Candles: what one candle tells you
The time slice behind the candle
A candle covers one fixed slice of time. On a one-hour chart, each candle shows what happened between the start and the end of that hour. On a five-minute chart, each candle covers five minutes. The four numbers are recorded for that slice only. When the slice ends, the candle stops changing.
The open is the first price of the slice. The close is the last price of the slice. The high is the highest price reached at any moment inside the slice. The low is the lowest price reached at any moment inside the slice. No other prices are kept for that candle.
The slice length is your choice, not the market's. A daily candle on EUR/USD covers one trading day. A one-minute candle covers one minute. The same four rules apply at every length. Changing the slice length changes how much detail you see, not what the candle means.
How the four numbers become a shape
The body is drawn between the open and the close. Its height is the distance between those two numbers. If the close is above the open, the body is often shown in one colour. If the close is below the open, it is often shown in another. The colour is a label, not a separate number.
The wicks are drawn from the body to the high and to the low. The upper wick runs from the top of the body up to the high. The lower wick runs from the bottom of the body down to the low. A wick can be long, short or absent. An absent wick means the high or low equals an end of the body.
Every shape you see is a direct drawing of the four numbers. A long body means the open and close are far apart. A short body means they are close together. A long upper wick means the high is far above both the open and the close. Nothing on the candle comes from anywhere else.
Reading a candle without guessing
Start with the body height. Subtract the open from the close, or the close from the open, and take the positive result. On EUR/USD, a difference of 0.0006 is 6 pips. That figure tells you how far price moved between the first and last price of the slice. It does not tell you the path price took in between.
Next, measure each wick. The upper wick is the high minus the higher of the open and close. The lower wick is the lower of the open and close minus the low. These two figures show how far price travelled beyond the body and then returned. They are information about what happened inside the slice, not a forecast.
Write the four numbers down for several candles in a row. Calculate the body and both wicks for each one. After a few rows, you will see that the chart is a table of figures drawn in a compact form. That habit replaces guessing from colour with checking from numbers.
One candle on EUR/USD: four numbers and a 0.10 lot
| Step | Amount | Note |
|---|---|---|
| Open | 1.0850 | The price at the start of the candle's time slice. |
| High | 1.0862 | The highest price reached during that slice. |
| Low | 1.0846 | The lowest price reached during that slice. |
| Close | 1.0858 | The price at the end of the slice. |
| Body height | 8 pips | Close minus open: 1.0858 − 1.0850 = 0.0008, which is 8 pips. |
| Upper wick | 4 pips | High minus close: 1.0862 − 1.0858 = 0.0004, which is 4 pips. |
| Lower wick | 4 pips | Open minus low: 1.0850 − 1.0846 = 0.0004, which is 4 pips. |
| Value of the body on 0.10 lots | ₱8.68 | 8 pips × 0.10 × 10 units per pip = 8 units of the quote currency, converted at the current EUR/USD rate of about 1.0850, giving roughly ₱8.68. |
Brokers vary in how they round pip values, and some charge a spread or commission on top. The exact peso amount you see depends on the rate at the moment of conversion and on your broker's terms.
Doing it once, step by step
You will take one candle from a chart and turn it into four numbers, then into body and wick sizes. Do this once per candle for a short run of candles.
- 01
Pick one candle and note its slice length
Choose a chart of EUR/USD and select a time frame, such as one hour. Point to one candle and state its slice length out loud. This tells you the period the four numbers cover.
- 02
Write down the four numbers
Read the open, high, low and close from the candle. Write them in a row, in that order. For example: 1.0850, 1.0860, 1.0844, 1.0856. Keep four decimal places.
- 03
Calculate the body height
Subtract the open from the close. If the result is negative, ignore the sign. In the example, 1.0856 minus 1.0850 equals 0.0006, which is 6 pips. This is the body height.
- 04
Calculate the upper wick
Subtract the higher of the open and close from the high. In the example, 1.0860 minus 1.0856 equals 0.0004, which is 4 pips. This is the upper wick.
- 05
Calculate the lower wick
Subtract the low from the lower of the open and close. In the example, 1.0850 minus 1.0844 equals 0.0006, which is 6 pips. This is the lower wick.
