Charting Fundamentals

Charts are your window into market behavior. Learning how to read them is one of the most important skills in trading. This guide covers candlestick charts, timeframes, and the most common chart types—helping you visualize price like a pro.

How to Read Candlestick Charts

Candlestick charts are the most popular chart type in day trading. Each candle shows how price moved during a specific time period.

A single candle shows:

Open: Where the price started
Close: Where the price ended
High: The highest price during the candle
Low: The lowest price during the candle

Bullish Candle: Close is higher than the open (usually green)
Bearish Candle: Close is lower than the open (usually red)

Pros:

Shows price movement clearly
Easy to spot momentum or reversal signals
Widely used by professional traders

Cons:

Can be overwhelming at first
Requires context (support, volume, patterns) to be effective

Understanding Timeframes

Each candlestick represents a specific unit of time.

1-Minute Chart: Each candle = 1 minute
5-Minute Chart: Each candle = 5 minutes
1-Hour Chart: Each candle = 1 hour
Daily Chart: Each candle = 1 trading day

Pros of Lower Timeframes (1min–5min):

More detailed, fast-moving setups
Better for scalping or short-term trades

Cons:

Noisy and harder to filter fake-outs

Requires fast decisions and focus

Pros of Higher Timeframes (1hr–Daily):

Smoother trends and cleaner setups

Easier to spot big-picture direction

Cons:

Fewer trades per day

Slower feedback, less detail on small price movements

Chart Types: Line, Bar, Candlestick

Line Chart

Plots closing prices only. Creates a simple, clean curve.

Pros:

Very easy to read

Great for spotting overall trends

Cons:

Lacks detail (no open, high, low)

Not ideal for precise entries/exits

Bar Chart

Shows open, high, low, and close (OHLC) with vertical bars and tick marks.

Pros:

Gives detailed OHLC data

Less clutter than candlesticks

Cons:

Harder for beginners to read

Less visual than candles

Candlestick Chart

The most popular choice among traders.

Pros:

Combines data + visual clarity

Makes it easier to spot patterns and emotion in the market

Cons:

Can be noisy on small timeframes

May require experience to use effectively

Final Thoughts

Chart reading is the language of the market. Start with candlestick charts on 5-minute or 15-minute timeframes, then explore other styles as you grow. Understanding how price behaves across time and chart types gives you a sharper edge and a clearer view of potential setups.