Japanese candlesticks: their origin and idea

The Japanese candlestick is not merely a coloured shape on the screen; it is a way of depicting price movement over a single time period in a small drawing the trader reads at a glance. Before we study the patterns, it is worth knowing where this method came from.

Where did it come from?

Japanese candlesticks date back to around 1600 AD, when rice merchants in Japan bought and sold in organised markets. Their development is attributed to a merchant named Homma Munehisa, who noticed that rice prices do not move by numbers alone but reflect the psychology of the participants — greed, fear and hesitation. So he devised a method of notation that shows this psychology in a single shape.