The ONLY Candlestick Video You’ll EVER Need (Step By Step Guide)

Summary

This educational video script is aimed at beginners in day trading, focusing on the fundamentals of candlestick anatomy. It explains the significance of the open, close, high, and low points of a candlestick, and how they reflect market movements. The tutorial distinguishes between bullish and bearish candlesticks, and introduces the concept of 'doji' candles, which indicate market indecision. The script also touches on the importance of long wicks in candlesticks as a signal of potential market reversals. The presenter emphasizes the value of understanding these basics for successful trading and encourages viewers to explore more detailed trading courses for further education.

Takeaways

• 📈 The video is aimed at beginners in day trading, focusing on teaching the basics of candlestick anatomy.
• 🌐 Most traders prefer Japanese candlesticks over other chart types because they provide the most information about price action.
• 🟢 A bullish candlestick is indicated by a green body, representing an increase in price, while a bearish candlestick is red, indicating a decrease.
• 🕒 Each candlestick represents a specific time frame, such as 15 minutes or a full day, encapsulating the price action within that period.
• 📊 The anatomy of a candlestick includes the open, close, high (wick), and low (wick), which are essential for understanding price movement.
• 🔍 The video explains how to interpret the open and close of a candlestick, which are crucial for determining the direction of price movement.
• 📉 The high and low wicks of a candlestick show the maximum price reached during its formation, indicating volatility.
• 🕰 The time frame of a candlestick is indicated by small numbers on the chart, showing how long it took for the candle to close.
• 🌀 Doji candlesticks, with extremely small bodies and large wicks, represent indecision in the market, as price moved significantly up and down but closed near the open.
• ⚖️ Long wicks on candlesticks can signal a potential change in market direction, as they indicate a temporary price movement that did not sustain.

Q & A

What is the main focus of the video?

The main focus of the video is to teach viewers about Candlestick Anatomy, specifically targeting beginners in day trading.

Why are Japanese candlesticks preferred by most traders?

Japanese candlesticks are preferred by most traders because they provide the most information needed to understand price action on any time frame.

What are the four points of analysis on all candles within a chart?

The four points of analysis on all candles within a chart are the price open, price close, price high, and price low.

What is the significance of the body color in a bullish candlestick?

In the video, the body of a bullish candlestick is represented by the color green, indicating a period where the price moved up.

How does the video differentiate between bullish and bearish candlesticks?

Bullish candlesticks are indicated by an upward movement and are represented by green, while bearish candlesticks show a downward movement and are represented by red.

What does the term 'Wicks' refer to in the context of candlesticks?

In the context of candlesticks, 'Wicks' refer to the thin lines extending from the body of the candle, representing the high and low prices during the candle's formation period.

How does the video explain the concept of 'indecision' in the market using candlesticks?

The video explains 'indecision' in the market by pointing out 'dojee' candles, which have a small body and large wicks, indicating a balance between the bulls and bears during the formation period of the candle.

What can long wicks on a candlestick indicate about the market's momentum?

Long wicks on a candlestick can indicate that price moved significantly in the direction of the wick but was not sustained, suggesting a potential change in control between bulls and bears.

Why does the video recommend watching the boot camp and trading transformation videos?

The video recommends watching the boot camp and trading transformation videos for a more comprehensive understanding of price action and trading strategies.

How does the video use color to represent market movement in candlesticks?

The video uses black to represent downward market movement and blue to represent upward movement, with the choice of colors being a personal preference for clarity over the traditional red and green.

Outlines

00:00

📈 Introduction to Candlestick Anatomy

The speaker introduces the topic of Candlestick Anatomy, aimed at beginners in day trading. They mention that experienced traders may already be familiar with concepts like open, closed, and wick, but beginners will benefit from this tutorial. The video promises to explain the basics of candlestick charts, which are preferred by most traders for their informational richness compared to other types of charts like line charts. The speaker uses color coding (black for downward movement and blue for upward movement) to represent price trends and begins to dissect the anatomy of a candlestick, starting with the body and its relation to the open and close prices.

05:00

🕒 Understanding Time Frames and Price Points

The speaker explains the concept of time frames in candlestick charts, using the 15-minute chart as an example. They discuss how each candle represents a specific time frame of price action, with the open and close of each candle marking the beginning and end of that time period. The high and low points of the wick indicate the maximum price reached during the formation of the candle. The explanation includes a comparison between a bullish (upward) and a bearish (downward) candle, emphasizing how the position of the open and close relative to the high and low points can indicate the direction of price movement.

