Trader's Glossary

Candlestick Chart

Developed by Japanese rice traders in the 19th century, candlestick charts are a method of plotting price action that has been widely adopted by contemporary traders. Essentially candlestick charts are a hybrid of line and bar graphs. Each candlestick represents a unit of the timeframe an asset is being monitored at; it is composed of a bar-shaped body and a line-shaped wick (or shadow) above and below the body. The body represents the opening and closing prices for the given duration, the wicks either side of it represent the highest and lowest prices the asset reached within that timeframe. Candlesticks are coloured differently to represent a higher closing than opening (indicating an upward price movement), and a lower closing than opening (indicating a downward price movement.) Traditionally bullish candlesticks were coloured white and bearish ones were coloured black, but nowadays traders can set their charting platforms to observe their own user-defined colour schemes.