Forex glossary
Doji Candle
A doji is a candle whose open and close are equal or nearly equal under a chosen tolerance, leaving a very small body. Shadow lengths can differ. It describes little net change during the period, without revealing participant intentions or establishing the next direction.
Illustrative example
How does it work in practice?
Assume EUR/USD opens at 1.1000 and closes at 1.1001, with a 1.1020 high and 1.0980 low. A one-pip body within a forty-pip range may meet the chosen doji tolerance.
A case to work through
Body and tolerance
Hypothetically, open=100.00 and close=100.04; the doji rule allows a body of at most 0.03.
- The body is 0.04, exceeding the stated limit by 0.01.
- With a different explicit tolerance of 0.05, the same body would qualify.
What follows? State the threshold used when classifying the candle.
Example boundary: A small body does not establish reversal; libraries may set thresholds relative to earlier candles.
A useful distinction
Doji Candle / Spinning Top
A doji's body is near zero under a tolerance; a spinning top has a small but more noticeable body and shadows.
Check your understanding
Apply a stated doji classification tolerance.
Show the answer and explanation
No; it exceeds the limit by 0.01
The rule uses the explicit tolerance.
Bodies, shadows and context
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Read the fuller explanation
Related terms
Sources and documentation
- TA-Lib – ta_CDLDOJI
Original OHLC body/shadow detection code and configurable candle thresholds; implementation is not effectiveness evidence.
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