One of the traders aids in developing methods of trading are the candlestick patterns. They are quite important when one is engaged in the creation of basic systems that help indicate a trend formation so you can start trading.

The open, high, low, close price of the stock, commodity or currency over a period of time is displayed in the candlestick form. The period covered is mostly user selectable.

5 minutes is universal for day traders but you might opt for 15 minutes in some circumstances. For longer duration trading you can choose longer periods.

The body of the candle records the difference between the open and close points. If it is white (or green/blue on a colored chart) the open is the lower boundary of the elliptical body and the price increased during the period you are studying. If it is black (or red on a colored chart then the opening price is the top boundary and the price plummeted.

In candles, vertical lines pointing up from the top and down from the bottom are known as wicks. The highest value ever accomplished during the period is the top of the upper wick section. On the other hand, the lowest value is the bottom of the lower wick part.

The advantage of this form of analysis is that the trader can right away see whether prices rose or fell over the period. A white or green candle exposes a rising price or bearish tendency and a black or red candle symbolizes a crumbling price or bullish tendency.

You can also inspect at a glance how the highs and lows ascribe to the opening and closing market prices. You could have a candle that is absolutely solid, without the wick.

The name for this is Marubozu pattern. This means that the opening and closing prices were never reached in either direction by the low and high rates.

The opening was the high price or the closing was the lower price if the candle was red or black. The low price would be the open and the close is the high price when the candle is green or white.

A long body indicates a fairly steady flow either downward or upward. A lengthy wick either top or bottom illustrates a reversal.

For accurate trend index a candlestick must be examined in conjunction with the others that preceded it. Then you can devise more complex candlestick patterns indicating the anticipated trends to come.

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