InvestorQ : Are Candlestick charts different from line charts and bar charts?
Ria Roy made post

Are Candlestick charts different from line charts and bar charts?

Answer
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Mahil Khan answered.
1 year ago


Candlesticks are perhaps the most sophisticated type of trend charts and are used extensively by more professional traders. These charts are extensively used by intraday traders and also by short term trend traders. Many traders like this type of chart because structurally it is similar to an OHLC chart but it can present the information on one particular day’s trading in a quicker, easier-to-read format. Visually, the Candlestick is more appealing and the trends are also depicted more clearly compared to the bar charts.

As we stated earlier, structurally the Candlestick charts are very similar to OHLC charts in that they provide the same information but just in a different format of presentation. The candlestick is constructed using a horizontal line to indicate the open and close, and a vertical box is made connecting these two lines to form the “body” of the candlestick. A single vertical line is drawn in the middle above the box to show the high and a single vertical line is drawn in the middle below the box to show the low. These are called the “wicks” or “shadows.” The next difference is that the Candlesticks also use colours to clearly depict the difference in trend creation. For example, colour of the body or whether it is filled or not is a key cue in Candlesticks. In traditional candlesticks, if the close is higher than the open, then the body is left hollow (white or green colour is used) to indicate an up day in that day’s price action. If the close is lower than the open then the body is closed (black or red in colour) to indicate a down day. The reason the candlesticks have become popular is that most chartists and traders are required to evaluate an array of stocks for short term opportunities. Taking the right decisions in a short attention span requires very strong visual representation and that is achieved by these candlesticks.