Japanese Candlesticks Aren't Patented

It was centuries ago that a rice trader in Japan devised a method of price recordation which told him what he wanted to know about the psychology of his fellow traders.  It was almost like a living, breathing second-by-second tracking of their mood of the moment that gave him an advantage.  The secret to it, if indeed there was a secret, was that in the course of the trading day certain patterns, or pictures, appeared which captured the essence of what had happened and had predictive value for future events.

He gave names to these “reversal” pictures, which in themselves are word pictures.  They’ve been translated, arduously, over the years by enterprising people in the financial industry; and the entire system has been reduced to writing and widely broadcast.

The Candlestick pictures are especially adept at spotting reversals of major price trends, either as they are in the beginning stages or about to begin.  They do not predict the extent of the price change following a reversal.  Fortunately for us, they are adaptable to all forms of financial trading, including – now – trading in currencies, which was probably an unknown art those many centuries ago.

In earlier times, the Western invention of the “corporation” was probably unknown, too.  It is, as we know, an artificial person; and has come to be used as the predominant style of business characterization.  It is very convenient for the allocation of capital in that shares in the enterprise can readily be created and traded in public markets.

The formation of the “corporation” has led to the stock markets as we know them today.  Trading in the shares of corporations is truly “big business.”  Even larger, in terms of dollars at risk at any given time, is trading in foreign exchange, which takes place around the clock.

The Candlesticks, as a system of price recordation, are free to use and simple to learn, while at the same time being so obviously superior to anything else in terms of instantly identifying the psychology of the traders in picture form which is readily recognized by the eye and translated by the brain.  The eye loves pictures; and in this case it was never so true that “a picture is worth a thousand words.”

Everyone who has an active interest in any financial market should take the time and devote the minor amount of energy to learn the Candlesticks.  The pictures will open your eyes to trading delights that you never knew existed, and will add immeasurably to your enjoyment of trading as well as your success in the endeavor.