Read the Map · Lesson 1 of 9
Candles, Timeframes and Volume
Read the open, high, low and close inside a single candle, see how short candles merge into longer ones, and use volume to judge how much participation sits behind a move.
In this lesson
- Read the open, high, low and close from a candle’s body and wicks
- Merge shorter candles into a longer timeframe and explain why the picture changes
- Use volume to judge how much participation sits behind a move
A price chart is a record of trades. The most common way to draw one is with candlestick bars. Each candle covers one slice of time and answers four questions: where did price start, how high did it go, how low did it go, and where did it finish? Those four numbers are the open, high, low and close, often shortened to OHLC. A simple line chart connects only the closes, so it hides the rest of that story.
- Body: the thick part of the candle. It spans the open and the close.
- Wicks: the thin lines above and below the body, which some charts call shadows. The top of the upper wick is the high, and the bottom of the lower wick is the low.
- Color: on a standard candlestick chart, a candle that closes above its own open is green or hollow, and one that closes below its open is red or filled. Colors and styles vary by platform, so read the prices, not just the color.
- Gaps: candles sit side by side in time order. When one opens well above or below the previous close, that’s a gap, common at the open after overnight news. If the two candles’ ranges don’t overlap at all, you’ll see empty space between them.
- Long wicks: a long upper wick means price traded higher during the period but couldn’t hold there by the close. A long lower wick means price traded lower during the period but recovered by the close. Neither tells you what happens next, but both show prices that were reached and not held.
Example Consider this example
A 5-minute candle opens at $500.20, climbs to $501.10, dips to $499.80 and closes at $500.90. The body runs from $500.20 up to $500.90, so it’s a green candle. A short upper wick reaches $501.10 and a short lower wick reaches $499.80. In plain English: price finished $0.70 above where it started and $0.20 below its high. One candle doesn’t show the order of moves inside those five minutes, only where they began, peaked, bottomed and ended.
Timeframes change the picture
A timeframe is how much time each candle covers: 1 minute, 5 minutes, 1 hour, 1 day and so on. Longer candles are built from shorter ones. To merge five 1-minute candles into one 5-minute candle, take the first open, the highest high, the lowest low and the last close, then add up the volume. Because merging hides the path in between, the same stretch of trading can look very different. A choppy 1-minute chart might be one calm candle on the hourly, and a strong-looking daily candle might hide a sharp drop in the first hour. Many traders check a higher timeframe for context, such as the daily trend, and a lower one for detail. Neither is the “real” chart; they answer different questions. The free StratosHedge chart lets you switch between 1m, 5m, 15m, 30m, 1h and 1d candles, so you can watch one session change shape as you zoom out.
Example Merging five candles
Five 1-minute candles (open, high, low, close): $500.00, $500.40, $499.90, $500.30 · $500.30, $500.80, $500.20, $500.70 · $500.70, $500.90, $500.10, $500.20 · $500.20, $500.30, $499.60, $499.80 · $499.80, $500.50, $499.70, $500.40. The 5-minute candle opens at $500.00 (first open), reaches $500.90 (highest high, third candle), dips to $499.60 (lowest low, fourth candle) and closes at $500.40 (last close). Five minutes of back-and-forth become one small green candle with wicks on both ends.
Volume shows participation
Volume counts how many shares or contracts traded during each candle. Most charts draw it as bars along the bottom. A move on heavy volume had many participants behind it; a move on light volume had fewer, and traders often treat it with more caution. Volume tells you how much trading happened, not who “won”: every trade has both a buyer and a seller. It often jumps when news hits or when price reaches an area many traders are watching. Compare volume with what’s normal for the same time of day. US stock volume tends to be heaviest near the 9:30 a.m. ET open (6:30 a.m. PT) and the 4:00 p.m. ET close (1:00 p.m. PT), and lighter around midday. Trading outside regular hours, called extended hours, is usually thinner still.
Check your understanding
5 questions. Answer each one, then open “Show answer” to compare.
Show answer
Answer: B. Price traded up to $42.90 during the period but couldn’t hold there by the close
The upper wick marks the high, $42.90. Closing at $42.15, just $0.05 above the open, shows the rally was given back before the period ended. A wick describes what already happened; it doesn’t forecast the next candle. And every trade has a buyer and a seller, so a candle can’t show “more sellers.”
Question 2 of 5 Five 1-minute candles have these lows: $19.95, $20.05, $19.90, $20.15 and $20.20. Their highs are $20.10, $20.35, $20.25, $20.40 and $20.30. What is the low of the merged 5-minute candle, in dollars?
$Show answer
Answer: 19.9 $ (anything within ±0.001 $ counts).
A merged candle takes the lowest low of its parts: $19.90, from the third candle. Its high is the highest high, $20.40, from the fourth. The open would come from the first candle and the close from the last.
Question 3 of 5 Order these candles from the one that covers the least time to the one that covers the most. Put these in order, first to last.
- 1-minute candle
- 1-hour candle
- 1-day candle
- 15-minute candle
Show answer
Correct order:
- 1-minute candle
- 15-minute candle
- 1-hour candle
- 1-day candle
Each step up is built from the ones below it: fifteen 1-minute candles make a 15-minute candle, four 15-minute candles make an hour, and a regular-session daily candle holds six and a half hours of trading, from 9:30 a.m. to 4:00 p.m. ET.
Show answer
Answer: False.
On a standard candlestick chart, a green or hollow candle closed above its own open. It can still close below the previous candle’s close, for example when it opens well lower after a gap down and recovers only part of the way. Some chart styles color by the previous close instead, which is why the lesson says to read the prices, not just the color.
Show answer
Answer: B. A move on light volume, with fewer participants than usual for that time of day
Forty thousand shares is about a quarter of what’s normal for that time of day, so participation was light. Traders often treat light-volume moves with more caution. Volume describes the past, though; it can’t prove what comes next.
Key takeaways
- Each candle records four prices: open, high, low and close. The body spans open to close; the wicks reach the high and low.
- Longer candles are built from shorter ones: first open, highest high, lowest low, last close and total volume.
- The same move can look calm or wild depending on the timeframe, so check more than one.
- Volume measures participation, not direction. Compare it with what’s normal for that time of day.
Try it in StratosHedge
Open the SPY chart and switch between the 1m, 5m and 1d timeframes. Find one candle with a long wick and compare its volume with the bars around it. Free charts are delayed by at least 15 minutes, which is fine for practice.
Read a real chart Needs: Free account
Key terms
- Candlestick (candle)
- A chart bar showing one period’s open, high, low and close. The thick body spans open to close; thin wicks reach the high and low.
- Timeframe
- How much time each candle covers, such as 1 minute, 5 minutes or 1 day. The same move can look very different on different timeframes.
- Trend
- The general direction of price over a timeframe: higher highs and higher lows in an uptrend, lower highs and lower lows in a downtrend.
- Volume
- How many shares or contracts traded during a period. Rising volume shows more participation behind a move.
- Extended hours
- Trading before the 9:30 a.m. ET open (pre-market) and after the 4:00 p.m. ET close. Volume is thinner and spreads wider, so prices jump more easily.
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