Getting Started with Candlesticks - The Basics of Financial Charts

A Look at the Markets - Vanguard All-World ETF

Last week, we examined the price of the Vanguard All-World ETF. We saw that after the volatility at the beginning of August, the price had initially dropped 10.6% from recent highs but recovered to only a 6.1% drop. Now, less than 2 weeks after the initial increase in volatility the ETF is only 2.9% lower than the recent highs.

Of course, this is not an indication of what might happen in the future. But it does show the importance of keeping a level head in volatile markets.

And do remember that, part of being an investor is accepting that there will be times when we may see 30% drops or more.

Getting Started with Candlestick Charts

Most of the charts I post in these newsletters are called ‘candlestick charts’. They are how I read the financial markets.

Let’s look at the ‘candles’ that make up the chart, so you too, can read the charts.

Here is an example of a daily candlestick chart from Apple.

Looking at the chart we can see Price (in this case in USD) along the Y-Axis and Time along the X-Axis. This is a ‘daily’ chart so each candle represents the price action on one trading day (there are approximately 20 trading days every month)

Let’s look at an individual candle.

Each candle represents a time frame from 1 minute (used by day traders) up to 1 month. As an investor, I tend to look at daily, weekly and monthly candles. I will sometimes look at hourly and 4-hourly charts to see price action around news events.

Candles are made up of 2 parts - the body and tail. The body of the candle is the thickest part.

The body represents the difference in price between the price at the start of the time frame and the price at the end of the timeframe.

Candles may have one or two tails. The tails are the thinnest part - think about the tail of a dog.

The tails represent the highest and lowest prices that were recorded between the start of the timeframe and the end of the timeframe.

One of the most important parts of candles is the colour. This tells you whether the price action is positive or negative.

If a candle closes higher than it opens it represents positive price action and is, therefore, a ‘bull candle’. Bull candles are typically green or white.

If a candle closes lower than it opens it represents negative price action and is, therefore, a ‘bear candle’. Bear candles are typically red or black.

Looking back at the Apple chart we can now begin to read the price action so far in 2024. The length of the candles indicates how volatile the price is.

I find this chart fascinating. We can see that the price action was slightly negative until the 3rd week in April. But then you can see 3 important events in the Apple story:

• 2nd May 2024 - Positive

• 11th June 2024 - Positive

• 5th August 2024 - Negative

We can now use the internet to check which news events may have caused this price action. Immediately we find:

• 2nd May - earnings - the markets reacted positively to the quarterly earnings results

• 11th June - WWDC - again the markets reacted positively to the Apple developer event and the announcement of further AI (Apple Intelligence) integration

• 2nd August - this was the time of the market volatility (Yen carry trade unwinding discussed in this newsletter of 9th August 2025). This was a market event and not solely connected to Apple.

And thus we can use this information to interpret the price action on the chart. Apple's price has reacted positively to company news. It rebounded well even after negative market events.

You might be asking why we need candlestick charts. Having examined the information we can read from a candlestick chart, let’s switch to a line chart. While it can be argued that the same information is there, unarguably it is a lot more difficult to read.

Which chart will you analyse?

Starbuck’s Shake-up!

It was announced this week that Starbucks is getting a new CEO in September - Brian Niccol. Niccol originally trained as an engineer but has spent most of his career in food retail. He is credited as being the mastermind behind Chipotle’s recent success where he is currently CEO. His proven ability to drive sales and profits at Chipotle has sparked optimism. Starbucks’ share price jumped 24.5% by the end of the day after the appointment was announced.

Niccol’s appointment has also sparked interest in his potential financial rewards. reports suggest that he could earn well over $100 million in his first year alone, subject to meeting performance-related targets.

Nice work, if you can get it!

Idiom of the Day: To Keep a Level Head

To keep a level head - idiom - to remain calm and think clearly in a difficult, stressful or troubling situation.