What are candlestick charts used for?

Candlestick charts are used by traders to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. Many algorithms are based on the same price information shown in candlestick charts.

What are low and high caps on a candlestick chart?

The Low and High caps are usually not present but may be added to ease reading. An hourly candlestick shown with order book depth on a currency exchange. A candlestick chart (also called Japanese candlestick chart or K-line ) is a style of financial chart used to describe price movements of a security, derivative, or currency .

What are candlestick patterns?

Some traders prefer to see the thickness of the real bodies, while others prefer the clean look of bar charts. Candlesticks are created by up and down movements in the price. While these price movements sometimes appear random, at other times they form patterns that traders use for analysis or trading purposes. There are many candlestick patterns.

How can volume be incorporated into Candlestick charts?

In modern charting software, volume can be incorporated into candlestick charts by increasing or decreasing candlesticks width according to the relative volume for a given time period. Candlestick charts are a visual aid for decision making in stock, foreign exchange, commodity, and option trading.