What it is
A candle has four prices, and the close is only one of them. The typical price blends in the high and low so that a candle with a long wick counts differently from one that closed near its extreme. Median price ignores the close and takes the middle of the range. Weighted close counts the close twice, so it sits between the two.
On its own the line is a simple reference. Its main value is understanding and comparing what other indicators feed on: VWAP and CCI use the typical price, the Alligator and Awesome Oscillator use the median price.
How it is calculated
1. Typical price = (high + low + close) divided by 3. 2. Median price = (high + low) divided by 2. 3. Weighted close = (high + low + close + close) divided by 4. 4. Plot the chosen value for every candle as a dashed line.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Formula | typical | typical, median or weighted | Which blend of prices is plotted. Typical is balanced, median ignores the close, weighted leans towards the close. |
How to read it
How to trade it
- 1
Use it as a filter on a 15 minute gold chart: only take buy signals from your main indicator when the candle closes above its own typical price.
- 2
Enter on the close of that candle.
- 3
Place the stop below the candle's low, or below the typical price line of the prior candle if that is tighter and still logical, often 5 to 8 points.
- 4
Target the next key level or 2 times the stop.
- 5
On US30, a run of closes below the typical price during a rally warns of weak buying; tighten stops on longs.
A buy filtered by a close above the typical price is proved wrong when the next candles close below their typical price and below your entry candle's low.
WickSpeak runs in your browser with nothing to install. When you add the typical price line, it writes a plain-English reading on the live candle: what the indicator is, what it is doing right now, how to trade it and what would prove that reading wrong. It says where the latest close sits against the chosen formula and what that says about who finished the candle stronger.
The typical price line is a reference drawing and is not one of the indicator conditions in Playbook.
Best markets and timeframes
Works on every market and timeframe. Most useful on gold, indices and forex when you want to judge the quality of each close.
Common mistakes
- Expecting it to give trade signals on its own; it is a reference line.
- Mixing up typical (three prices) with median (two prices).
- Comparing it with indicators built on a different price without realising.
Works well with
Questions traders ask
What is the typical price formula?
Typical price is the high plus the low plus the close, divided by 3. It is often written as HLC3.
What is the difference between typical price and median price?
Median price is the high plus the low divided by 2, the middle of the candle's range. Typical price also includes the close, so it shifts towards where the candle finished.
Which indicators use the typical price?
VWAP, the Commodity Channel Index and the Money Flow Index all use the typical price. The Alligator and Awesome Oscillator use the median price.
What is weighted close?
Weighted close is the high plus the low plus twice the close, divided by 4. It gives the close extra weight while still using the range.