A. History Of Candlestick

“ It's hard to beat a person who never gives up ”

Candlestick has been used since 1700, Munehisa Homma is the most famous Japanese that used the candlestick to predict the future rice price by using the past price.

Homma, who traded rice futures discovered that markets were strongly influenced by emotions of the traders. And he realized that he could understand the emotions he could use that to predit futures. Between 1500 and 1600 the territories of today's Japan were at constant war. Each daimyo (feudal lord) was in constant contention to take over their neighbor. This one hundred year period is known as Sengoku Jidai or the "Age of Country at War"l. It slowly came to order in the early 1600's through three dynamic generals - Nobunaga Oda, Hideyoshi Toyotomi, and Ieyasu Tokugawa. Their combined leadership prowess has become legendary folklore in Japan's history. Their achievements are described as: "Nobunaga piled the rice, Hideyoshi kneaded the dough, and Tokugawa ate the cake." All the contributions from these great generals unified Japan into one nation. Tokugawa's family ruled the country from 1615 to 1867. This become known as the Tokugawa Shogunate Era.

The relative stability engendered by the centralized Japanese feudal system lead by Tokugawa offered new opportunities. The agrarian economy grew, but, more importantly, there was expansion and ease in domestic trade. By the 17th century, a national market had evolved to replace the system of local and isolated markets. This concept of a centralized marketplace was to indirectly lead to the development of technical analysis in Japan.

Because at that time Japanese did`nt have any standard exchange, their use rice as the tool to trade. So if one daimyo need money, he will send his rice to Osaka, that rice will be kept in the warehouse and he will get a coupon that he can sell it anytime he want. Rice traders tend to sell their coupon to avoid paying tax which is 40%-60% as a delivery fee. This was a beginning of word`s future market.

With this background, Munehisa homma dominate the rice price in Japan successfully. Munehisa Homma was born at 1724, at 1750 his father was death and he was appointed to continue his father business. Munehisa started his rice business at sakata city which is near with the port. Sakata is the city near the port that used to keep and distribute rice.

to dominate the price in edo market. In Edo people made a song to appreciate Homma, the lyrics are :

“ When the weather in sakata is bright and clear, the weather in Osaka will be cloudly and it will be raining in Edo.”

It means that when there is harvesting time in sakata, the rice price in Osaka will drop and rice price in Edo will be really fall. After dominating the rice price in Japan . Homma was appointed by japanese government as the consultant and get the admiration as a samurai. He died at 1803 then. It is believed that around 1700s he ever wrote a book about his principle of trading. This book than give a big change for many Japanese traders. Until now, Candlestick method has been spread all over the world , and quite popular not only for Japanese traders but many westerns traders has been used it too.