10:01

📉 Analyzing Daily Price Action and Candlestick Types

The tutorial shifts to analyzing daily price action using candlestick charts. The speaker illustrates how a single candlestick on a daily chart represents an entire day's worth of price movement, from open to close, as well as the day's high and low. They introduce the concept of 'doji' candles, characterized by small bodies and large wicks, indicating market indecision. The speaker also discusses the significance of long wicks, suggesting that they can signal a lack of sustainability in price movements, whether bullish or bearish. They emphasize the importance of understanding these candlestick types for effective trading.

15:02

📚 Further Learning and Closing Thoughts

In the concluding part, the speaker encourages viewers to explore more beginner-friendly videos for a deeper understanding of price action and trading. They reference their 'boot camp' and 'trading transformation' series as valuable resources for novice traders. The speaker reiterates the importance of recognizing doji candles and long wicks as indicators of market sentiment and decision-making. The video aims to equip viewers with foundational knowledge to build upon for successful trading.

Keywords

💡Candlestick Anatomy

Candlestick anatomy refers to the structure and components of a candlestick chart, which is a popular method for visualizing price movements in financial markets. In the video, the anatomy is broken down into four main points of analysis: the open, close, high, and low. Each of these points represents a specific price level during a given time frame. The video emphasizes the importance of understanding candlestick anatomy for beginners in day trading, as it provides a comprehensive view of price action.

💡Open and Close

The 'open' and 'close' are critical components of a candlestick, representing the starting and ending prices of a specific time period. In the context of the video, the open is where the filled portion of the candlestick begins, indicating the price at which the market opened during that period. Conversely, the close is where the candlestick ends, showing the final price. The video explains that these points are essential for understanding the direction and strength of price movements.

💡Candlestick Wicks

Candlestick wicks, also known as shadows, are the thin lines extending from the body of the candlestick. They represent the highest and lowest prices reached during the time period, regardless of the open and close. The video uses the term 'cubic hairs' colloquially to describe these wicks, emphasizing their role in showing the price extremes. The length and direction of the wicks can provide insights into market volatility and potential reversal points.

💡Bullish and Bearish Candlesticks

The terms 'bullish' and 'bearish' describe the direction of price movement in financial markets. A bullish candlestick indicates a period where the closing price was higher than the opening price, typically depicted in green in the video. Conversely, a bearish candlestick shows a period where the closing price was lower than the opening price, often colored red. These concepts are fundamental to the video's discussion of price action and market sentiment.

💡Price High and Low

The 'high' and 'low' of a candlestick represent the maximum and minimum prices reached during the specified time frame. The high is the upper wick of the candle, showing the peak price, while the low is the lower wick, indicating the lowest price. The video uses these concepts to illustrate the range of price movements and to analyze market behavior, such as identifying potential support and resistance levels.

💡Time Frame

The 'time frame' in candlestick charts refers to the duration each candlestick represents, such as 1 minute, 15 minutes, 1 hour, or 1 day. The video explains that the time frame is crucial for understanding the scale of price movements and the significance of the open, high, low, and close prices. Different time frames provide different levels of detail, from minute-by-minute actions to daily summaries.

💡Doge Candlesticks

A 'doge' candlestick, as humorously named in the video, is a candle with a small body and large wicks, indicating a period of indecision in the market. Despite significant price movements up and down, the closing and opening prices are similar, suggesting a balance between buying and selling pressures. The video uses this concept to highlight periods where the market direction is unclear.

💡Long Wicks

Long wicks on a candlestick suggest a temporary price movement that was not sustained. If a bullish candlestick has a long upper wick, it indicates that the price rose significantly during the period but failed to close at those higher levels, potentially signaling a weak bullish trend. Conversely, a long lower wick on a bearish candlestick implies that the price dropped but recovered before closing, indicating potential buying interest. The video uses these observations to discuss market dynamics and potential trend reversals.

💡Indecision in the Market

In the video, 'indecision in the market' is discussed in the context of doge candlesticks, where the market shows no clear direction or bias. This is characterized by a small body with large wicks, indicating significant price movement up and down without a decisive close. The video suggests that such candlesticks represent a balanced market where buyers and sellers are equally matched, leading to a flat or indecisive price action.

