Recently, a friend asked me how to quickly understand the various indicators on candlestick charts, so I want to organize my insights and share them with everyone.

Actually, those seemingly complicated lines on the chart are not difficult at their core. For example, trading volume is just telling you how many people are buying and selling. You can think of it as the number of people buying candies in a store; when there are many, trading is active; when few, it’s quiet. The taller the bars at the bottom of the chart, the more people are involved in buying and selling.

Next is Bollinger Bands, a tool that helps you determine whether the price is deviating from the normal range. Imagine a rubber band being stretched too tight; it will eventually snap back. Bollinger Bands work on this concept, with a middle line representing a moving average, and an upper and lower line serving as boundaries. Price fluctuations within these boundaries are normal; when it goes beyond, it could be a turning point.

When talking about moving averages, we have to mention the basic indicators MA and EMA. MA is the Moving Average line, which is simple: it plots the average price over a certain period, helping you see the trend clearly without being confused by short-term fluctuations. For example, if your last five exam scores are 80, 85, 90, 95, and 100, the average is 90. On the chart, MA is shown as a red line representing the average price over that period.

But there’s an upgraded version called EMA, or Exponential Moving Average. The difference between EMA and MA is that EMA gives more weight to recent data. If your recent exam scores have improved, EMA reacts faster than MA, providing a more current average. On the chart, you’ll see a blue line (EMA) that follows price changes more agilely than the red line (MA).

I’ve found that many beginners are initially intimidated by these terms, but once you understand the basics of MA and EMA, other indicators become much easier. Next time you look at a chart, start by observing MA and EMA, and gradually you’ll find yourself able to understand the rhythm of the market.