In this post, I will explain what the colors mean in the charts you see on the Robinhood app.
How Robinhood uses the color patterns
Robinhood Crypto combines colors and patterns to communicate to its account holders about the performance of various assets and trades on its exchange.
The most popular patterns on the Robinhood markets are the candlestick patterns. Candlestick patterns are preferred because of their ease of use and greater user experience on a mobile app. The candlestick patterns easily blend with color codes to provide an exquisite presentation of market data that both new investors and experienced retail investors can quickly grasp.
To understand how Robinhood uses color patterns, you need to grasp the following 4 aspects:
1. The importance of color codes
Imagine on one road you have a traffic police using hand signals to control a heavy traffic flow. Compare this to another similar road where traffic lights are used to control a heavy traffic flow. In most cases, you will find that traffic lights are better at regulating traffic flow than hand signals. Why? Because color codes are faster to learn, perceive, and interpret.
2. The 5 Color codes for Robinhood candlestick charts
The following are the 5 color codes applicable to Robinhood crypto trading:
The Green color signifies an upward movement in price. There are two variations of green color:
- Light Green – indicates a minor gain in price.
- Dark Green – indicates a major gain in price.
The Red color signifies a downward movement in price. There are two variations of red color:
- Light Red – indicates a minor loss in price.
- Dark Red – indicates a major loss in price.
Robinhood uses yellow instead of green for crypto trading. Thus, you can have light yellow and dark yellow substituting light green and dark green, respectively.
Robinhood also uses pink instead of red for crypto trading. Thus, you can have light pink and dark pink substituting light red and dark red, respectively.
The grey color indicates that the market is closed.
3. Custom colors
Despite the standard colors, the Robinhood platform allows users to create custom colors for their charts. For example, if you don’t like the Yellow/Pink combination, you can choose the traditional Green/Red combination.
4. Other use-cases of Robinhood color codes
Apart from Robinhood crypto trading, some of the assets and trades that Robin Hood utilizes these communication tools as part of its customer service include:
- Mutual funds
- Exchange-traded funds
- Options trading
- Fractional shares
- Stock trading
Reading the Robinhood Candlestick patterns
1. Robinhood candlestick chart anatomy
The candlestick has two major parts – the body and the wick.
(a) The body
The body of a candlestick represents the range between the open position and the close position. The shorter the body, the shorter the range. The longer the body, the longer the range.
(b) The wick (shadow/tail)
The shadow (wick) represents the elongated line that extends the body. These wicks are the visible long thin lines above and below the main body. They indicate the day’s high and low positions.
A tall shadow is an indicator of resistance while a long tail is an indicator of support.
2. The color codes
There are four major color codes for a candlestick which fall into two combinations –red/greed and black/white.
(a) The Red vs Green
The red color code indicates a bearish market (where prices are falling) while the green color code indicates a bullish market (where prices are falling).
(b) The White vs Black
Some charts are not colored. Rather, they are black and white. On these charts, the white (unfilled/hollow) color code represents a bullish market while the black (filled) color code represents a bearish market.
While some charts have a Red/Green combination, others have a Red/Black combination. Based on the color combination, we can draw the following interpretations;
- A green/white body signals that a given asset’s price movement soared over the day’s opening position.
- A red/black body signals that a given asset’s price movement fell below the day’s opening position.
- Black-filled candlesticks happen when the day’s close position is higher than the previous day’s close position yet lower than the day’s open position.
- Black-hollow candlesticks happen when the day’s close position is higher than the previous day’s close position yet higher than the day’s open position.
- Red-filled candlesticks happen when the day’s close position is lower than its open position yet lower than the previous day’s close position.
- The red-hollow candlesticks happen when the day’s close position is higher than its open position yet lower than the previous day’s close position.
3. The positions
There are three main sets of positions in a day’s market – the open/close position, the high/low position, and the rise/fall position.
(a) Open and close positions
The open and close positions on a bullish candlestick are directly inverse to those on a bearish candlestick.
This indicates that the closing price on a bullish candlestick is higher than the opening price. On the contrary, the opening price on a bearish candlestick is higher than the closing price on a bearish candlestick.
(b) The high and low
A high position refers to the ceiling position (highest price) in a day’s trading. On the other hand, a low position refers to the floor position (lowest price) in a day’s trading.
(c) The rising prices and falling prices
When prices are generally falling, they are represented by the red-filled or black-filled candlesticks.
On the other hand, when prices are generally rising, they are represented by green-filled or white-filled candlesticks.
4. The bearish vs bullish movements
The bullish movement is an upward movement as indicated by the upward arrow above. On the contrary, the bearish movement is a downward movement as indicated by the downward arrow above.
Understanding how to interpret the colors is particularly useful when swing trading in crypto.
Robinhood is not without competition. Some of its competitors include Webull and TD Ameritrade. Yet, Robinhood has cut out a niche for itself.
