Candlestick

A candlestick is a way of displaying price data on a chart that shows four pieces of information for each time period: the opening price, the closing price, the highest price reached, and the lowest price reached. The "body" of the candle spans from open to close, while the thin lines above and below (called wicks or shadows) show the high and low.

If the close is higher than the open, the candle is typically colored green or white (bullish). If the close is lower, it's red or black (bearish). The size and shape of candles tell you a lot about market sentiment. A long body with short wicks shows strong conviction. A small body with long wicks shows indecision.

Candlestick charting originated in 18th-century Japan for trading rice and was popularized in the West by Steve Nison in the 1990s. Today, it's by far the most common chart type among forex traders. Specific candlestick patterns — like doji, hammer, engulfing, and shooting star formations — form the basis of many trading strategies.