What is Candlestick Chart?
A candlestick shows four prices for one period: the open, the high, the low and the close, drawn as a body between open and close with thin wicks out to the high and low.
How it works
A body that closes above its open is usually coloured green (or hollow) and one that closes below is red (or filled). Long wicks show price was pushed away from an extreme and rejected. Named patterns such as the engulfing candle, the doji, the hammer and three white soldiers are combinations of one to three candles that traders read as reversal or continuation signs.
What it can't tell you
A single candle depends on the timeframe it is drawn on, and the patterns are described loosely, so two traders can disagree on whether one has formed.
How Tickfloor uses it
Candlestick patterns are one of the ten inputs to Tickfloor's agreement score, and the daily chart drills teach reading wicks and bodies.
Does it work as a strategy?
Tickfloor backtested 5 rules that use a candlestick, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use a candlestick, and a historical diagnostic, not validation under Testing Standard v2.
Tickfloor's research desk has backtested 517 strategies, most against an equal-weight benchmark of the same assets rebalanced daily that pays no costs (the strategies pay theirs). After correcting for the 598 tests run (Benjamini-Hochberg), 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.
Common questions
What is Candlestick Chart?
A candlestick shows four prices for one period: the open, the high, the low and the close, drawn as a body between open and close with thin wicks out to the high and low.
How does Candlestick Chart work?
A body that closes above its open is usually coloured green (or hollow) and one that closes below is red (or filled). Long wicks show price was pushed away from an extreme and rejected. Named patterns such as the engulfing candle, the doji, the hammer and three white soldiers are combinations of one to three candles that traders read as reversal or continuation signs.
Does Candlestick Chart work as a strategy?
Tickfloor backtested 5 rules that use a candlestick, net of modelled trading costs, against a benchmark of the same assets. None finished ahead of the benchmark on the point estimate, and none cleared the corrected bar (Benjamini-Hochberg q below 0.10). These are specific tested implementations, not every way to use a candlestick, and a historical diagnostic, not validation under Testing Standard v2.
What are the limits of Candlestick Chart?
A single candle depends on the timeframe it is drawn on, and the patterns are described loosely, so two traders can disagree on whether one has formed.
How does Tickfloor use Candlestick Chart?
Candlestick patterns are one of the ten inputs to Tickfloor's agreement score, and the daily chart drills teach reading wicks and bodies.