What is the Real Body
The real body is the wide part of a candlestick chart. It indicates whether a stock’s closing price was higher or lower than its opening price.
BREAKING DOWN Real Body
The real body, in candlestick charting, is the wide part of a candle that represents the range between the opening and the closing prices over a specific time period.
Candlestick charts use a color-coded system to signify certain trends or fluctuations. When the real body of a candle is black or shaded red, it means the close was lower than the open. If the real body is empty or colored green, it means the close was higher than the open. This color-based system makes it easy for investors and analysts to see at a glance whether prices were up or down.
This system can be used to gauge investor sentiment during that period. A red candlestick would typically signal that there is intense selling pressure, since the prices dropped after the open. One could assume in this case that the price was bearish. On the other hand, a white candlestick would normally indicate that there is strong buying pressure, since prices increased after the open. This would generally imply that the price was bullish.
Real Body and Candlestick Charting
Candlestick charting is a method of evaluating stock performance using a certain style of financial charts. Its origins go back many centuries, and this concept has roots that may be surprising to many people. It traces back to Japan, where centuries ago Japanese merchants and rice traders would use a similar system to monitor and track market prices, specifically involving the price of rice. That Japanese system was eventually copied and modified by traders and analysts in the United States, where it has now become very popular.
In today’s U.S. investing environment, a candlestick chart tracks the high, low, opening and closing price of an individual security during a certain period. The contrast between these data points will determine the shape of the candlestick, which can vary widely based on the unique figures involved in that specific scenario.
The candlestick approach is viewed as a reliable and useful way to guide investment activities for any liquid financial asset such as stocks or futures. However, while candlestick charts can be a useful tool, they must be used as part of a comprehensive investing strategy. The candles should not be viewed as an isolated metric, but rather should be evaluated in relation to the existing market structure.