts - where the high and low are emphasized - candlesticks give emphasis to the relationship between close price and open price.

Traders who use candlesticks may more quickly identify different types of price action that tend to predict reversals or continuations in trends - one of the most difficult aspects of trading. Furthermore, combined with other technical analysis tools, candlestick pattern analysis can be a very useful way to select entry and exit points.

The following image represents the design of the typical candlestick.

The body of a candlestick illustrates the difference between the open and closing price. Its color (in this case, red for down and green for up) shows whether the period market closed up or down.

The wicks (or shadows) point out the extreme low and the extreme high price for the currency that period.

Disclaimer

Foreign Exchange trading carries a high level of risk, and may not be suitable for all investors. Before deciding to trade any Forex Exchange financial instruments you should carefully consider your investment objectives, level of experience, and affordable risk. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with the Foreign Exchange trading, and seek advice from an independent financial advisor if you have any doubts.