SnapEx Academy Lesson 3
Welcome back to SnapEX Academy! This is SK, a SnapEx senior analyst. For today's Lesson we will look into some of the basics of candle stick chart.
Now, in the previous lesson we have reviewed some of the terms, which includes:
High: Highest price of a specified time segment
Low: Lowest price of a specified time segment
There are some other terms you should be aware before we look at the candle stick charts.
Open: open price of a specified time segment
Close: close price of a specified time segment
Time segment here can be referred to 1min, 5 min, 15min, 30min, 1hour, 4hour, 1day, 1week, 1month for most general use.
So here is a typical illustration of a candle stick chart:
The obvious difference between two sticks above is the color, but where they positioned the “Open” and “Close” is reversed indeed.
Remember in SnapEx, or in other major western countries, the international standard for Market Moving up is green. And Market Moving Down is Red.
FYI, in some countries, like China and South Korea, the color is indeed reversed.
A single candle stick represents a price movement in a time frame. If a chart is a 1-hour chart, it means one candle stick contains 1-hour of price movements.
So, for this example, this 1-hour chart means, at the start of this hour, the price was 100, and at the end of this hour the price was 120.
Within this hour the price moved all the way up to 130 at its peak and moved all the way down to 90.
If the next hour candle stick looks like above, within this next 1 hour, the price was opened at 120, and at the end of this hour, the price moved down to 100
Within this hour the price moved all the way up to 150 at its peak and moved all the way down to 70.
If you looked at closely, the colored area is called the body, which indicated how much the price actually moved as result of this time frame.
The little tails trailing from the body up or down is called the “shadow”, which shows the price movement outside the body.
In a nutshell, candle stick chart is the most commonly used tools in the financial field because it naturally shows the price movement a short or long period of time in a presentable manner.
Note that candle stick chart is also a form of a “indicator”. Indicators are the tools for analyzing the price movement of the market.
So for next series of lessons, we will be looking into basic indicators that most profession analyst and trader use for their market analysis.