How a candle forms
Hook
NQ · 5-min practice chart
Learn more · the details, worked example and common mistakes
A candle starts as a flat line at the price where its period begins: the open.
As price moves, the body stretches from the open to the current price, and the wicks reach out to the highest and lowest prices so far. They stay even when price moves back.
The colour shows whether price is above or below the open right now, so it can flip while the candle forms.
When time runs out, the last price becomes the close and the candle is finished. Very different paths can leave the same four prices, which is why a candle never shows whether the high or the low came first.
Common mistakes
- Treating a candle as finished while its time is still running. Until it closes, its body, wicks and colour can all still change.
- Calling the high the close. The high can happen before the period ends.
- Calling the bottom of the body the low. A lower wick may reach further.
From the trading desk
Experienced traders rarely act on a candle that is still forming. A 5-minute candle can look strong at minute two and finish as a long wick at minute five.