Introduction to Candlesticks for pennystocks
Are you a master penny stock trader? If so then there’s a good chance you already use candle stick analysis to help yourself make killer trades.
However, if you don’t now is the time to learn! In This article you’ll learn the basics of candle stick charting and how to read a basic candle stick.
What is Candle Stick Analysis?
Candle Stick Analysis is a stock trading technique that involves making trades based purely on “price” action & not on “why” the price is moving one way of another.
Candle stick analysis involves being able to read a candle stick chart, which is made up of several individual candle sticks. Each individual candle stick represents a specific period of time such as 1 full trading day.
Reading a Candle Stick part 1
An individual candle stick is made up of 5 critical pieces of information; the opening price, the closing price, the high, the low, and the color. Each individual candle stick also represents a certain time frame.
This time frame applies to all of the candle sticks being viewed within the same candle stick chart.The most common time frames are Daily, Weekly, hourly, and by-the-minute.
To read a candle stick you first must start with the color. Candle stick colors come in combinations of either red/green or black/white. A black/red candle stick means the price ended lower than the previous candle stick price. A white/green candle stick means that the price ended higher than the previous price.
Reading a Candle Stick part 2
Now that you understand the critical elements of an individual candle stick it’s time to learn the last bit of information you’ll need to read them.
To read a white/green candle stick, start from the bottom of the candle and read up. The bottom of the candle is the “opening price” & the top of the candle is the “closing price”.
Inversely to read a black/red candle stick, start from the top of the candle and read down. The bottom of the candle is the “closing price” & the top of the candle is the “opening price.
Closing Words
Candle stick charting includes a lot of information & it’s best to learn the basic concepts first before overloading your self with “jargon”. Continue reading our series on candle stick charting for penny stocks and soon you’ll be a pro.
For getting more guidance regarding penny stocks, subscribe to our free penny stock newsletter.