A plain-English introduction to candlestick charts: what each part of a candle shows, how traders read common single-candle and multi-candle shapes, and why candlesticks describe the past rather than predict the future. Educational only — no indicator is predictive, all trading carries the risk of loss, and nothing here is buy or sell advice.
A candlestick is a way of drawing price action for one period of time. Each candle summarises four numbers for that period: the open (the first traded price), the close (the last traded price), the high (the highest traded price), and the low (the lowest traded price). These are often called the OHLC values.
The period a single candle covers depends on your chart's timeframe. On a 5-minute chart, each candle is 5 minutes; on a daily chart, each candle is one day. Switching timeframes does not change the price data itself, only how it is grouped into candles. Candlesticks present the same underlying information as a bar chart, just in a more visual form that many traders find easier to scan.
Every candle has two parts: the body and the wicks (also called shadows or tails). The body is the rectangle between the open and the close. The wicks are the thin lines above and below the body, reaching up to the high and down to the low.
Colour conventions vary by platform, but a common default is that a candle closing higher than it opened is shown in one colour (often green or white) and a candle closing lower than it opened in another (often red or black). The colour only tells you whether the close was above or below the open for that period — nothing more, and nothing about what comes next.
The relationship between body and wicks is what many traders pay attention to. A long body means the open and close were far apart, while long wicks show that price travelled to an extreme during the period before returning. A small body with long wicks is often described as indecision: price moved around a lot but finished near where it started.
Some candles have names because their shape is distinctive. A doji has a very small body, meaning the open and close were almost equal; traders often read it as a sign of indecision or balance between buyers and sellers. A hammer has a small body near the top of its range with a long lower wick, and a shooting star has a small body near the bottom of its range with a long upper wick.
It is important to be careful with these labels. The same shape can appear in many different contexts, and a name does not tell you what price will do next. Traders typically consider where a candle appears (for example, after a long move or near a level they are watching) rather than treating the shape on its own as meaningful. A shape alone is a description, not a signal to act on.
Other patterns are made of two or more candles read together. An engulfing pattern is two candles where the second body fully covers the first body. A morning star and an evening star are three-candle sequences. There are dozens of named formations, and different sources sometimes define them slightly differently.
Traders often describe these patterns as ways of summarising a short stretch of price behaviour — for example, a shift from one direction to a pause and back again. They are descriptions of what already happened, not forecasts. A pattern that formed in the past does not guarantee anything about the next candle, and many patterns are followed by moves in either direction.
Candlesticks are a reading tool, not a decision engine. Traders commonly use them to get a quick sense of how a period unfolded, to compare the current period with recent ones, and to combine that picture with other context such as trend, support and resistance levels, volume, or the timeframe they are analysing.
No candlestick or pattern is predictive. They describe the past and can look very different depending on the timeframe you choose, so the same market can appear calm on one chart and dramatic on another. Patterns also produce many shapes that are not followed by any particular outcome, and a shape alone says nothing about risk.
All trading carries the risk of loss, and nothing on a candlestick chart removes that risk. Candlesticks are best treated as one input for learning to read price, used alongside a clear understanding of your own risk — never as a reason to buy or sell on their own. This article is educational only and is not buy or sell advice.
Educational only — not financial advice. Trading involves substantial risk of loss.