The Japanese Candlesticks system of financial price presentation was developed centuries ago in the Japanese rice trade. One trader wanted to fashion a device for himself, whereby he might be able to determine the mind-set of other traders. He was playing amateur psychologist, for sure. At the end of a trading day, he would mark down the high and low prices of the day, the opening price, and the closing price.

The direction of the trading, as revealed by the relationship of the close to the open, gave him some idea of the traders' mood that day. The difference lay in the "stick" or bar which he used. His invention was to show the area of prices between the open and the close as a fattened-out line, thereby creating a cylinder. If prices closed higher than the open, he left the cylinder blank. If prices closed lower than the open, he filled in the cylinder "black." A quick glance revealed the underlying psychology of the traders for that day.

That's the basis of the Japanese Candlestick system, which has been carried over to the present day and is used in all kinds of financial trading. A full recitation of Candlestick Charting Explained is best left to the authoritative text materials.

Singly or together, Candlestick price bars can create specific patterns which, over time, have been proven to be accurate predictors of future price moves. Singly or in combination, these individual bars (which can represent time spans to suit), alone or together, are simply pictorial representations of traders' mind-set, as a group.

So we are dealing with pictures, not with numbers per se. This is Pattern Recognition, pure and simple. The Candlesticks foretell the probable next direction of trade, but they do not foretell its extent; nor do they suggest entry prices or exit prices. All of those other competencies are left to other devices. The Candles show the opportunity; the trader takes the signal and uses his other tools in order to make trades.

It is not possible to convey the full range of information which the Candlestick should have - certainly not in a short article under the caption "Candlestick Charting Explained." A few other tips may be helpful, however. The trader should familiarize himself with the 15 or so most prevalent and generally reliable Candlestick reversal patterns. This is easier and faster than you might think. The whole process is very intuitive. The trader can assimilate than in just a few very short hours - certainly between suppertime and bedtime.

The Candlesticks really come into their own when viewed in real time. The impression is that of a movie - which of course it is, because the data feed shows trading as it is happening, and the mood of the investors is on full display across all time frames.

Every trader should learn the Candlesticks. His trading education is very incomplete otherwise.