From rice-trade ledgers long ago:a candle draws the high and low.
A charting technique developed in 18th-century Japan that uses candle-shaped formations to represent price action.
Each candlestick shows the open, high, low, and close for a specific time period.
In plain words
A candlestick is a way of drawing what the price did during one period, such as an hour or a day. A thick body spans the opening and closing prices, and thin lines called wicks or shadows reach to the highest and lowest prices of the period. The method is traditionally traced to the rice markets of Japan, which is where the name comes from.
See it move
The period closes: the candle is complete
Why it matters
Most trading platforms draw charts this way, so reading a candle is a basic chart skill. The colour or fill of the body shows at a glance whether the period closed above or below where it opened.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
During one hour an invented price opens at 1.1000, rises as high as 1.1030, drops as low as 1.0990 and closes at 1.1020.
- 1Bodyfrom the open at 1.1000 up to the close at 1.1020, so 20 pips and rising
- 2Upper wickfrom 1.1020 to the high at 1.1030, so 10 pips
- 3Lower wickfrom 1.1000 down to the low at 1.0990, so 10 pips
The candle is a rising one with a 20-pip body and a 10-pip wick at each end; its full range is 40 pips.
A common mistake
The top of the body is not always the close. On a falling candle the open is at the top of the body and the close is at the bottom.
Check yourself
Learn more
Educational information, not investment advice or a recommendation to trade.