Share Market Knowledge: What is a candlestick? If you enter without learning this, the stock market will burn you to ashes.

Stock Market Knowledge: In the last few years, many new people have entered the stock market. Many people start investing money without learning and eventually leave the stock market after incurring losses. But if someone really wants to earn money from the stock market then it is very important to learn it. The stock market is a field which has the depth of an ocean. There is a lot to learn. There are many types of instruments to invest money, such as equity, future and options, mutual funds, bonds etc. In such a situation, the question arises that where to start learning? What should be the basic?

Just as the basis of any child’s education is ‘A B C D’ or ‘K B G D’, similarly learning in the stock market also starts with the price. And the most important thing to understand the price is candlestick. A candlestick contains a complete description of the price for a specified period of time. By just looking at one candle of a day, you can know what has happened throughout the day.

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Candlestick tells about the open, high, low and close price of any underlying (share or index). After a candlestick is complete, it is usually divided into two parts, first – real body, and second – shadow. Some people also call Shadow as Wick. Real body is the difference between the opening and closing price, and the wick represents price rejection. This rejection in price can happen both upwards and downwards.

There is a link with rice traders of Japan
In olden times, when there were no computers and calculators, traders faced a lot of difficulty in understanding the prices. At that time, Japanese rice traders created the candlestick method to understand the past and present prices at a glance. It is said that Munehisa Homma, a rice trader, invented it in the 18th century. A candlestick was formed on each day’s trading and by adding one candlestick after another, a long-term price could be seen at a glance, which is also called a Japanese candlestick chart or K-Line.

In 1991, an author named Steve Nisson wrote a book on the Japanese candlestick charting technique. Western countries were introduced to this technology through this book. Gradually, candlestick patterns started being used to track all types of sentiments. Candlestick made it easier to understand and track sentiment. Now there is no need to go through the old ledgers to see when the price showed a rise and when the price showed a recession.

Importance of candlestick in stock market
As you know, a candlestick gives information about the price for a specified period of time. For example – if yesterday a share closed at Rs 100 and today opens at Rs 101 and closes at Rs 103 with a high of Rs 105 and a low of Rs 99, then you can get complete information by just looking at one candle. . The candlestick of yesterday and today will be formed like this-

If the candlesticks of several days are added, a complete chart is formed. You can view charts for 6 months, 1 year, 5 years or more simultaneously. At a glance you can know in which direction the price moved on the chart. Technical analysts (experts) of the market make possible predictions of share prices on this basis.

Overall, if you are taking the first step towards learning the stock market, then learn to read candlesticks. Many more articles have also been published in the Share Market Knowledge Series, which you can read and understand by going to the links given below.

Why is someone’s color green and someone’s red?
In candlesticks, some are green and some are red… why is this so? A green candle indicates that the price on that day has closed higher than the price the day before. Similarly, red colored candle gives information about falling price. There are some old articles in the links given below, which can make you aware of some more things about the stock market.

Also read – Share Market: Learn to recognize rogue candles, you will catch the shares before they run away!

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Also read – Share Market Knowledge: These two things will tell the complete horoscope of the company, those who invest in the share market should not miss it.

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