Those who are taking their first steps in crypto trading – trading on the cryptocurrency exchange, have to learn a lot of new information. Reading candlestick charts is one of the most necessary skills. Without it, trading is transformed from a conscious process based on a detailed analysis into a game of chance in which it is impossible to predict the result. As a result, this approach only leads to the loss of invested funds. We tell you why you need to be able to read candlestick charts, and how to use them to buy or sell cryptocurrency in real time.
What are candles?
Using the services of cryptocurrency exchange services, you can transfer the received coins to the exchange in order to earn more: the choice of trading instruments on the largest trading floors is very extensive, and among them there is sure to be an asset that will quickly make tens of percent of profit. The interface of any exchange necessarily includes a price chart, which displays all the changes that occur with the exchange rate of coins in real time.
Please note: one candle shows how the price has changed over a certain period of time. That is, if the chart period (timeframe) is 1 hour, then each of its elements indicates changes in the course over the past 60 minutes.
The chart consists of candles in two colors:
• Green – indicate that in the selected interval the price rose;
• Red – indicate a decrease in the same length interval.
What you can learn from one candle
Since the candle contains all the price changes for a specified period of time, by its type it is possible to understand at what price the interval began (for example, an hour), what maximum and minimum values were reached, and at what price the candle closed when the interval ended.
A candle has several elements, each of which carries useful information:
1. The body of the candle. For green candles, which are called bullish, the lower part of the body indicates the opening price, the lower – the last quote at the time the time interval ends. For red, bearish candles, on the contrary, the upper body is the open price, the lower is the close.
2. Shadows – characterize extremes – maximum and minimum values of quotes achieved during the formation of the candle.
Candlestick analysis or how to use it
To choose the right moment and the most favorable exchange rate for Bitcoin on the exchange or in the exchange office, you need to follow the schedule. There are a number of patterns of price changes, which are combined under the general name of “candlestick analysis”.
We are talking about certain sequences of candles, which are also called patterns. Their appearance may indicate the continuation of the movement of prices up or down, as well as indicate the upcoming reversal of the current trend.
Many specialized books are devoted to candle analysis, which detail the features of using various patterns. Can I make money by exchanging electronic money? The answer is definitely possible, provided that the trader acts within the framework of the trading strategy. It’s not so important whether you are trading on the stock exchange or using online currency exchangers – for profit, it’s much more important to buy cryptocurrency in order to sell it when the rate rises.
Understanding the basic principles of candlestick charts helps move on to a more extensive and complex section: technical analysis. The joint use of several algorithms for assessing the market situation will help develop your own investment strategy and begin to regularly receive income from investments in cryptocurrency.