What you need to know about candlesticks in trading

The candlestick is a graphical tool that gathers a lot of information related to the movements made by an asset over a given time or period. It is a tool that allows you to collect and analyze price variations in a financial market in order to make good decisions. Through this article, discover what a candlestick is in trading.

The candlestick is a basic tool in trading

Used mainly in the financial markets, the candlestick is one of the basic building blocks for a more or less reassuring chart analysis. For more information on the subject, go to website here. A candlestick shows all the moves the financial market has made over a specific period of time. It consists of a set of vital information such as the highest and lowest price reached over a period; as well as the first and last price over the same period. With the various pieces of information that the candlestick provides, one can make an estimate or an approximation of the market price for another period in the immediate future. In other words, it is easier to know if the market will rise or fall in price in the next few hours.

A specific candlestick for a specific trading strategy

Candlesticks come in a variety of designs. Many theories and ideas have been developed to improve analysis and decision making in trading. All of these ideas have led to the development of different candlestick patterns. Among others, we can note the Long Line, Hikkake, Short Line or High Wave models, to name a few. Each of them has its own specificity. For example, the information obtained from a Long Line candlestick pattern is different from that obtained from a Short Line candlestick pattern. The composition of these two candlesticks is not the same. The interpretation of the information gives crucial clues that come into play on the market price movements, and above all it is very specific, although complex from one model to another.