| It's hard to believe that a 400 year old way of | | | | measured amount of time during a trading period. |
| tracking a commodities market is still one of the | | | | Depending on the chart the bar could represent a |
| most popular and efficient ways of graphing the | | | | week, a day, four hours, one hour, 15 minutes, 5 |
| Forex market today, but that's exactly the case with | | | | minutes, or something else, so pay attention to the |
| candlestick charts. The Japanese were the first to | | | | time frame. The four prices in each candlestick are |
| use technical analysis, and the story goes that | | | | the high, low, open, and close. The high is the |
| candlestick charts were an invention of a Japanese | | | | absolute highest value the currency achieved during |
| man named Homma. | | | | the entire period while the low is the lowest value. |
| There was trading in commodities in Japan, specifically | | | | Open is still open, and close is close. Just that easy. |
| in the rice market starting in the 1600s. In the 1700s | | | | The color of the bar will depend on whether the |
| Homma discovered that while supply and demand | | | | currency ended up higher than the open or lower |
| was a basic truth, he noticed there was also a direct | | | | than the open at the end of the measured session. |
| link between the prices in the markets and the | | | | Often there will be green for gain and red for loss, or |
| general emotions of the traders involved. | | | | white and black, but the two colors really don't |
| Homma realized that he could benefit from | | | | matter, as long as you understand what each one |
| understanding their emotions to help predict the | | | | represents. Why are candlestick charts great to use? |
| future prices. He was one of the first to understand | | | | 1. You can see the open, close, high, and low all in |
| that there could be a vast difference between value | | | | one glance |
| and price of rice - that perceptions could be used to | | | | 2. You can access a lot of information easily and |
| take advantage and make a profit! | | | | quickly at a glance |
| A candlestick chart is so called because prices are | | | | 3. Trends are very easy to spot at a glance once |
| measured with a bar and two lines on each side, | | | | you're used to these charts |
| making it look like a candle. The color determines | | | | This kind of chart offers you an incredible amount of |
| whether the price rose or fell during the | | | | information and makes finding and locating potential |
| predetermined amount of time. The line on top of | | | | patterns and trends far easier than any other type |
| the bar measures the absolute highest price achieved | | | | of graph or method. This will be a major tool for |
| outside of the open to close range during the day, | | | | analyzing currency pairs, so it's one you will want to |
| while the bottom line is the absolute lowest price | | | | become familiar and comfortable with to add in your |
| outside of the open to close range. | | | | Forex arsenal. |
| There are four prices that are tracked for each | | | | |