In this article, I am going to show how to read trading graph. Finding yourself trading when you discover cryptocurrencies is a very common thing. Those who approach this activity do so thinking of becoming immensely rich in record time is the same. Even if anyone can learn to exploit the market cycles to profit, it is not certain that all those who engage in this activity will reach the goal. Trading is a system of rules, but many infringe on them since we impose these rules on ourselves. The first rule that every trader must follow is “never invest more than you are willing to lose.”
The first thing we must do is learn to read stock market charts which, in jargon, are called “Japanese candlestick charts.” A line graph can graphically render the price trend, but the candlestick charts give us much more information than we could obtain by observing a line.
These graphs are called this is quite intuitive: the graphic signs (that colored red and green) resemble candles. Each candle on the chart expresses the price trend in the unit of time defined by the user. For this reason, we hear about charts for one hour, four hours, one day, one week, and so on; this is the length of time covered by one candle.
Imagine reading a 1D (one day) chart; we know that each candle graphically represents what happened over the last24h. Therefore, if the candle is colored red, the price has dropped in the twenty-four hours; on the contrary, if the candle is colored green, the price has gone up.
The height of the candle represents the change.
The height of the candle represents the change in unit price. When we read a red candle (which signals a price drop in the unit of time), the upper border indicates the opening price, the lower one the closing price of the session, and vice versa for a green candle.
In some cases, we can observe candles that are not colored and substantially resemble crosses. This type of candle indicates that the opening price was substantially identical to the closing price; the edges of these crosses (directed upwards or downwards) graphically represent the price changes (maximum and minimum) that occurred during the session.
[ccpw id=”645″]Practical examples
Let’s take some practical examples and imagine that the price of 1BTC, after starting from a price of $10 at the opening, touched a maximum of $15 and then closed the session at $12. How does the candle represent all this? Simple, in the meantime, we
will have a green candle (because the price has risen), similar to a rectangle whose lower edge is positioned at $10 (the opening) and the upper margin is positioned at $12 (the close); from the upper margin. Then, we will see starting a straight line (“shadow”) that reaches $15.
As another example, let’s imagine that the opening price is $20 and the closing price is $17. With the day’s low at $15 and the day’s high at $22. In this case, the candle will be red (session at a loss), the upper margin (opening price) will be positioned at $20. From here the upper shadow (the straight line) will start, which represents the high of the day. It will touch share at $22, while the lower margin of the candle (closing price) will settle at $17. The level from which the lower shadow (always another straight line) will start and reach the low of the day at $15.
For the last example OF how to read trading graph
A session that opens and closes at $17, corresponding to the minimum of the day and with a maximum peak reached of $20. In this case, the candle will look like a cross; it will not have any color because the opening and closing price coincide, and there will be no lower shadow because the day’s low has never gone below the opening. Still, a long upper shadow will extend up to $20.
[ccpw id=”646″]How To BEST Read Cryptocurrency Charts
