Candles: what one candle tells you
The four numbers inside the slice
A candle is a picture of one fixed slice of time. On a one-minute chart, that slice is sixty seconds. On a daily chart, it is one trading day. The slice length is chosen by you, not by the market. Change the slice and the candle changes shape, even though the underlying prices are the same.
The four numbers are the open, the high, the low and the close. The open is the first price recorded in that slice. The close is the last. The high and the low are the most extreme prices touched at any moment inside the slice. Every candle on every chart is built from exactly these four figures.
The order of the four numbers is not fixed. Price can open, fall to the low, rise to the high and close lower than the open. Or it can open, rise to the high, fall to the low and close higher. The candle does not tell you the order. It only gives you the four values. The path between them is hidden.
Body and shadows as differences
The body is the distance between the open and the close. If the close is above the open, the body is drawn one colour. If the close is below the open, it is drawn another. The body length is the difference between those two numbers, always written as a positive amount. It shows how far price travelled from the first price to the last.
The shadows are the distances from the body to the high and to the low. The upper shadow runs from the top of the body up to the high. The lower shadow runs from the bottom of the body down to the low. If the open or close equals the high or low, that shadow has zero length and may not appear at all.
On USD/INR, a pip is the fourth decimal place. A move from 83.2500 to 83.2600 is ten pips. The body and each shadow can be measured in pips the same way. Once you have the pip figure, you can multiply by the pip value for your position size. On one standard lot, that value is ₹10 per pip, so ten pips is ₹100.
What a single candle cannot show
One candle cannot tell you how many times price moved between the four numbers. A candle with a small body and long shadows may have moved up and down many times inside the slice. Another candle with the same four numbers may have moved in a single sweep. The shape is identical. The activity is not.
One candle also cannot tell you what happened before or after the slice. A long lower shadow means price fell and then recovered by the close. It does not mean the recovery will continue. The next slice starts fresh with its own open, high, low and close.
This is why a single candle is not a signal on its own. It is a record of one slice. To read it, you take the four numbers, work out the body and the range in pips, and convert to rupees using your pip value. That keeps the shape tied to figures you can check. Brokers vary in rounding, spread and charges, so your rupee result may differ from the raw calculation.
One USD/INR candle worth ₹2,400
| Step | Amount | Note |
|---|---|---|
| Open | 83.2500 | the price at the start of the chosen time slice |
| High | 83.2600 | the highest price reached during that slice |
| Low | 83.2360 | the lowest price reached during that slice |
| Close | 83.2450 | the price at the end of the slice |
| Body | 5 pips | open 83.2500 minus close 83.2450, a fall of 0.0050 |
| Body in rupees | ₹50 | 5 pips x ₹10 per pip on one standard lot |
| Upper shadow | 10 pips | high 83.2600 minus open 83.2500 |
| Lower shadow | 9 pips | close 83.2450 minus low 83.2360 |
| Whole range | 24 pips | high 83.2600 minus low 83.2360 |
| Range in rupees | ₹240 | 24 pips x ₹10 per pip on one standard lot |
Brokers vary in how they round prices, what spread they quote, and whether they add commission or other charges. The figures above are the raw numbers from the four prices, before any of that.
Doing it once, step by step
You will take one candle's four prices and turn them into body, shadows and range in pips, then into rupees on one standard lot. Do this once by hand, in order, before you trust any chart tool to do it for you.
- 01
Write down the four prices
Pick one candle on a USD/INR chart and note its open, high, low and close. Use the exact figures shown, not a rounded version. For example: open 83.2500, high 83.2700, low 83.2400, close 83.2600. Write them in a row so you can compare them.
- 02
Find the body in pips
Subtract the open from the close. If the close is higher, the result is positive. If the close is lower, ignore the minus sign and treat the body as a length. In the example, 83.2600 minus 83.2500 is 0.0100. That is 10 pips.
- 03
Find each shadow in pips
The upper shadow is the high minus the higher of the open and the close. The lower shadow is the lower of the open and the close minus the low. In the example, the higher of open and close is 83.2600, so the upper shadow is 83.2700 minus 83.2600, which is 0.0100, or 10 pips. The lower shadow is 83.2500 minus 83.2400, which is 0.0100, or 10 pips.