💡Liquidity Sweep

A 'liquidity sweep' mentioned in the video refers to a sudden and significant price movement, often caused by a large order that quickly consumes the available liquidity at the current price level. This can result in a candlestick with a long wick, indicating a brief but intense price movement. The video uses this term to explain a specific type of market activity that can influence candlestick patterns and should be considered when analyzing price action.

Highlights

Introduction to Candlestick Anatomy for beginners in day trading.

Explanation of the four points of analysis on all candles: open, close, high, and low.

Differentiation between bullish (up) and bearish (down) candlesticks.

Importance of the color coding in candlesticks to represent price movement.

How to read the anatomy of a bullish candlestick with a filled-in body.

Understanding the significance of candle wicks representing high and low price points.

The role of time frames in candlestick charts and their impact on price action.

Visual demonstration of how to identify the open and close of a candlestick.

Transition from 15-minute to daily time frame to illustrate different scales of price action.

Discussion on the practical use of Japanese candlesticks in trading.

Introduction to doji candlesticks representing market indecision.

Analysis of long wicks on candlesticks as indicators of market momentum.

Practical advice on not overvaluing certain candlestick patterns.

Recommendation for beginners to watch the boot camp and trading transformation series for more insights.

Emphasis on the importance of understanding candlestick anatomy for successful trading.

