How to Make Money Trading with Candlestick Charts

as a trader, you should
always be buying into other’s fears and
selling into other’s greed.
And this is not as complex as it sounds. Once
you are done with this book, it will be very
easy to recognize the emotions of the traders
in that stock. Candlesticks make the analysis
visually apparent.
This book is for those who want to make
money in the stock market. And the easiest
way to do that is to live by the above
principle. You can either be a shark in the
ocean or be eaten by one!

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Candlesticks Light the Way
Let us now look at how candlesticks are
drawn.
You need four price points to draw a single
candlestick. Considering an example of a
daily candlestick, you need:
High price of the day;
Low price of the day;
Opening price of the day;
Closing price of the day.
The two parts of the candlestick are:
The body:
This is the part between the

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open and the close. In case the day’s
opening price is lower than the closing
price, the colour of the body is white
(some charting services will make this
green). Conversely, when the day’s
opening price is higher than the closing
price, the colour of the body is black
(sometimes shown as red).
The shadows:
The upper shadow is the
line above the body and the lower
shadow is the line below the body. In the
case of a black bodied candle, the upper
shadow is from the day’s open price to
its high price and the lower shadow is
from the closing price to the low price of
that day. Conversely, in the case of a
white bodied candle, the upper shadow

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is between the closing price and the high
price of the day, and the lower shadow is
between the opening price and the low
price of the day.
Note:
Throughout this book, the words
“white” candle and “light” candle have been
used interchangeably. Also, the words “black”
candle and “dark” candle have been used
interchangeably.
Figure 2.1
shows the construction of a
candlestick when the closing price of the day
is 
higher
than the opening price of the day.

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Figure 2.1: