Candlestick Stock Charts & Charting Benefits

Candlestick stock charts are the preferred chart type that I use here at Trendy Stock Charts. When you use candlestick stock charts, you can peruse the chart and look for specific candlestick patterns. Candlestick patterns are very powerful tools as a single candlestick pattern can indicate the reversal of a stock's uptrend or downtrend.

For example, early notification that an uptrend has ended can allow you to start scaling out of some shares and locking in profits. This early notification gives you an opportunity to take advantage of this changing trend and position your portfolio accordingly.

If you are not familiar with how to read a candlestick stock chart, then keep reading. Below I discuss the basics of candlestick charting, including the components of what actually makes up a "candlestick".

Having a basic grasp of candlestick patterns and their terminology will come in handy when you are a member of Trendy Stock Charts, as well as make you a better investor and trader!

Candlestick Colors

A green candlestick develops when a stock's share price closed at a higher price when compared to the previous candlestick. The previous candlestick could be a daily, weekly, monthly or even a 5 minute candlestick.

Some charting platforms use white candlesticks instead of green.

A red candlestick develops when a stock's share price closed at a lower price when compared to the previous candlestick. Again, the previous candlestick could be a daily, weekly, monthly or even a 5 minute candlestick.

The same charting platforms that use white instead of green candlesticks will use black instead of red candlesticks. Green and red candlesticks are the preferred choice by Trendy Stock Charts.

Candlestick Components

Now that we have examined what the green and red candlestick colors represent, let's look at the various components that make up candlestick patterns.

• Opening Share Price - the share price for the candlestick at the beginning of the trading period

• Closing Share Price - the share price for the candlestick at the end of the trading period

• Real Body - the area between the opening price and the closing share price

• Upper Shadow - the highest share price the candlestick reached during the trading period

• Lower Shadow - the lowest share price the candlestick reached during the trading period

Did you notice the subtle differences between green candlesticks and red candlesticks? The differences between the two are in the opening and closing share prices.

Hollow vs. Colored Candlesticks

Do you know the differences between a hollow candlestick and one filled in with color? The hollow candlesticks are called "Trending Candlesticks" - not all trading platforms offer trending candlesticks as an option. But for those trading platforms that do, let me explain the differences.

• A candlestick that is filled in with color (either red or green) means that the stock closed lower at the end of the trading period than where the share price opened at the beginning of the trading period

• A candlestick that is outlined with color but is hollow on the inside means that the stock closed higher at the end of the trading period than where the share price opened at the beginning of the trading period

Candlestick Patterns

Are you already familiar with candlestick patterns and their requirements? Then just skip on over to the juicy stuff - my stock market articles page where I combine candlestick patterns along with other types of technical analysis to determine a stocks' trend and price targets.

Join Trendy Stock Charts

At Trendy Stock Charts, I use candlestick charts 95% of the time. And while using candlestick stock alone can increase your trading success, I find even greater success when I look for and identify certain candlestick patterns.

As a Trendy Stock Charts member, you will have access to a plethora of exclusive candlestick pattern content such as detailed requirements, characteristics & observations, trading strategies and real chart examples.

Candlestick patterns are powerful tools, but combine with other technical analysis methods and you can achieve even greater success than using the candlestick patterns alone. Candlestick patterns can serve as confirmation indicators for other technical analysis methods.

So does learning how to analyze candlestick stock charts and patterns sound intriguing to you? Then start the process and become a Trendy Stock Charts member today! There is even a no-cost no-obligation trial membership plan to try out the website. No more excuses.