The following are key factors that draw many traders and investors to the Robinhood platform:
Founded by Vlad Tenev and Baiju Bhatt, Robinhood has expanded in leaps and bounds. The Robinhood platform is run by Robinhood Financial LLC a registered broker-dealer and one of the leading providers of brokerage services in the financial sector. Robinhood Financial LLC is an SIPC member and also a member of FDIC. It is also regulated by the U.S. Securities Exchange Commission. Due to its high reputation, there is significant risk reduction when trading and investing on Robinhood as compared to other platforms.
2. Outstanding features
The following are some of the astounding features that Robinhood users get to enjoy:
(a) The interface features;
- User-friendly interface – Robinhood focuses on ease of use. Thus, new customers will find it easy to navigate its mobile app and web interface. Most customers have rated Robinhood highly for great user experience due to its simple, intuitive, and sleek interface.
- Trading App – this Robinhood app enables Robinhood users to enjoy the full features of the Robinhood platform while on the go. These include trading stocks, crypto trades, and IRA accounts. You can use the trading app on both Android phone and iOS phones.
- Advanced charts – these include candlestick charts, Line charts, Moving Average (MA) charts, Relative Strength Index (RSI), Volume-Weight Average Price (VWAP), MACD, EMA, etc.
- Robinhood wallet – active traders can open self-custody crypto wallets on the Robinhood platform. This makes it easy to carry out crypto transactions.
(b) The investment features;
- Robinhood cash card – This card is issued by Sutton Bank. Instead of having general merchant credit cards for your Robinhood money, go for a Robinhood cash card. This is a debit prepaid card that lets you pay for your cash transactions on the Robinhood platform. phones
- Robinhood Gold – this is a membership facility that is ideal for active traders with a high volume of transactions and advanced investors. Robinhood Gold member gets to enjoy lots of benefits at lower recurrent costs. Robinhood gold is also ideal for any financial institution with an active trading portfolio.
- Advanced investment tools – these include Limit Orders and Order Flow.
- Investing platform – Apart from investing activities, the Robinhood investing platform enables users to gain useful information such as share price movement at any given point, stock price valuation, market cap of various digital assets (including the price of bitcoin), past performance of key digital assets during different time periods, essential tips on investment strategy, and relevant educational resources. On this investment platform, you can find an ideal investment tool for your financial asset management.
- Multiple trades and investment avenues – apart from traditional financial assets, you can also trade and invest in crypto assets.
(c) The trading features;
- Algorithmic trading bot – you can conduct Robinhood automated trading via an algorithmic trading bot.
- Brokerage account – Robinhood brokerage account is what distinguishes Robinhood from ordinary cryptocurrency exchanges. This account is specifically designed to provide brokerage services.
- Spending account – Robinhood spending account is specifically designed to be similar to an ordinary bank account.
- Instant deposits – you can make instant deposits from your bank account to your Robinhood brokerage account. This makes it quicker to utilize your cash on Robinhood money transactions while bank clearance, which typically takes up to 5 business days, is still being processed. Thus, the Instant Deposits mechanism lets you save up to 5 days of investment. This enables you to take advantage of the prevailing market conditions.
3. Great products
Robinhood has many products. Some of the most popular financial products that draw Robinhood users to the platform include:
- Robinhood crypto – you can invest in over 18 different types of crypto assets and enjoy most of the benefits you would get from non-crypto financial assets.
- Fractional shares – Robinhood allows one to own a fraction of a share. This is ideal for those shares that have a high price tag.
- Robinhood IRA – This is a special facility for IRA investment. All you need is to have a social security number to open up an IRA account. This is ideal for your retirement investing. You 1% match on the ordinary account and a 3% match on the Robinhood Gold account.
4. Exclusive benefits
Robinhood users get to enjoy the following benefits:
- Commission-free trading of stocks – Robinhood provides commission-free trades of stocks. You don’t pay anything to trade in stocks.
- Interest earning on uninvested cash – cash that you have yet to allocate to any investment vehicle still earns automatic interest.
- Free stock – new customers can get free stock on Robinhood upon opening a Robinhood account.
5. Crypto trades
Robinhood blends traditional financial products with cryptocurrency trading. However, unlike mainstream cryptocurrency exchanges, it has a very limited number of crypto assets available for trade. Currently, it offers just about 18 cryptocurrencies for trade, including bitcoin, ethers, and Shiba Inu coins. See Is Robinhood Bad for Crypto for more.
6. Accessible customer service
Customer support is of utmost importance when it comes to finance. Robinhood has several channels for interacting with customers. These include;
- phone calls – Robinhood has a toll-free phone number, (888) 275-8523, for customer service.
- social media – Robinhood has verified social handles on major social media platforms.
- Web/App – you can also contact the Robinhood customer service team on the web platform or App.
In this brief guide, I will walk you through how to set up a stop-loss order when trading crypto assets on Robinhood. Read more.