Transcripts

what's going on guys today I'm going to

teach you guys about Candlestick Anatomy

so we're again another chart workor

video and this is going to be more so

for beginners so if you guys already

know about open closed Candlestick Wicks

and what uh the Wicks represent what the

clothes represent then you guys can

probably skip this video but if you guys

are new to day trading this video is

going to be perfect with you so without

further Ado let's jump into the charts

I'm going to draw some of these things

out and we can get started so first

things first what we want to understand

about candlesticks is the anatomy of a

Candlestick so that is going to be

indicated with opens and close as we

know first of all I want to show you

guys on the chart there's several

different ways that we can set up a

Candlestick chart or just a trading

chart in general so when I go over here

we can see that there's a bunch of

different uh things here we have line

line with markers step line area

whatever all of this stuff hiashi Reno

line break all of this stuff we or most

Traders typically just use Candlestick

charts or just candles which are

Japanese candlesticks why because it

gives us the most information needed in

order to understand what price action is

doing every single time on every single

time frame so with that being said once

we understand what chart that we want to

be on we can go into understanding

candlesticks so let's go down here and

we can see that this is what my chart

look like looks like I use black to

represent going down um and blue to to

represent going up not racially

motivated but you guys get the point

okay most of the time when you guys open

up a regular chart it's going to be red

and green me personally I just like blue

and black just looks a little bit

cleaner so with that being said let's

get into the anatomy of candlesticks so

we'll start off with a bullish

Candlestick so let's just draw one out

here and we'll do this so first and

foremost this filled in this shaded area

right here is called the body of a of a

Candlestick and let's say that

this for your guys's sake is going to be

green

oops this is a bullish

Candlestick okay so the body of a

bullish Candlestick or a up Candlestick

is going to be green so let's analyze

there's four points of analysis on all

candles within a chart okay and it's

going to be the price open the price

close the price High and the price low

so on a up candle this line right here

where the body starts where the filled

in portion starts is going to be the

open okay so open this is where price

opened okay so meaning the past

Candlestick closed and then next

candlestick opened at this price okay

then we have the close so right here is

where the candle closed so we're going

to get into the time frames of these

things but we'll get into that a little

bit later first I want you guys to

understand the anatomy so we have

jeez we have the open and we have the

close so boom price opened here and then

price ended up closing here and then we

have the high of the wick so these

little I call them cubic hairs sometimes

but you guys can call them whatever you

want Candlestick Wicks is the

appropriate term um but this is the high

of the candle why because we can see or

I'll explain this a little bit more so

right now actually so this is where the

candle opened right so let's say boom

this Candlestick opens at some point in

time while this candle was forming price

got up to this point which is why it

left a little snail trail of this Wick

right is to indicate where price went

and the highest point that price went

during this candle's formation and then

on top of that right here is the low of

the Candlestick okay and this indicates

that hey price opened and then at some

point in time during this candle's

formation price got down to this price

point and formed this low okay but all

in all after we pushed up to make this

high and after we pushed down to make

this low we closed right here and now

we'll get into these little numbers up

here and this really indicates the time

frame so every single time frame what

does it represent it represents the time

that it takes for a candle to close on

each Candlestick chart so right now

we're on the 15m or 15 minute chart so

that means when this Candlestick opens

it has 15 minutes worth of price action

to do whatever it wants until it closes

so this candle right here represents 15

minutes worth of price action so we can

see that once the past candle closed

let's draw one out really quick boom

boom boom boom typically the close and

the open of previous candles will be

even right so again let's assume that

this is another bullish Candlestick we

can see that boom this candle closed and

then again because it this candle closes

and this candle opens at the same time

they're typically going to be the same

price so we close right here the next

candle opens right here and then it has

15 minutes for price to either go up so

at one point in time during that 15

minutes price came up to this high point

of price and then also at some point in

time during those 15 minutes price came

down to this price but after that 15

minutes happened we opened here and then

once that 15-minute Mark hits boom it

closed at this price cool and

now let's remove this let's say that

we're on the daily time frame and I

don't want to switch it because we have

this beautiful little painting right

here let's say that we're on the daily

time frame uh what amount of time will

this Candlestick represent a day's worth

of price action so we can see where the

day opened we can see the low of the day

we can see the high of the day and we

can also see where the the day closed

okay now moving forward let's show a

bearish candlesticks or a Candlestick

that goes down so let's draw this out

boom they all look pretty Sim similar

this okay and we'll make it red just

because you guys will likely be on these

standard settings boom boom boom boom so

a bearish Candlestick or a down

candle we know that price opened and

then moved down right because it's red

so it's the same thing for the

Candlestick Wix so what's this it's the

high

because at some point in time during

these 15 minutes worth of price action

represented in this candle price Le left

a little snail Trail or showed history

that hey price moved up to this price

point at some point in time did it close

here no but it ended up coming up here

during that 15 minutes on top of that we

have the low right down here again price

opened moved down to this price point at

some point in time did it close here no

but it did move down to this price now

the only only thing that's different are

the close and the open so this line

right here is now the open why because

the Candlestick went down right so if we

just think about it

logically if price went down it opened

at a higher point and it closed at a

lower point so

boom this is the close Okay so again

this Candlestick opened okay look these

are pretty even so let's say we had this

candle boom it closed right here this is

the next one it opened right here at

some point in time during those 15

minutes price got up to $

5,798 75 but it decided to go down at

some point in time during those 15

minutes price got down to

$572 and then it closed after those 15

minutes right here okay so now that we

understand the anatomy of candlesticks

let's go into the actual chart and show

these okay happening live and then after

that I'll do go a little bit deeper and

kind of talk about how Candlestick Wicks

can tell us a lot about um the overall

momentum and where price wants to go

just by analyzing these candlesticks

okay so right here we see boom up candle

down candle so again this is on the

15-minute chart so where is the open of

this up

candle boom right here where was the

