Sam's setup is finished and his tool bill is still $0. So on Monday at 9:45 he opens his free 5-minute chart of XYZ and actually looks at it.

Green bars. Red bars. Thin lines poking out above and below. Some bars are tall, some are barely there. He's seen charts like this a hundred times in videos, and he realizes he can't say what a single one of them means.

That's where everyone starts. The good news: each of those bars answers the same four questions, and once you know them, the chart starts talking.

In 30 seconds

  • A CandlestickA candlestick is a single bar on a price chart showing four pieces of data for a specific time period: the opening price, the high, the low, and the closing price — giving you a complete picture of what buyers and sellers did during that peRead definition → chart shows four prices for each time period: the open, the high, the low and the close.
  • The body (the thick part) runs from the open to the close. Green usually means the close was above the open, and red means it was below.
  • The wicks (the thin lines) show the highest and lowest prices reached. A long wick means price went there and got pushed back.
  • A candle describes what already happened. It isn't finished until its time period ends, and on its own it doesn't predict the next move.

By the end of this lesson you'll be able to name every part of a candle, tell the story of any single candle in one sentence, recognize the five basic candle shapes, and know what a candle can and can't tell you. This lesson starts Module 3. If you're new, start with Lesson 20: Free vs Paid Trading Tools, where you set up the free chart you'll use here.

What is a candlestick chart?

A candlestick chart is a price chart that draws one "candle" for each time period, and each candle shows four prices: where price opened, the highest it went, the lowest it went, and where it closed.

Think of a weather report. "It's 64°F right now" is useful, but a full report tells you the morning temperature, the evening temperature, the day's high and the day's low. A line chart is the first kind of report: it connects closing prices only. A candlestick chart is the full report for every period on the chart (CME Group).

Chart type
Line chart
What each period shows
The close only
Best for
Seeing a long-term trend at a glance
Chart type
Bar chart
What each period shows
Open, high, low and close, drawn as a vertical line with small ticks
Best for
The same data as candles, in a thinner style
Chart type
Candlestick chart
What each period shows
Open, high, low and close, drawn as a body and wicks
Best for
Seeing who controlled each period quickly

The method is usually traced to 18th-century Japan, where rice merchant Munehisa Homma is credited with developing it, and it spread to Western markets after Steve Nison's 1991 book Japanese Candlestick Charting Techniques (Britannica Money). Today it's the default chart on most trading platforms.

Each candle covers one period you choose. On Sam's 5-minute chart, from Lesson 18: Trading Screen Layout, every candle is five minutes of trading. On a daily chart, each candle is a whole day. Lesson 26: Chart Timeframes covers which ones to watch.

What are the parts of a candlestick?

A candlestick has two parts: the body, which spans the open and the close, and the wicks, which stretch up to the high and down to the low.

  • Open: the first price traded in the period.
  • Close: the last price traded in the period.
  • High: the highest price traded at any moment in the period, even for a split second.
  • Low: the lowest price traded at any moment in the period.
  • Body: the thick rectangle between the open and the close.
  • Wicks (also called shadows): the thin lines from the body up to the high and down to the low.

Body = final score. Wicks = where price went and couldn't stay.

On a green candle the open is at the bottom of the body; on a red candle it's at the top.

The color tells you which end of the body is the open. On a green candle the close is above the open, so the open is at the bottom of the body. On a red candle the close is below the open, so the open is at the top.

Close vs open
Green candle
Close above open
Red candle
Close below open
Top of the body
Green candle
Close
Red candle
Open
Bottom of the body
Green candle
Open
Red candle
Close
Plain meaning
Green candle
Price ended the period higher than it started
Red candle
Price ended the period lower than it started

Green and red are the most common colors, but they're a chart setting. CME Group's course describes the up color as green "depending on the color settings", so check yours before you read anything.

What does the body of a candle tell you?

The body tells you who won the period and by how much: its color shows the direction from open to close, and its size shows how strong that move was.

CME Group puts it simply: the size of the body indicates the intensity of buying or selling (CME Group).

  • A tall body means one side controlled the period and price ended far from where it started.
  • A short body means the open and close were close together. Buyers and sellers were roughly even by the end.
  • Almost no body means price closed about where it opened. That shape has its own name, the DojiA doji is a candlestick where the opening and closing prices are nearly identical, creating a very small body with wicks extending above and below — it signals indecision between buyers and sellers during that period.Read definition →, which you'll meet below.

