Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

What is a Japanese Candlestick Chart? Technical Analysis

Forex Educational Video Series

Author: Andreas Thalassinos (BSc, MSc, MSTA, CFTe, MFTA), Head of Education at FXTM.

What is a Japanese Candlestick Chart?

The Japanese version of price charting uses a shape similar to a candlestick as a visual representation. The Japanese Candlestick method of visualising charts is one of, if not the, most popular methods of looking at charts for the modern trader.

The way it works is that one candlestick shows the open, high, close and low point of the price at a given timeframe. The shadow or wick shows the distance between the high and the low. The body of the candle, or “real body”, measures the distance between the open and the close. When the close is greater than the open price, then the body of the candlestick is white. This reflects a positive sentiment in the market. When the close is less than the open price, then the body of the candlestick is black. This reflects a negative sentiment in the market.

There are many different shapes and sizes to the candlesticks and the patterns they form, all of which come with their own special names. For example, one of the simplest and most popular candlestick patterns is called The Hammer. This is when the candle has a long lower shadow and a short body, with a tiny or no shadow on top. The Hammer is made up of just one candle and is a type of bullish reversal candlestick. We will be covering trend reversals in an upcoming video. Until then, traders!

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

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