Green, red and doji candles
Hook
NQ · 5-min practice chart
Learn more · the details, worked example and common mistakes
Buyers and sellers trade all the time. When buying wins over a period, price ends higher than it started: a bullish candle. When selling wins, it ends lower: a bearish candle.
Only the open and the close decide. A candle with a long line on top can still be bearish, if it closed below its open.
A doji needs the open and close exactly equal. If they're even slightly apart, the candle has a direction.
Common mistakes
- Reading one bullish candle as a promise that price keeps rising. The word describes how that one candle finished, nothing more.
- Judging direction by the thin lines. Only the close compared with the open decides.
- Calling a candle a doji when the open and close are only close together. They must be exactly equal.
From the trading desk
A doji after a long run often gets attention because it shows a pause. On its own it says nothing about direction; traders wait to see what the next candles do. On a real desk, traders also call a candle a doji when its open and close are only nearly equal; CandleLab uses exactly equal so every answer can be checked.