In the 16th century, japan didn’t have pre-defined currency for trading. People used to exchange commodities. Every person working was to give rice as a tax in Japan. At the port, Feudal Lords set up a store for the storage of rice collected. Rice receipt was used as a medium of conducting the sale and buy transactions. Additional receipts were generated for being people to transact with, they would be paid from the other harvests in future. Those receipts were referred as “Empty Rice Contracts” since there was no physical ownership of rice. It was the beginning of one day trading in the world.

Japanese Rice Tradingjapan-rice-trading

In the late 17th century a rice trader in Japan known as Mr. Homma Munehisa conducted a very deep study of all aspects concerning the future of rice. The study involved the fundamental and entire market psychology for the rice. Following his study, he became a very successful rice trader in Osaka at Ojima Rice Market. It was reported that Mr. Homma Munehisa had won more than 100 consecutive trades in a row. He became a legendary rice trader in Osaka. Many people referred him to “God’ when it came to rice market. For his contributions in the technical trading and trading capabilities, Mr. Homma Munehisa was honored as “Honorary Samurai’.

Candlesticks charts were found by Mr. Honorary Samurai. Candlesticks charts methodology was developed on the basis of the rice trading principles and techniques. In 1775 he wrote a book called “San-en Kinsen Hiroku“. In his book, he shared all the psychological aspect concerning the market.in his book he highlighted on how psychological mind of the traders plays an important role for them to be successful. He also mentioned that human emotions have a huge impact on the price movements for the rice in the market. His book became a great success to him.

Candlesticks in the Stock Market

candlestick-history

In the late 19th century, candlestick trading method started to be used by many Japanese technical analysts. The method was used in the Japanese stock exchange. In the early of 19th century, Mr. Charles Dow a very famous market technician picked up the Japanese candlesticks. Candlestick is the most popular technique used to analysis charts for the trade financial instruments by all the traders. It is in use up to date.

Candlesticks Introduced to America

Recently, Mr. Steve Nison agreed on the power from the Japanese candlestick. He was the first person to introduce the candlestick technique in the western world. It was in the mid-1980s when he first came across the Japanese candlestick. He met the candlestick in one of the Japanese broker offices. He was fascinated by the candlestick and he could not hide it. He began to research about the candlestick with great passion. His research took him three years to become a success writing his first book about the Japanese candlesticks. He became the first person in U.S to publish an article about the Japanese candlesticks analysis. His book was published in the year 1989, “Bibles of Candlestick Charting Analysis, Japanese Candlestick Charting Techniques, and Beyond Candlesticks”.

Candlestick Charts for Day Trading

Day trading is a technique which is popularized to all the general investments for the last 7 years. It emerged as a result of a decline in the severe market daily. With huge down days, it was difficult for investors and their brokers to the communique. It was enacted that the market should be accessed by everybody available, thus leading to electronic trading systems.

The initial day trading techniques must have an electronic signal which produced huge profits and quick arbitrage although the in the last two years they have disappeared. When using the candlestick signal, day trading is very profitable. The current candlestick signal clearly shows investors sentiment all changes for a certain duration. A combination of stochastic and candlestick signal facilitates high accurate results. When the stochastic and signal coordinate, day trading is the best platform to work on.

Candlesticks charts are easy to learn. Prices range of the open and close are usually plotted in a line as a rectangle. In case the close of above the open, the rectangle body is white and if the close is below, the rectangle body is red. Many candlesticks combine and form a candlestick pattern. The red color is used to as a representation of blood of the buyers and sellers in Homma’s reference.

Support-and-Resistance-in-the-Stock-Market

Support and resistance have long been vital trading indicators. With their roots in the supply and demand theory, these concepts represent key junctures where the forces of demand and supply meet.

Support and resistance are undoubtedly the most important attributes of technical analysis. Usually, they are used by traders to refer to price levels on charts which might act as barriers which control the movement of the price of a stock or a security. They are the levels from where the movement of this price tends to stop or reverse back. They represent the levels where quite a few traders might be willing to buy or sell the stock on various platforms.Support-and-Resistance-in-the-Stock-Market

What is support?

Support is defined as the price level at which demand is thought to be strong enough to prevent the stock price from falling any further. Whenever the price reaches the support level, it has difficulty going past that level. The logic dictates that as the price declines and approaches support, buyers become more inclined to buy a sellers become less willing to sell. By the time the price reaches the support level, demand will tend to overcome supply and stop the price from falling below support.

What is resistance?

Resistance is the opposite of support. It is the price level at which supply is strong enough to prevent the stock from increasing any further. The rationale is that as the price approaches resistance, sellers (supply) becomes more inclined to sell and buyers (demand) become less inclined to buy. By the time the price reaches the resistance level, the supply will overcome demand and prevent the price from rising above resistance.

Support and resistance levels are important points in time where the forces of supply and demand meet. These support and resistance levels are seen by technical analysts as crucial when determining market psychology, supply and demand. When these support or resistance levels are broken, the supply and demand forces that created these levels are assumed to have moved, in which case new levels of support and resistance will likely be established.Support-and-Resistance-in-the-Stock-Market

Some characteristics of support and resistance figures:

  • They help stock traders to arrive at entry or exit prices.
  • They are a useful aspect of trends as they help traders to make trading decisions and identify when the trend starts to reverse.
  • Round numbers are important in support and resistance levels. The increased selling and buying pressure at round numbers lends them psychological importance.

The importance of support and resistance

Support and resistance is a crucial part of trends as it can be used to make trading decisions and identify when a trend is reversing. Besides, these barriers form the basis of many successful trading strategies an almost all market stocks, bonds, forex, options, futures, commodities, and many more.

Moreover, support and resistance are determinant forces in the market. They represent price levels where traders can make financial decisions about profit and loss.

Identifying support and resistance

There are many indicators that have been developed to help identify these two barriers. However, using them effectively takes some practice and experience. Support and resistance can be easily identified with the help of moving averages. Besides, the Fibonacci retracement tool can be used to determine these levels.
Generally, support and resistance play an important role in technical analysis. Furthermore, they are key tools used by research firms, stock advisories, and broking firms which provide stock tips based on their technical analysis.