One candle, four prices

Episode 2 · Series S1: Candle basics · Comment keyword: OHLC

Takeaway: Every candle is a block of time that carries four prices: open, high, low and close. Colour is only one part of what a candle tells you.

Hindi: Har candle ek time block hai, aur usme chaar price hote hain: open, high, low, close.

Watch the reel

Play the reel (video.mp4)

The idea in plain words

If you only read a candle as “green” or “red”, you are missing most of it. Each candle covers one fixed block of time (one hour on a 1H chart) and records four prices from that block:

1. Open: the first traded price of the block.
2. High: the highest price reached in the block.
3. Low: the lowest price reached in the block.
4. Close: the last traded price of the block.

The candle is drawn from those four numbers:

• The body runs from the open to the close.
• The wicks run from the body up to the high and down to the low.
• The candle is green when the close is above the open, and red when it is below.

Step by step

Step 1: Read the four prices off one real candle

Bitcoin (BTCUSDT spot), 1-hour candle at 22:00 UTC on 1 Oct 2023. This is the same candle that broke the level in Episode 1.

Price	Value
Open	27,180.38
High	28,065.51
Low	27,155.00
Close	27,996.43

Step 2: Build the body and the wicks

• Body = close minus open = 816.05. Close is above open, so the candle is green.
• Upper wick = high minus close = 69.08.
• Lower wick = open minus low = 25.38.
• Range = high minus low = 910.51.

Note: the candle alone does not tell you in which order the high and the low printed during the hour. It only gives the four prices.

Step 3: See why the low matters

Every candle has its own low. When traders talk about a “swing low”, they mean the low of one specific candle. In a long (buy) trade, a stop is often placed just below a swing low, so knowing how to read a candle’s low is a basic skill you use in risk planning later in the series.

Common mistakes

1. Reading only the colour. Green does not mean “buy” and red does not mean “sell”. Colour only compares the close with the open.
2. Confusing the body with the range. The body is open to close. The range is high to low, wicks included.
3. Assuming the order inside the candle. A green candle can print its low first or its high first. The four prices do not say which.
4. Forgetting the time block. The same four prices mean nothing without knowing the timeframe.

Try it yourself

• Pick any 1H candle on a BTCUSDT chart and write down its open, high, low and close.
• Work out its body, upper wick, lower wick and range.
• Decide its colour from the numbers alone before looking at it.
• Find a nearby swing low and note which candle it belongs to.

Next lesson

Episode 3: Red candle means crash? No · /trading/learn/003-red-candle-not-a-crash · comment COLOUR

Previous: Episode 1: Wick vs Close · /trading/learn/001-wick-vs-close

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Data: Binance BTCUSDT spot 1-hour candles, times in UTC, re-checked against the Binance public klines API.

Education only, not financial advice.

ivish.studio