A Brief History of Japanese Candlestick Charting

Japanese Candlestick

In Japan , during the 16th century there wasn’t any pre-defined currency for buying and selling of objects. Rice was collected as a tax from all working people, and various Feudal Lord’s had made a set up at the port city of Osaka to store the collected rice in warehouses, as a result, rice receipts of the available rice stock were used as a medium for exchange in buying and selling transactions. Sometimes additional receipts were created for transactions, which would be paid from the future rice harvests. These were called “Empty Rice Contracts” because there wasn’t any physical possession of rice. This was the beginning of one of the world’s first futures market.


Later in 17th century, Mr. Homma Munehisa (Honma Munehisa, 1724-1803) a rice trader from Sakata, Japan studied very deeply in all aspects of the rice futures market ranging from fundamentals to the entire market psychology and, as a result, he became a successful rice trader at the Ojima Rice Market in Osaka; further Homma was reported to have 100 consecutive winning trades in a row and became a legendary rice trader, he was considered as GOD of the rice market. He was honored as an “Honorary Samurai” for his trading capabilities and for his contributions in the field of technical trading.


Mr. Homma Munehisa is the founder of candlesticks charts, and the candlesticks methodology is entirely based upon their trading techniques and principles. In 1755, Mr. Homma Munehisa wrote a book “San-en Kinsen Hiroku, (The Fountain of Gold – The Three Monkey Record of Money)” and shared the psychological aspect of the market; he mentioned that a trader’s mind psychology plays a critical role in his success and the price movements in the market are highly influenced by human emotions. This book was a huge success.


Later in 19th century many Japanese technical analysts started applying candlestick trading method in Japanese stock exchange. Around 1900, The Japanese candlesticks were picked up by the famous market technician Mr. Charles Dow , and till today it is the most popular form of technical analysis charting method used by traders, to trade financial instruments.


More recently, Mr. Steve Nison understood the power of Japanese candlestick charting and was the first person to introduce it to the western part of the world. Mr. Steve Nison came across the Japanese candlesticks chart for the first time in the mid 1980’s in the office of a Japanese broker, he became fascinated by them and could not resist and, as a result, he started to research them so passionately that, after 3 long years of research, he published a book on Japanese candlesticks.
Mr. Steve Nison authored the first article written on Japanese candlesticks analysis in the U.S. (published in Futures magazine in 1989) and he are the author of the “Bibles” of Candlestick Charting Analysis, Japanese Candlestick Charting Techniques and Beyond Candlesticks.


Mr. Steve Nison is a C.M.T (Chartered Market Technician) and is the recognized leading authority on Japanese Candlesticks and has over 30 years of experience in technical analysis and holds a M.B.A. in Finance and Investments. He has also worked as a senior analyst at Merryl Lynch. Mr. Steve Nison’s work has been highlighted in many financial publication houses including The Wall Street Journal; Barron s, Institutional Investor, and Euroweek.

Submit Your Comments: