II.1. The concept of a candle.
Fig.29. The structure of the candle.
Let’s understand the concept of “candle” in trading. Figure 29 shows a large daily red candle. The big red rectangle is called the candle body. The upper and lower “tails” are called candle shadows. For the red candle, sales for the specified period of time were predominant. The upper border of the red rectangle of the candle coincides with the opening price of the trading session (if the timeframe corresponds to 1 day), and the lower border of the red rectangle coincides with the current price or the closing price of the trading session. For a green candle, i.e. when purchases prevailed, the boundaries of the candle body have the opposite value. In order to understand exactly what to do with candles, let’s turn to the examples in Table 1.
Candlestick charts are very popular among traders. Table 1. Market situations with candles and interpretation.
Fig.29. The structure of the candle.
Let’s understand the concept of “candle” in trading. Figure 29 shows a large daily red candle. The big red rectangle is called the candle body. The upper and lower “tails” are called candle shadows. For the red candle, sales for the specified period of time were predominant. The upper border of the red rectangle of the candle coincides with the opening price of the trading session (if the timeframe corresponds to 1 day), and the lower border of the red rectangle coincides with the current price or the closing price of the trading session. For a green candle, i.e. when purchases prevailed, the boundaries of the candle body have the opposite value. In order to understand exactly what to do with candles, let’s turn to the examples in Table 1.
Candlestick charts are very popular among traders. Table 1. Market situations with candles and interpretation.
Mechel JSC stock. At point 1 we see a long green candle, which may give a signal to buy. Next, we see 3 confirming candles. On the third candle at the end of the trading session, we go Long, not forgetting about the stop. At the end of the trading session, the candles in volume 2 come out, because the probability of the end of the upward movement is close. You can also try to grab the tip of the candle the next day, if you have time to move the stop order. After T.3. we see that the frequency of the appearance of red candles increases at the end of the trading session in T.4, we enter the short, not forgetting about the stop order.at point 5, we exit the short and enter the Long. The signal was the increased volume of purchases in the previous red candle and the small size of the candle in volume 5. We suggest that you determine where to exit yourself.