What Is a Candlestick?
A candlestick represents price action for a specific time period — one minute, one hour, one day, or longer. It shows four pieces of information at a glance:
- Open (O) — where the price started
- High (H) — the highest price reached
- Low (L) — the lowest price reached
- Close (C) — where the price ended
The body (thick rectangle) spans from open to close. The thin lines above and below are called wicks (or shadows) and represent the high and low.
Bullish vs. Bearish Candles
| Color | Meaning |
|---|---|
| Green / white | Close > Open (price moved up) |
| Red / black | Close < Open (price moved down) |
In PaperTrade Academy, the chart uses green for up candles and red for down, per our design system.
Reading the Wicks
Wicks tell you where price tested but didn't stay:
- Long upper wick → sellers rejected higher prices → bearish signal
- Long lower wick → buyers defended lower prices → bullish signal
- No wicks (shaved candle) → price opened at one extreme and closed at the other — strong momentum
Common Single-Candle Patterns
Doji
Body is nearly invisible (open ≈ close). Signals indecision — neither bulls nor bears won the period. Often precedes a reversal.
Hammer
Small body near the top, long lower wick (at least 2× the body). Appears after a downtrend and signals potential bullish reversal — buyers stepped in at the lows.
Shooting Star
Small body near the bottom, long upper wick. Appears after an uptrend and signals potential bearish reversal — sellers overpowered buyers above.
Limitations
Candlestick patterns are probabilistic, not certain. Always confirm with:
- Volume (high volume strengthens the signal)
- Multiple candles (context matters)
- Support/resistance levels
In your practice trading: try enabling the candlestick view on the chart panel and identify today's doji or hammer formations before placing a simulated trade.
Key Takeaways
- OHLC + wick shape tells a complete story of each period's battle between buyers and sellers
- Green = bullish period, red = bearish period