BENEFITS OF USING CANDLESTICK CHARTS

Many beginning traders start analyzing stock price charts by viewing simple bar charts, which are default in most charting websites or software programs. Bar charts graphically represent the open, high, low, and close of a stock price or index as a single line with the height or range of the bar representing the difference between the open and the close. A left hash-mark represents the opening price on a given timeframe and a right hash-mark represents the closing price.

While bar charts may be sufficient for longer-term investors who only want a quick view of the current price trend before adding a stock to a portfolio, shorter term traders benefit from the clearer signals and additional information candle charts reveal at key market reversals. In fact, the strongest benefit of using candlestick charts is to highlight key shifts in the supply and demand relationship that occur at expected market turning points in the trend.