The Candlestick patters are the basis for Japanese Candlestick chart analysis. Candlestick gives two dimensional view to depict open to close range and shadows so as to mark day's high and low.

One cannot ignore that Investor's psychologically driven forces of fear; greed and hope greatly influence the stock prices. Candlestick patter is one of the best Technical analysis tool to study the market psychology.

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Japanese Candlestick offer a quick picture into the psychology of short term trading, studying the effect, not the cause. Applying candlesticks means that for short-term, an investor can make confident decisions about buying, selling, or holding an investment.

If you combine candlestick analysis with other technical analysis tools, candlestick analysis pattern can be a very useful way to select entry and exit points. The common sense elements conveyed in the candlestick signals makes for a clear and concise trading technique for beginning investors as well as experienced traders.

Origin Of Candlestick Pattern

This amazing tool of technical analysis was uses by Japanese Rice traders in the  period of 1750 to 1800.

Mr. Munehisa Homma ( also known as Sokyu Homma ) ( 1724-1803 ) is often known to be the father of the candlestick chart his trading success reputedly led to him becoming a honorary Samurai.

Until about 1710, only physical rice was traded but then a futures market emerged where coupons, promising delivery of rice at a future time, began to be issued. From this, a secondary market of coupon trading emerged in which Munehisa flourished. Stories claim that he established a personal network of men about every 6 km between Sakata and Osaka (a distance of some 600 km) to communicate market prices.

In 1755, he wrote"The fountain of Gold - The Three Monkey Record of Money" the first book on market psychology. In this he claims that the psychological aspect of the market is critical to trading success and that traders' emotions have a significant influence on rice prices. He notes that this this can be used to position oneself against the market when all are bearish,there is cause for prices to rice and      vice-verse.

He appears to have used weather and market volume as well as price in adopting trading positions. He is considered the most successful market trader in history, generating over $100bn in profits at today's prices, some years earning over $10bn a year.