How to read candlestick charts for beginners

Anatomy of a candle

The thick part is the body, the range between the open and the close. The thin lines above and below are the wicks (or shadows), reaching to the highest and lowest prices of the period. On most charts a green or white body means the price closed higher than it opened, and red or black means it closed lower. Colours can be changed, so check your platform.

What the shape suggests

Shapes describe what happened during the period:

• A long body means buyers or sellers dominated the period.
• Long wicks mean the price moved a lot but was pushed back, a sign of rejection.
• A tiny body with wicks on both sides (a doji) means open and close were nearly equal, so neither side won.

Timeframes

A daily candle summarises a whole day, a five-minute candle only five minutes. The same market can look calm on one timeframe and chaotic on another, so many traders look at a longer timeframe first for context, then a shorter one for timing.

Patterns are clues, not predictions

Names like hammer or engulfing candle describe shapes that have often appeared near turning points. They are not reliable signals by themselves. Their usefulness depends on where they appear, such as near an area where price has reversed before, and on testing them on real data.

Practise reading charts

Open a chart, pick a timeframe and describe in words what the last ten candles say about who was in control. Then check what happened next. Doing this repeatedly, on a practice account, builds the habit without risking money.