Home / Blog / Candlestick Charts : How To Read Candlestick Charts

Reading candlestick charts is an effective way to study the emotions of other traders and to interpret price. Candles provide a trader with a picture of human emotions that are used to make buy and sell decisions.

You really don’t need anything else on a stock chart but the candlesticks themselves to be a successful trader! And, there is nothing that can improve your trading more than learning the art of reading candlestick charts. It’s true!

Candles always begin neutral. From there, they can grow to become either bearish, bullish or on rare occasions neither. When a candle first develops traders do not know what it will become. They can speculate but they do not truly know what a candle is until it closes.

After a candle begins the battle is on. The bulls and the bears fight it out and the candle displays to us who is winning. If there are more buyers in the market you will see the candle move up and form a bullish candle. If there are more sellers you will see the candle move down and become a bearish candle. This may appear very obvious but think about it. That little candle is an indicator that tells you who is currently winning the battle, the bulls or the bears.

Bullish Candles

How To Read Candlestick Charts
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A bullish candle is what traders call any candle that has a bullish body. So after the candle grows and closes, if it closes with a bullish body, it is a bullish candle. If it has a strong bullish body it is a strong bullish candle. If it has a small bullish body it is a weak bullish candle. Think about it. The candle does not only tell you the price it tells you the bulls are winning and they have power. There are more buyers than sellers!

This is critical information in this market. If your system tells you to go short but the candle is clearly bullish, it might be a good idea to hold off on the short. Why would anybody go short when there are more buyers in the market?

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