Dating gide candlesticks
This type of analysis is commonly thought to have been developed by a rice trader named Homma who was from the small town of Sakata in Japan.
Pre-dating the western bar chart by a century, Homma created what were to become modern candlestick charts because he realized that rather than supply and demand, it was trader emotion that was the biggest variable driving the price swings in rice.
The first component is the candle body, usually shown as a rectangle or square shape, depending on the price action.
The second component, the wick, is the line that exists on the top and bottom of the candle’s body and shows the high and low extremes for a particular time period.
This is a Guest Post by @Trend Spider and originally appeared on their Trend Spider Blog.
Whether you are new to trading or not, you have probably seen those stock photos of someone sitting in front of a screen full of charts that accompany every article about trading.
While the name is all about the resemblance to a hammer, to understand the psychological aspects of this, we need to explore this in more detail.
For anyone looking to understand trading, having a strong background knowledge of candles and what they depict can give you a leg up in the challenging game of stock trading.If its an hourly chart, each candle represents one hour of trading, a 5-minute chart means each candle is 5 minutes and so on.Regardless of time period, each candle is made up of two components and can be used in exactly the same way to conduct the analysis. Each candle here is represented as one day’s price action shown under “Time Frame”. If the candle is green, the price closed above the previous time period, if red, the price closed below the previous time period.Recognizing candle patterns is one of the first skills you should learn in your trading journey, but it’s not just about seeing the pattern, understanding what it is showing you and how you can develop profitable candlestick trading strategies is key.The value in all the patterns that are commonly used for trading is that they can be used to potentially predict future price action.
These emotional swings in traders can be shown through patterns that we will dig deeper into later.