Here's the catch. Color tells you open versus close, and that's all. A green candle can still have spent most of its five minutes falling. To see what happened in between, you need the wicks.

What do the wicks on a candle tell you?

The wicks show how far price traveled beyond the open and close, so a long wick marks prices that were reached during the period but couldn't hold by the close.

  • A long upper wick: buyers pushed price up, then sellers pushed it back down before the period ended.
  • A long lower wick: sellers pushed price down, then buyers pushed it back up.
  • Short or no wicks: whichever side was winning stayed in control from start to finish.

Picture a ball thrown against a wall. You never see the ball sitting at the wall, only the mark where it hit and the fact that it came back. A long wick is that mark. It tells you where price got to and that something there sent it back.

The longer the wick compared with the body, the bigger the rejection. Those prices often matter again later, which is exactly what Lesson 22 is about.

How do you read one candle, step by step?

You read a candle by answering three questions in order: who won (color), by how much (body size), and where did someone get pushed back (wicks).

Then put the answers into one sentence. That sentence is the candle's story.

Sam reads his first candles (hypothetical). Here are three 5-minute XYZ candles from Sam's Monday chart. The prices are made up for this lesson.

Time (ET)
9:45 to 9:50
Open
$52.00
High
$52.24
Low
$51.97
Close
$52.20
Color
Green
Body
20¢
Upper wick
4¢
Lower wick
3¢
Time (ET)
9:50 to 9:55
Open
$52.20
High
$52.60
Low
$52.15
Close
$52.25
Color
Green
Body
5¢
Upper wick
35¢
Lower wick
5¢
Time (ET)
9:55 to 10:00
Open
$52.25
High
$52.28
Low
$52.02
Close
$52.05
Color
Red
Body
20¢
Upper wick
3¢
Lower wick
3¢

Sam picks the middle candle and works through the three questions.

  1. Who won? Green, so buyers, just. It closed 5 cents above its open.
  2. By how much? Barely. The body is 5 cents in a candle that's 45 cents tall from high to low.
  3. Where did someone get pushed back? At the top. The upper wick is 35 cents, about three quarters of the whole candle.

His one-sentence story: "Buyers pushed XYZ up to $52.60, sellers shoved it straight back, and buyers only just held on." The next candle, a solid red one, shows sellers kept control.

Sam doesn't trade any of this. He's still in Broker A's demo and he's reading, not buying. But he writes $52.60 on a sticky note, because he wants to know whether price gets pushed back there again.

Which candle shapes should a beginner recognize?

Beginners only need five basic candle shapes to start reading charts: a big body with tiny wicks, a doji, a long lower wick, a long upper wick and a spinning top.

Shape
Marubozu
What it looks like
A tall body with little or no wick
What happened in the period
One side controlled it from open to close
Shape
Doji
What it looks like
Almost no body, wicks on one or both sides
What happened in the period
Price ended about where it started; neither side won
Shape
Long lower wick (a hammer when it appears after a fall)
What it looks like
Small body near the top, lower wick much longer than the body
What happened in the period
Sellers pushed price down, buyers pushed it back
Shape
Long upper wick (a shooting star when it appears after a rise)
What it looks like
Small body near the bottom, upper wick much longer than the body
What happened in the period
Buyers pushed price up, sellers pushed it back
Shape
Spinning top
What it looks like
Small body with wicks on both sides
What happened in the period
Both sides tried, and neither got far

Sam's middle candle is a long-upper-wick candle. Whether it counts as a "shooting star" depends on what came before it, which is the point of the next section.

The names help you talk about charts. Multi-candle patterns, such as flags and engulfing patterns, come in Lesson 23: Simple Chart Patterns.

What can a single candle tell you, and what can't it?

A single candle can tell you what happened during its period, but on its own it can't tell you what happens next.

Britannica Money notes that the same candle can have a different interpretation, and even a different name, depending on the candles around it and the larger chart (Britannica Money). A long lower wick after a steady fall says sellers ran out of push at that price. The same shape halfway through a sideways morning says very little.

The same shape means different things in different places on the chart. Read where a candle sits before you read what it looks like.

Illustrative: one candle shape, three locations, three different meanings.

