Japanese Candlestick Charting
(Steve Nison)
Many people who started trading would look into the countless indicators offered by their brokers. Everything from the simple moving average to the custom made ones, each promises to add an edge to the trader's strategy. However, one must realize that regardless of what the indicator may be, they are all based on the price chart that we tend to ignore.
If indicators follow price, then price must be the most recent information you can have about any market. However, people tend to ignore price because it requires subjective interpretation unlike purely mechanical indicators. People forget the price action shown is the actual mood and behavior of the market. The ability to read charts will give you significant edge into your trading.
Steve Nison introduced the West to Japanese candlestick charting. This type of chart was practiced in Japan well before any major financial markets existed. It gives the trader a glimpse of the psychology behind the market that indicators fail to portray. Traders must understand that it is people that move the markets. Although economics, news, and various reports do come into play in determining the general direction, it is the reaction of the traders to these resources that is more important.
Japanese candlestick is designed to portray the behavior of the traders during a session. Fear, greed, excitement and defeat are all captured in the forms of patterns described in this book. The names of these patterns rally important information on the strength and direction of the market. So if you wish to profit from trading in any financial markets, then the ability to read price action through candlestick charting will definitely give you a head start from those following behind you using those other indicators.
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