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9th May 2017
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Candlestick Chart: Know the Secrets of the Financial Markets

If you are an investor who is active in stock, forex or any other financial market, you might already know about the importance of candlestick charts. And if you don’t, you are missing out on a lot of profit making opportunities.

This magnificent way of market analysis was developed by Japanese traders to trade rice in the 17th century. Candlestick charts were further developed by Charles Dow in the 1900s. As this technical indicator is easy to learn and understand, it helps both beginners and professional traders to conduct profitable trades. (Information Credit: https://www.easymarkets.com/eu/ )

Understanding Candlestick

A candlestick is a helpful tool that reveals crucial market secrets to the traders. A single candlestick has a body that has an opening and closing. The shadows are thin lines that are attached to the body of the candle and are also known as the wick of the candle. These wicks that appear at both ends of the body show the high and low of the price. A candlestick without wicks can also appear in the chart. It is a strong signal of conviction by either sellers or buyers.

Secrets of the Financial Market Revealed by the Candlestick

To succeed in the financial market, one needs to know what is happening in the financial market they are investing in. It is often seen that investors lose out opportunities due to lack of knowledge about the market. A candlestick reveals the price movement in an understandable manner. A candlestick when combined with price action becomes a powerful tool and if a trader can use them properly, they can help traders to succeed.

By looking at one candlestick, you can make out whether the price is controlled by the bulls or by the bears. The size of candles also gives out important information about the market. Bigger candles means that there is big momentum in the market. A large full bodied candle that closes near the highs or lows indicates strong momentum in the market. Although many new traders get scared by the difference in the size of the candles appearing, it is actually very important for pattern formation. Candlestick patterns like engulfing patterns can help the trader to know about a reversal in current trend or continuation of a trend. This helps them to frame better strategies. The shadows are also helpful in revealing price rise or fall depending of the length of the shadow.

The candlestick along with price action can help investors to survive in any type of financial market. It reveals details of the market that helps the investors in making right investing decisions.

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