What is a candlestick in trading?

A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. It originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States.

What is a daily candlestick chart?

Many algorithms are based on the same price information shown in candlestick charts. Emotion often dictates trading, which can be read in candlestick charts. Just like a bar chart, a daily candlestick shows the market's open, high, low, and close prices for the day.

What does the body of a candlestick mean?

The body of a candlestick is used to show the difference between an asset’s open and close price (or the current price for the candlestick on the far right). If the candlestick is green, then the bottom of the body represents the opening price and the top represents the closing price.

What does a hollow candlestick mean?

Hollow candlestick – A hollow candlestick is one where the body of the candle is not shaded. The analogy is that a hollow candlestick represents a candle that has not melted. This indicates that a stock’s closing price was higher than its opening price. Example: Coca-Cola stock closes the previous day's session at 49.79.