DISQUS

RSH · 12 months ago

I've got a question for you. You said: "There are two basic types of candles, solid and hollow, or red and white." In fact, though, there are four types of candles on the charts from StockCharts.com. There are solid red candles, solid black ones, hollow red ones, and hollow black ones (which I guess you could call white candles). Am I right in thinking that a solid candle indicates a closing price lower than the opening, and a hollow candle is for a closing price that is higher than the opening? If so, what is the significance of red versus black?

Zach Bass · 11 months ago

A solid candle, black or red, is a candle where the open is at the top of the candle body, and the close is at the bottom of the body. The difference between black and red solid candles is that a black solid candle closes above the previous open, where a red candle closes below the previous open.

A hollow candle, black or red, is a candle where the open is at the bottom of the candle body, and the close is at the top of the body. The difference between black and red hollow candles is that a black hollow candle closes above the previous open, where a red hollow candle closes below the previous open.

RSH · 11 months ago

Aha! Except that, looking at the above chart, I think your explanation is not quite right. See, for instance, the solid black candle on Jul 14 and the hollow black candle on Oct 6. A candle is black or red depending on where it closes relative to the previous close, not the previous open.

To summarize, I suppose you could call the black candles bullish (closing prices are rising) and red candles bearish (closing prices are falling). That's useful information.

Thanks for the explanation. I understand these charts better now.

Jesse W. · 12 months ago

I have never been a huge fan of short term investing, but reading charts is a HUGE part of it and I admire anyone who can do it successfully!