The research backs up that caution. A peer-reviewed study of Dow Jones Industrial Average stocks from 1992 to 2002 found no evidence that candlestick signals predicted price moves reliably (Marshall, Young and Rose, 2006). A later study of the same index found some three-day patterns profitable after costs, but only with specific TrendA trend is a sustained directional movement in price over time — an uptrend is characterized by a sequence of higher highs and higher lows, a downtrend by lower highs and lower lows — and correctly identifying the current trend direction isRead definition → and holding rules, and not with others (Lu, Chen and Hsu, 2015). So the evidence is mixed, and it's about exact, tested rules rather than eyeballing one candle. That doesn't make candles useless. It means they're a way to read what buyers and sellers just did, and the decision comes from context, which Module 3 builds piece by piece: levels in Lesson 22, VolumeVolume is the total number of shares (or contracts) traded during a given time period — it's the primary confirmation tool for all price action, because a price move accompanied by high volume indicates genuine market participation, while tRead definition → in Lesson 29: Volume Analysis, and timeframes in Lesson 26.

One more limit: a candle isn't finished until its period ends. Until then, its open is fixed but its high, low and close can all still change.

Reading a candle before it closes

You're doing it if
You call a candle "strong" or "a HammerA single-candle reversal pattern with a small body near the top of the candle and a long lower wick — at least twice the body length. It signals that sellers pushed price significantly lower during the session but buyers regained control anRead definition →" while it's still forming, you act on its shape in the first minute of a 5-minute candle, or the candle you reacted to looks completely different once it's finished.
The fix
Treat a forming candle as unfinished. Wait for the period to end, then read the finished candle with the three questions. At 9:52 Sam's middle candle looked like a tall green bar near $52.55; by 9:55 it had closed at $52.25 with a long upper wick.

Your turn: tell the story of five candles (15 minutes)

0 of 6 done

Check your understanding

Check your understanding

A red candle opens at $10.00, reaches $10.10, falls to $9.70 and closes at $9.80. Where is its open?

Check your understanding

A 5-minute candle has a tiny body near its low and a long upper wick. What happened during those five minutes?

Check your understanding

It's 9:52 a.m. and the current 5-minute candle looks like a big green bar. What should you do?

Key takeaways

  • Every candle is a summary of one period: open, high, low and close.
  • Color and body size tell you who won and how decisively; wicks show where price was pushed back.
  • Use the three questions (who won, by how much, where was price pushed back) to turn any candle into one sentence.
  • Five basic shapes cover most of what a beginner will see.
  • Read finished candles, in context. A candle on its own describes the past.

Frequently asked questions

What timeframe candles should a beginner day trader use?
Most beginners start with 5-minute candles for watching the trading day and a daily chart for the bigger picture. A 1-minute chart shows more detail but moves fast and is harder to read while you're learning. Lesson 26 explains how to choose and combine timeframes.
What's the difference between a candlestick chart and a bar chart?
They show exactly the same four prices. A bar chart draws each period as a vertical line from high to low, with a small tick on the left for the open and one on the right for the close. A candlestick chart draws the space between open and close as a colored body, which makes the direction easier to see at a glance.
Why are the candle colors different on my chart?
Candle colors are a display setting, so platforms and users can change them. Some charts use white or hollow candles for up periods and black or filled candles for down periods. Before you read a chart, check which color your platform uses when the close is above the open.
Do I need to memorize all the candlestick pattern names?
No. There are dozens of named patterns, and many describe the same idea in slightly different shapes. Being able to read any candle's body and wicks matters more than knowing names, and the five basic shapes in this lesson are enough to start.
How long does it take to learn to read candlestick charts?
You can learn the parts of a candle in one sitting, but reading them quickly takes practice. Telling the story of a handful of candles each day for a few weeks builds the habit. Practice on finished candles in a chart or demo account, with no money at stake.

Up next: why do some prices keep stopping the move?

By 10:30 XYZ has climbed back toward $52.60, and again a long upper wick appears right at the price on Sam's sticky note. Coincidence? Or are sellers waiting at that price? Lesson 22: Support and Resistance explains why some prices keep stopping the move, and how to find them before the open.

Disclaimer

This lesson is for education only and isn't financial advice. Sam's chart, prices and candles are hypothetical. Candlestick shapes describe what already happened; they don't predict future prices, and no candle or pattern guarantees a result. Day trading carries a high risk of loss. Never trade with money you can't afford to lose. Read our full disclaimer.

Article Sources

DayTradingToolkit builds every lesson on exchange education, peer-reviewed research and established references. These are the ones used here.