Green Candle Meaning in Trading, and Why a Red Day Can Print Green

A green candle in trading means the price closed higher than it opened during that candle's time period, and a red candle means it closed lower than it opened. On a daily chart each candle is one trading session, so a green daily candle tells you the stock finished the day above its opening price, which is a different thing from finishing the day up.

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How a candlestick shows open, high, low and close

Every candle records four prices for its time period, which traders shorten to OHLC for open, high, low and close. The thick part of the candle, called the body, runs from the open to the close, and the thin lines above and below it, called wicks or shadows, stretch to the high and the low.

• Open: the first traded price of the period, at the bottom of a green body or the top of a red one.
• Close: the last traded price of the period, at the top of a green body or the bottom of a red one.
• High and low: the tips of the upper and lower wicks, showing the full range the price covered.

Each candle covers whatever period the chart is set to, whether that is five minutes, one session or a week, so the same stock can show a red daily candle sitting inside a green weekly one.

Candlestick charts are usually traced back to rice traders in Japan, with the merchant Munehisa Homma often credited as an early user in the 1700s, and Steve Nison brought them to Western traders in the early 1990s.

What a green candle means

A green candle means buyers pushed the price above where it started the period. A tall green body with small wicks shows a session that opened near its low and closed near its high, while a small green body with a long lower wick shows sellers driving the price down during the session before buyers pushed it back up by the close.

On its own, a green candle does not tell you whether the stock is up or down compared with yesterday, because that number is the daily change in your watchlist and it is measured from the previous close rather than from today's open.

What a red candle means

A red candle means the price closed below where it opened, so sellers had the upper hand over that period. A long red body after a run of green candles is the shape nobody wants to see on a position they are holding, since it shows the price opening strong and sliding for the rest of the session. A long upper wick on a red candle shows a rally that buyers could not hold.

Why a green candle can appear in a falling market

Because candle color compares the close with the open, a stock can drop for the day and still print a green candle. This happens when the stock gaps down, opening well below the previous close, and then claws back part of the loss during the session.

Take a made up example where a stock closed at $50 yesterday and bad news came out overnight, so it opens at $46, trades as low as $45.20 and then recovers to close at $47.50. Today's candle is green, because $47.50 is above the $46 open, yet the stock is down $2.50, or 5%, on the day. String together a week of gap downs that each recover a little and you get a chart that slides steadily lower while every single candle on it is green.

That is the joke traders tell when a position keeps falling and they want a friendlier screen, and it is the reason candle color should never be the only thing you read. The change from the previous close, the trend on a higher timeframe and the volume behind the move fill in what the color leaves out.

Candle colors are just a chart setting

Green for up and red for down is a convention that most charting platforms let you change, and in mainland China the usual convention runs the other way, with red for a rising price and green for a falling one. Some platforms also color candles by the change from the previous close rather than from the open, and hollow candle styles mix both ideas, so check your settings before reading anything into a color.

The colors are only there to help you scan a chart quickly, and changing them does nothing to the price, which is a lesson most of us learn the first time we wish it would.

Related terms

A long run of mostly green candles over months is loosely what people mean by a bull market, and a long run of mostly red is a bear market, which our guide to bull vs bear market explains properly. A sharp wick that pokes through an obvious level and snaps straight back is often called a stop hunt, and a brief green rally inside a steep fall is a dead cat bounce.

A case for anyone who has changed their chart settings

Every day trader has stared at a red screen and wished it looked different, which is the moment behind the Green Candles Only Phone Case for Day Traders. The design shows a chart falling steadily from top to bottom while every candle on it is painted green, with the caption "so I changed my chart settings." The joke only lands if you know how candles work, so it gets a laugh from the right people and a puzzled look from everyone else.

It is a two layer case with a hard polycarbonate shell and a TPU lining and a glossy dye sublimation print, printed for your exact phone model after you order. It fits 34 iPhone and Samsung Galaxy models, works with wireless charging (not MagSafe) and ships free in the US, and if you are shopping for someone else, our list of gifts for day traders has more ideas.

Once you can read single candles, the next step is reading the direction they add up to, which is what the trend is your friend is all about.

Frequently asked questions

What does a green candle mean in stocks?

In stocks, a green candle means the share price closed above its opening price for that candle's time period. On a daily chart, that means the stock finished the session higher than where it opened, even if it is still down from the previous day's close.

What does a red candle mean in trading?

A red candle means the price closed below its opening price for that period, which shows that sellers were in control from the open to the close. It does not by itself mean the stock is down for the day, since a stock that gaps up and then fades can print a red candle while still finishing above yesterday's close.

Why are there green candles when the stock is going down?

A stock can fall from one day to the next while each daily candle closes above its own open. This happens when the price gaps down at the open and then recovers part of the loss, so the chart trends lower even though the candles are green.

This guide explains a phrase and is not financial advice.

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