Most of the people find it really hard to understand the candlestick chart concept where in reality; it is not that hard to understand. You can explain this concept in many ways but as it’s clear that this chart is only used in financial equations where real money or value of money is involved so, we will explain this concept from financial perspective.
A candlestick chart is a chart that displays multiple values of money for one day for stock purposes. This includes the opening, closing, high and low values of money for stocks and shares in foreign exchange and money transferring purposes. The middle part of the candlestick is called the real body and this tells the investors about the highest, lowest, opening, closing and real value of money including the color of the main body. For example, if the body of the candlestick is red or black, this explains that the stock was closed on lowest price where if the body is green or white, it tells that the stock was closed on highest value.
Here is preview of a free Sample Candlestick Chart Template created using MS Word,
Importance of Candlestick Charts:
The professionals of stocks and share markets know that emotions of buyers play a huge role in the value of the stocks and shares. This means that the emotions of a potential buyer determine whether the stock will be closed on highest value or lowest price. When we use this element of buyers’ emotion in predicting the future value of stocks, this entire process is explained by candlestick chart. This chart not only provides useful information for the investors about the future value of the shares and stocks but it also gives them a better idea to invest their money in a safe place.
If we get to know the history of candlestick chart, we find out that this technique was invented by Japanese traders back in 1700 when it was used for rice trading for the first time. The inventor used this chart technique to include the emotions of buyers in the future price evaluation of rice in the market and the technique was so accurate that now it is used in shares and stock markets around the world. The rules and regulations that Japanese invented hundreds of years back are still implacable in the stocks of present world.
Application of Candlestick Charts:
You may find that there are hundreds of types of charts and graphical presentations that are used in each kind of business and companies and most of the time, any type of chart can be used in any kind of business but not the candlestick chart. This is the chart that can only be used in the businesses and companies related to finances and currency such as stock exchange, commodity, option trading or foreign exchange. This is the chart that is only used when the actual money or currency value is included in the process. This is the reason that only the stock exchanges use this chart where stocks and shares are bought or sold.
Here is download link for this Candlestick Chart Template,