Trading Glossary

Candlestick chart

A price chart that uses rectangles that range from the opening price to the closing price of each trading session. The rectangle is dark (usually black) if the closing price is lower than the opening price (a down day), or light (usually white) if the close is higher than the open (an up day). Candlestick charts, which originated in Japan, are very similar to bar charts, although they pre-date them by a number of years.

The high and low price extremes extend as vertical lines above or below these rectangles, forming "wicks" to the bodies of the candles represented by the rectangles. Of course, if the high and low of the day are identical to the open and close, no wicks will exist; conversely, if the open and close are the same price, no rectangle (body) will exist. Like bar charts, candlestick charts can be constructed on any time frame.