Understanding volume candle charts
Volume candles are similar to standard candles only in that they vary in thickness which depends on the trading volume. This chart type can help you more easily identify the time periods when the most trading has occurred and analyze candlestick patterns.
CONTENTS:
- What are volume candles
- Volume candles vs standard candles
- Enabling the chart type
- Volume candles settings
- Candlestick patterns
What are volume candles
If you are familiar with standard candles, you may already know that each candle consists of a rectangular body that represents open and close prices and wicks/shadows/tails that indicate the highest and lowest prices during that period.
Volume is one of the most important metrics in trading. High volume may tell you whether the price movement is caused by market participants' interest in that asset and thus it's more likely to be the "true" price direction.
On the contrary, low volume may indicate that, for instance, chart patterns are broken falsely, and price may return to its previous values.
Volume candles vs standard candles
As mentioned earlier, the only difference between these two chart types is that volume candles are displayed with different thickness of their bodies.
As a quick summary of their benefits, volume candles:
- Give you a clear picture of open, high, low, and close prices
- Provide an easy to interpret relationship between price and volume
- Work with candlestick patterns
Enabling the chart type
Once you are on Supercharts, open the сhart type menu on the upper toolbar, and select "Volume candles."
Volume candles settings
To make the most of your volume candles chart, you can customize them according to your preferences and needs.
For that, find the gear "Settings" button on the upper toolbar and go to the "Symbol" tab.
The first section, "Volume candles," lists settings specific to this chart type:
- Color based on previous close: When enabled, the color of each candle will depend not of this candle's open and close prices but on the relationship of this candle's close price and the previous ones
- Body: Change candles' bodies' outlook for enhanced visual appearance
- Borders: Change the colors of the candles' edges
- Wick: Choose the preferred color of the candles' shadows
Candlestick patterns
To maximize the utility of candlestick charts, you can use Candlestick pattern indicators. To do that, go to the upper toolbar and select "Indicators," choose "Patterns" and scroll down to find "Candlestick patterns indicators."
These automated tools detect specific candlesticks and patterns and provide insights into their potential implications. However, it’s best to always evaluate the broader context and not rely solely on automated indicators to make trading decisions.
Volume candles in a nutshell
There are many different forms of charts, each enhancing your view on the markets.
Volume candles are a step forward toward the understanding of true price movements. Their visual appearance may help you avoid potential false signals of other technical analysis tools regarding trend changes or continuation.
In trading, there's nothing completely true while relying on a single source of information. TradingView recommends studying other chart types along with indicators and drawing tools to have a broader understanding of financial markets.
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