Candlestick Charting For Dummies®

Recognizing the Many Benefits of Candlestick Charting

Trading, investing, and charting styles are plentiful. You can spend hours debating what type of approach to the markets is the best. For me, and for a growing number of other traders, the benefits of a candlestick chart versus other types of charts aren’t really debatable. Let me tell you why.

Changes and developments in the way stocks and other securities are traded (and when they’re traded) have made trading an increasingly complex undertaking. (For more info, see the nearby sidebar, “What makes up a day?”) Because trading is becoming more and more complex, the need for a consistent, dynamic charting method is more important than ever. Traders need easy-to-read charts that allow them to make quick decisions and efficiently analyze patterns. Candlesticks offer those benefits and many more, all covered in this section.

Seeing is believing: Candlesticks are easy to read

It sounds pretty simplistic, but one noteworthy advantage candlesticks have over other charts is their readability. For many people who strain to read the fine print and also for the younger traders who don’t want to deal with the headaches that can come from staring at bar charts all morning, candlesticks are an attractive option. Consider Figure 2-1, which displays a bar and a candlestick in a side-by-side comparison.

Figure 2-1 gives you a basic idea of why candlesticks are easier to read, but it doesn’t really provide a full picture of why they’re also ...