Charts and more charts. This is the word you will most frequently hear from people who are active in the stock trading industry. This is because every decision many investors take, every purchase or sale they make, is always based on a profound analysis of stock price patterns. And, candlestick charts are the subject of this topic.

Now, it may not seem like such an important piece of information at the beginning, but the average stock chart offers you all the information you need to become successful in this line of investment activity. As you may or may not have figured out, there are several main types of visual aids, but the best stock price illustrations which give detailed analysis and are more suited to this kind of work are candlestick charts. If you learn how to use and understand them properly, you are already on your way to success in stock trading.

These charts are made up of either one white or one black column for each day of trading. A white column represents a stock price higher at the end of the day; a black one represents a down day. Every column displays information on the price of a stock – the opening price, the highest, the lowest and the closing price. These basic characteristics allow you to have a clear perspective for each trading day.

For beginners, candlestick charts which include the opening and closing prices as well as the high and low for the day may look like a bunch useless or complicated data; but, in truth, they are actually very easy to read and interpret. The information displayed on these illustrations is very easy to remember because it is depicted by little markings. This also makes the information very straightforward.

Just by looking at a series of candlesticks you will notice that certain patterns start to emerge. Each candlestick column offers the user a visual aid that proves to be very useful. All of these clues will give you a hint on when to perform a certain action in a particular stock. Using candlesticks not only gives you the opportunity to detect trends easily, but they also show you the reason behind them. This is very important for a stock trader to determine what his options are. For example, long “tails” at the top of a column usually represents investors holding back on a stock. Conversely, a long “tail” at the bottom of a column may represent investors propping up a particular stock.

Many investors, especially the more experienced ones in the stock trading business, prefer to use these candlestick charts because they feel that they are easier to understand. This is a step in the right direction, as you have the option of combining your analyses with other stock market indicators.

The various patterns that are identified probably offer the most complete image of a trading platform you can obtain at any point in time while trading. They offer you the chance to determine the mechanism or psychology behind certain changes and trend reversals which in turn affords you the option of making correct modifications and predicting the future outcome of your actions.

Author Bio: John is a certified public accountant by profession with over 25 years’ experience in stock market analysis and investments. You can learn how to find the best stocks with John’s free report. To get an immediate download on this valuable resource, visit: http://www.AnalyzeAnyStock.com.
Trade Forex, Commodities, Stocks and more, trade CFDs on the Plus 500 CFD trading platform! *CFD Service. 80.6% lose money - Register a real money account here and get trading right away.

Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.