If you have an interest in the foreign exchange market (more commonly known as Forex), candlestick charts are the most readable and useful graphic depiction available.

A combination of a line chart and a bar chart, a candlestick chart shows the range of price movement over a set period of time. Candlestick charts are an excellent aid when you are making decisions as you can see a lot of information about the Forex trading currency movement and with a little bit of education about what the chart represents, you will soon see why.

A rice trader by the name of Honma Munehisa was said to have developed the candlestick chart during the Tokugawa Shogunate, a period of feudal dictatorship in Japan. Honma was far ahead of his time; legend has it that he had men stationed every 6 kilometers along the road, positioned to relay the current prices of rice to his headquarters.

Honma’s charts gave him an overview of the rising and falling market prices over an extended period of time, and after they were codified, they were an invaluable tool for his operation.

These charts were used (and continue to be used today!) to predict future trends. In 1900, the American journalist and founder of the Wall Street journal, Charles Dow, discovered this technique and added it to his series of tools for understanding market behavior.

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