Lesson 8 of 31 · Zero to reading a chart

What Is a Candlestick? Four Numbers. That's All

A candle is not a signal: it is the first, highest, lowest and last price inside one window of time, drawn as one shape, and the timeframe label decides how big that window is.

This shape has a name. A candle. What do you think it is telling you?

Most people think a candle is a signal. Buy, or sell.

It is not. It is four numbers, drawn as one shape. That is all.

Seven episodes in, here is what you can read. A share is one slice of a company.

The ticker is its code. The exchange is where it changes hands.

The price is the last trade. Two people agreeing.

And a chart is one dot for every price, joined into a line.

Last time we built that line. Today we swap it for something better.

Here is the problem with a line. Pick any one minute.

Inside that minute there might be three hundred trades.

The line keeps one, and throws the rest away.

Think of a race. How did it go? She finished fourth. One number.

Or where she started. The furthest ahead. The furthest behind. Where she finished.

Four numbers. Same race. Far more of the story.

A candle is that second answer. Take one window of time.

The first price inside it. That is the open.

The highest price: the high. The lowest: the low. The last price: the close.

Now draw them. Open to close: the fat part. High and low: the tips of the thin lines.

Four numbers, one shape. Open, high, low, close. Or O, H, L, C.

Here is the real thing. A daily chart. One candle for each day.

Cursor on one. Watch the header. Open. High. Low. Close.

Move to the next day. Four new ones.

Now, here is the part people miss. How long is one candle?

Here, each candle is one day. Five-minute chart, five minutes. One-minute chart, one.

The timeframe label decides. Same four numbers. A different sized window.

The first, the highest, the lowest and the last price. Inside one window of time.

Other names exist. Body, wick, shadow, tail. Next time.

Here is the mistake. Somebody learns a candle shape has a name, and treats it as an instruction.

A candle records four prices. It does not know what happens next.

Open any chart, point at one candle, and say its four numbers out loud.

Check yourself

Name the four numbers.

Open, high, low, close.

What decides how long one candle is?

The timeframe label.

Is one candle a signal?

No. It is four numbers.

Next lesson: The candle is a fight.

For learning only. Not financial advice, not signals, not stock picks.