Japanese Candlesticks And Forex Trading

Japanese Candlestick Charts In The Forex Market

What do Japanese candlesticks have to do with trading forex?

A whole lot.

Originally created in Japan (as the name implies) several centuries ago to trade rice, candle charts are used by thousands of forex traders to track price movement.

Most people find candle charts much easier to read than standard bar charts, and they have become incredibly popular. Most forex charts you see are Japanese candlesticks charts.

Candle charts are formed using the opening and closing prices, as well as the high and the low.

If the price closes higher than it opened, a hollow candle is drawn (usually drawn in white or green in color).

If the price closes lower than it opened, a filled candle is drawn (usually drawn in black or red in color).

Most forex online brokers and market makers I've seen use the green/red color scheme rather than the more traditional white/black. Forex trends are easily spotted even by newcomers as green candles signify price increases while red indicates price decreases.