- 04
Find the whole range in pips
Subtract the low from the high. In the example, 83.2700 minus 83.2400 is 0.0300, which is 30 pips. The body plus the two shadows should equal the range. Here 10 plus 10 plus 10 is 30, so the figures agree.
- 05
Convert pips to rupees
Multiply each pip figure by the pip value for your position size. On one standard lot of USD/INR, that value is ₹10 per pip. The body is 10 pips, so ₹100. The range is 30 pips, so ₹300. Each shadow is 10 pips, so ₹100 each.
- 06
Check the shape against the numbers
Look at the candle on the chart and compare its shape with your figures. A body of 10 pips and shadows of 10 pips each should look roughly balanced. If the chart shows a long upper shadow but your numbers give a short one, you have misread a price. Correct the numbers before you use them.
The mistake most people make here
The common mistake is to look only at the body and ignore the shadows. A long upper shadow means price went up and then came back down before the slice ended, so the close does not show that journey. Another mistake is to treat one candle as a signal on its own. Read the four numbers first, work out the body and the range in pips, then convert to rupees using ₹10 per pip on one standard lot. That keeps the shape tied to something you can check.Check yourself
A USD/INR candle opens at 83.2500, reaches a high of 83.2700, a low of 83.2400 and closes at 83.2600. What is the body in pips and in rupees on one standard lot?
The body is the close minus the open: 83.2600 minus 83.2500 is 0.0100, which is 10 pips. At ₹10 per pip on one standard lot, that body is ₹100.
Using the same candle, what is the whole range in pips and in rupees?
The range is the high minus the low: 83.2700 minus 83.2400 is 0.0300, which is 30 pips. At ₹10 per pip on one standard lot, the range is ₹300.
Questions that come up next
How do I know which slice of time a candle covers?
The slice is set by the chart, not by the market. A one-minute chart draws one candle for every sixty seconds. A daily chart draws one candle for each trading day. If you switch the chart setting, the same prices get grouped into different candles. The four numbers change with the slice you pick.
Why does the body change colour between candles?
The colour only shows which of the two body numbers is larger. If the close is above the open, the body is drawn in one colour. If the close is below the open, it is drawn in another. The length is the same idea either way: the difference between open and close, written as a positive amount. Colour adds no fifth number.
Can a shadow be longer than the body?
Yes, and often it is. The body is the open-to-close distance. A shadow is the distance from the body to the high or to the low. Nothing ties the two sizes together. A candle with a tiny body and a long shadow simply means price reached an extreme and then returned before the slice ended.
What does a missing shadow mean?
It means the open or the close sat exactly at the high or the low. The distance from the body to that extreme was zero, so there is nothing to draw. This is common on quiet candles. It is not a special signal by itself.
How do I turn a candle into rupees?
Measure the part you want in pips first. On USD/INR, one pip is the fourth decimal place, so 83.2500 to 83.2600 is ten pips. Then multiply by the pip value for your position size. On one standard lot the value used here is ₹10 per pip, so ten pips is ₹100. Your broker's rounding and charges sit outside that sum.
Does the candle show the order the prices happened in?
No. It gives you four values and nothing about their sequence. Price may have opened, dropped to the low, climbed to the high and closed lower. It may have done the reverse. Two candles with identical numbers can hide completely different paths. The order is not recoverable from the shape.
The words used on this page
- slice
- The fixed stretch of time one candle covers. You choose it through the chart setting. Every candle on the page is one slice.
- open
- The first price recorded inside the slice. It is one of the four numbers a candle holds. It is not necessarily the highest or the lowest.
- close
- The last price recorded inside the slice. It is the other end of the body. The difference between close and open gives the body length.
- body
- The distance between the open and the close, written as a positive amount. It is drawn as a coloured block. Its length is the open-to-close difference.
- shadow
- The distance from the body out to the high or to the low. The upper shadow reaches the high, the lower shadow reaches the low. A shadow can be zero.
- pip
- On USD/INR, the fourth decimal place. A move from 83.2500 to 83.2600 is ten pips. Pip value depends on your position size and varies between brokers.
What to take away
- A candle is four numbers for one slice of time: open, high, low and close.
- Body and shadows are differences between those four numbers, and each can be measured in pips.
- The shape does not show the order of the prices or how many times price moved.
- Convert pips to rupees with the pip value for your position size, before any broker charges.