lowest point Within These 15 minutes

worth of price action that price got

down to boom right here where was the

highest point of those 15 minutes worth

of price action that it got to boom

right here and where did price close at

boom right here okay moving forward we

have a down candle so we can see boom

this candle closed right here the next

candle opened at a similar price so boom

this is the open this is the

high this is the low

and this is the close of 15 minutes

worth of price action okay now let's go

on to the daily chart boom so now each

Candlestick represents a days worth of

price action okay so we can see boom

let's zoom in here we can see that this

has the tiniest little Wick right here

okay so what is this

Boom the high of the day

what is

this Boom the open how do we know it's

the open because price closed down where

was the low of the day boom right

here and where did price close boom

right

here okay and this shows a days worth of

price action so we can see that price

opened right here at some point in time

during the day it got up to this price

at 578 $8 or 5 yeah

$578 and then price moved all the way

down at some point in time during the

day it got all the way down to

$563 and then it ended up closing at the

price of $

5,639 25 cool now something that's

really cool about Candlestick

charts is these give us the most amount

of price data possible right so we can

see okay this is what it did on the day

and then we go if we go into the 4our

chart we can still see all of that day's

worth of price action except in four

minute kandles and then on top of that

we can scale down and see how every

hour's worth of price action was printed

and on top of that we can scale down and

we can see how every 5 minutes worth of

price action was formed to create that

one

big boom day

down candle okay same thing on the one

minute we can see every single minut

worth of price action for that day that

gives us a super detailed super mapped

out view of what price was doing during

every single minute every single second

of that day is worth of price action

okay and that's why we use Japanese

candlesticks okay and again relatively

beginner video because but understanding

this is very essential to even going

anywhere else within Trading okay we

need to understand anatomy of

candlesticks now last thing that I want

to leave you guys with is just talking

about um some sort some candles I

wouldn't even call them Candlestick

patterns but I would call them uh like

identifying candlesticks okay so let's

uh let's just go into the chart and we

can identify

some so in my eyes like I really like to

classify just like two different types

of candles there's like full candles and

there's dogee candles again that's a

Japanese word don't ask me why it's

called that but a dogee candle is

essentially a candle with an extremely

small body and pretty large Wicks or

large Wicks compared to the body of the

candle so this daily candle is a perfect

representation of a dogee and that

pretty much represents indecision within

the market right because boom price

moved up a lot price moved down a lot

but all in all we closed and opened at

very similar prices which means who was

in control for that day of day worth of

price action

honestly it was a pretty even match

between the Bulls and the Bears meaning

hey we pushed up a lot we pushed down a

lot but at the end of the day we closed

pretty Break Even meaning it was a

pretty 50/50 type of day okay so dois

within the market and we can identify

these on every single time frame right

this is another example boom we moved up

a lot we moved down but at the end of

the day we Clos relatively small okay

and then this Candlestick is a full

Candlestick I don't necessarily want to

get into like engulfing candlestick or

anything like that because I honestly

think it gets a little bit too confusing

for people and there's there's honestly

no reason to be covering things like

that because it does just get too

confusing and people give them way more

value than they should be given but

something that you guys should

understand is dogee candles 6

representing indecision within the

market this is another really great

example where the body is pretty much

nonexistent we can see that this was a

pretty 50/50 dead we move up a little

bit we move down a lot and then we end

up closing at pretty much the exact same

price that we opened at okay we can see

more of these again we can see boom

indecision candle boom indecision candle

boom indecision candle that pretty much

just

represents during that time frame so

again this is 15 minutes within this 15

minutes worth of price action there was

no necess there was no necessar

necessary like overall bias and overall

um big determination within the market

of where the market wanted to go for

that point in time and again don't put

too don't put too much value on dogee C

candlesticks it's just something to

understand and to realize that hey these

just represent indecision within the

market um and then on top of that

something else that can be relatively

useful is long Wicks okay so if we have

a Candlestick that for example just

looks something like this let's say this

is a g down Candlestick we see a big

long high all the way up here a long

Wick to the upside what does this tell

me about the market especially if this

closes bearish we can see that price hey

at one point in time price got all the

way up here but it wasn't sustainable it

wasn't sustained so price was able to

get all the way up here but what did

price end up doing it ended up closing

all the way down here so what does that

mean it means bears are probably in

charge of the market so when we see

super high Wicks okay whether it's to

the upside or to the downside okay if we

see a high Wick to the upside we can

kind of get some sort of indication from

these candles by saying hey look price

moved up all the way up to these Highs

but there wasn't strong it wasn't uh the

buys the buy orders weren't strong

enough to have price close all the way

up here and in turn price ended up boom

going all the way back down so what does

that mean it means there's not as many

bulls within the market pro market is

probably bearish again depending on what

time frame you're on and then same thing

to the downside let's go ahead and

switch this color to

Green okay if we have a bullish

Candlestick and we have boom a really

long Wick to the downside boom same

thing okay price was able to push all

the way down here but what happened

price ended up closing bullish ended up

closing all the way up here so what does

that tell me about the market it means

hey yeah the Bears stepped in for a

quick little second but was it

sustainable no the Bulls ended up

overplaying them over overpowering them

and boom we end up closing bullish and

there was a perfect example of that on

one of the candlesticks right here so

boom even though this was a bullish

candle we can see right and then again

everybody that's not necessarily a

beginner we can see that this was a

liquidity sweep but we can see boom

super long Candlestick Wick to the

upside but then boom we end up closing

all the way back down here and then in

turn we can see price going down further

but again if this is your guys' first

video from me I highly recommend you

guys go back watch the boot camp watch

the trading transformation because

that's pretty much an entire course that

I've put out to the internet for free

for you guys to learn how to trade on

your own and hopefully turn profitable

from it so if this is your very first

video from me I love and appreciate you

guys go watch the boot camp go go watch

the trade and transformation because

there's a lot more beginner videos that

can help you guys help understand price

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