Learn to utilize the power of candlestick charts with LiteForex
A successful Forex investment requires a lot of technical analysis. The trader who analyse the market carefully and in a strategically will surely earn whopping returns. One of the most powerful tool used for reading the market fluctuations is candlestick chart. It is also known as Japanese candlestick chart or simply candlestick. These charts were derived over 200 years ago by the Japanese for analysing rich markets. The technique evolved and now millions of traders across the globe are using it. Some of the eminent brokers like LiteForex, FxPro, and FXPRIMUS also provide basics of using candlesticks.
Beside Foreign Exchange market, these charts are also used in the stock market and other markets. They are visually more clear and attractive than the standard bar or line graphs. A trader can use these charts for all time frames, from a long term investment to a day trading. The power of a candlestick lies in giving the turning points of the market and reducing the risk. You can learn to construct a candlestick chart with the help of some leading brokers like Dukascopy, 4XP, Windsor Broker, and Varengold. These brokers provide online tutorials about all the Forex basics.
Opening price, closing price, high, and low price is the data required to construct a candlestick. The component of the chart includes a rectangular body and lower and upper wicks. The body is the part between the open and close points representing the price range between those points while the wicks represents high and low prices. The upper wicks show the high rates of the day and the lower wicks shows the low prices of the day. The wicks are also known as shadows.
The rectangular body can be either white or black, representing buying or selling dominance. The online trading platforms offered nowadays allow you to choose different colours for the chart’s body. Thus, you can use any colour combination for perceiving the changes in the market forces. Some of the brokers offering online trading platform are LiteForex, Windsor broker, 4XP and many others.
White body means the close is higher than the open indicating buying dominance. On the other hand, black indicates selling dominance with close lower than the open.
The Japanese candlestick can be drawn for any time interval, the most popular being a day. Setting the length of the time interval depends solely on the trader and the nature of the trade he carries. A short-term trader may opt to measure the fluctuations in minutes.
So, try out your own candlesticks and use them to read market variations. Do remember that trading solely on the basis of technical analysis is not a good practice. You also have to apply your knowledge and skills to combine the outcome of different tools for making high returns.
The author is an online Forex trading expert who also provide coaching to the new traders about the Forex market and online brokers like LiteForex, Windsor, Varengold, and Dukascopy.
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