Knowing how to read candlestick charts is needed for both stock trading and foreign currency trading. Candlesticks are a record of price movements that will help a trader to identify trends and spot imminent breakouts and reversals or retracements. Many traders are able to develop worthwhile trading systems virtually wholly on the premise of candlestick charts, and many more systems depend on them as a first or primary signal. The chart is made of a series of blocks or candles, each one showing the open, close, high and low prices over a period. These can be prices of anything: stocks, commodities, currencies or whatever. The open and close prices could be the costs for a day’s trading but in most cases you have control over the period and you can set your chart to show a candle for each hour, for 5 minutes or whatever. If you’re coming up with systems around this kind of chart you’ll probably want to test your signals over more than one time period before you open a trade. In this example the open price is the base of the candle’s wide block and the close price is the top of the block. If the price fell in the period, the body of the candle will be shaded, either black or a color. In all cases, the high during the period is the pinnacle of the vertical line or wick stretching upward from the pinnacle of the block. You could have green or blue for a bullish period when the price was rising and red for a bearish period when the price was falling.