- 06
Repeat for the next few candles
Move to the next candle and repeat the four calculations. Do this for at least five candles in a row. The repeated figures show you how the shape follows from the numbers.
The mistake most people make here
The common mistake is to treat the wicks as noise and look only at the body colour. A long upper wick means price went up and came back down before the candle closed, which is information about sellers. A long lower wick means the opposite. Instead of guessing from colour alone, write down the four numbers for a few candles and calculate the body and wick sizes yourself. That habit turns the chart from a picture into a set of figures you can check.Check yourself
A candle opens at 1.0850, reaches a high of 1.0860, a low of 1.0844 and closes at 1.0856. What is the body height in pips, and what is that worth on 0.10 lots in pesos at a rate of 1.0850?
Body height: close minus open = 1.0856 − 1.0850 = 0.0006, which is 6 pips. On 0.10 lots, 6 pips × 0.10 × 10 = 6 units of the quote currency. At 1.0850, that is 6 ÷ 1.0850 ≈ ₱5.53.
Using the same candle, what are the upper and lower wick sizes in pips?
Upper wick: high minus close = 1.0860 − 1.0856 = 0.0004, so 4 pips. Lower wick: open minus low = 1.0850 − 1.0844 = 0.0006, so 6 pips.
Questions that come up next
Why does the candle change while I am looking at it?
The candle covers a slice of time that has not finished yet. Until the slice ends, the close is only the latest price, so the body and wicks keep moving. The open is fixed once the slice starts, but the high, low and close can still change. When the slice ends, the candle stops changing and the four numbers are final.
Does a green candle mean the price will keep going up?
No. The colour only records that the close was above the open for that one slice. It says nothing about the next slice, and nothing about how far price moved inside the slice. A candle with a small body and long wicks can be green and still show price fell back a long way. Read the four numbers, not the colour alone.
What if a candle has no wick at all?
That means the high or the low equals one end of the body. If there is no upper wick, the high equals the higher of the open and the close. If there is no lower wick, the low equals the lower of the open and the close. It is not a special signal. It is just the four numbers landing on the same value.
How do I turn pips into pesos for a candle I am looking at?
First work out the pip size from the four numbers. Then multiply by your lot size and by ten for a standard lot figure in the quote currency. Convert that to pesos at the rate on the day. The result varies with the rate and with your broker's rounding, spread and commission, so treat it as an estimate.
Should I use a one-minute chart or a daily chart?
The slice length is your choice. A shorter slice gives more candles and more detail inside a session. A longer slice gives fewer candles and hides the small moves. The four numbers mean the same thing at every length. Pick one length, write the numbers down, and compare like with like.
Where does the SEC Philippines come in?
The SEC Philippines regulates certain investment products and the firms that offer them to the public in the country. It does not set the price of EUR/USD and it does not approve any trading method. Rules on what a firm may offer, and how it must hold client money, are set out by the regulator. Check the current rules yourself rather than relying on a summary.
The words used on this page
- Slice of time
- The fixed period one candle covers, such as one hour or one day. The four numbers are recorded for that period only. When the period ends, the candle stops changing.
- Open
- The first price recorded in the slice of time. It is one of the four numbers behind the candle. The body is drawn from this number.
- Close
- The last price recorded in the slice of time. It is the other end of the body. On a live candle the close is only the latest price so far.
- Wick
- The thin line drawn from the body to the high or to the low. It shows how far price travelled beyond the body and came back. A wick can be long, short or absent.
- Pip
- A small unit of price change on a currency pair. On EUR/USD, a move of 0.0001 is one pip. Body and wick sizes are often written in pips so they are easy to compare.
- Lot
- A standard amount used to size a trade. A smaller lot means a smaller peso value for each pip. The exact value depends on your broker's terms.
What to take away
- One candle holds four numbers for one slice of time: open, high, low and close.
- The body is the distance between open and close; the wicks run from the body to the high and the low.
- Write the four numbers down and measure the body and wicks yourself instead of reading colour alone.
- Pip values in pesos vary with the rate and with your broker's rounding, spread and commission.