CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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ThinkMarkets > Support > FAQs > Trading FAQs > What is a candlestick in forex trading?
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What is a candlestick in forex trading?

A candlestick is simply a way to represent price on a unit basis. 
 
For example, if you are looking at the one-hour chart, each candlestick will represent the opening price, the high price, the low price, and then the closing price. 
 
The candlestick also has what is known as a 'body', which is filled with a colour to represent whether or not the market rose or fell during that time frame. For example, if you are looking at the one-hour chart, if you see a red candle, it means that the market has fallen during that hour from the opening to the closing price. 
 
Alternately, if the market closes higher than it did at the beginning of the hour, then the body becomes green. You can make the candlesticks any color you want, but most traders tend to use red and green. 
 
Candlesticks also contain 'wicks', which are above and below the body, showing where the price has pulled back from. When you look at the upper part of the candlestick, it shows that there are a lot of sellers above and that could possibly mean that there is a lot of resistance to the market. 
 
Obviously, the same thing can be said about a long wick underneath, as buyers are stepping in to try to support the market. While that is not the be-all and end-all of candlestick reading, it is one of the more important things to keep in mind. 
 
Candlesticks’ colour-coded bodies allow you to quickly read the trend. If you see a lot of red candlesticks, then you know that in general the market is in a downtrend. There is a bit of a misconception that there is more information in candlesticks than a bar chart though, it’s just that it’s a little bit more clearly displayed. At the end of the day, both of these types of charts display the exact same information. 

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Risk warning for retail traders: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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