Candle stick chart

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    Kiaria Yoshida

    How effective is a candlestick chart?

    1. They make attractive wall charts that make you seem as if you have deep insight into obscure aspects of price history.
    2. If you are very familiar with the market structure of the thing being charted, they can convey a lot of information quickly about price action over the last few trading sessions (or any few historical trading sessions, say around a big market move). At a glance you can tell direction and intraday versus interday volatility.
      For rapid trading, the candlestick includes some information that is useful for making very short-term price predictions (say from open to one hour after open), but is far inferior to quantitative methods that use all intraday price and order data, along with other data.
    3. For making money, not at all. They don’t contain enough information for rapid trading, and they don’t do anything to predict longer-term movements.
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