Lectii Pentru Un Trader Razboinic

Lessons for the Warrior Traderwww.samuraitradingacademy.com © 2012 Samurai Trading Academy “There is timing in the whole life of the warrior, in his thriving and declining, in his harmony and discord. Similarly, there is timing in the Way of the merchant, in the rise and fall of capital. All things entail rising and falling timing. You must be able to discern this.” Miyamoto Musashi There are few paths more challenging than the journey to becoming a successful trader. It is a profession unlike any other, where each day we step into a battlefield with few rules except those we make for ourselves. It’s for this reason that so many traders fail. Without a proper code to guide their actions and the discipline to follow it, they will have little chance to succeed. The other warriors on the market battlefield are prepared, highly experienced, and have an intense desire to win and return to fight the battle anew tomorrow. Do you have the determination to match or surpass them? In my years of trading I’ve always been inspired by the mindset of great warriors of the past, in particular the Japanese samurai. To me, the samurai warrior had all the needed mental tools to be successful at any endeavor of their time or ours. Trading is no exception. Miyamoto Musashi, perhaps the greatest samurai who ever lived, was of particular influence on me. Not only was he a legendary swordsman who never lost a battle, but he also produced other exquisite artistic works. He wrote The Book of Five Rings, was an accomplished calligraphist and sculptor, and completed a number of masterful ink paintings. For Musashi, the Way of the Sword was only one application of strategy, and by knowing the Way one could accomplish mastery in any skill. True strategy was about the life-long quest for knowledge, never becoming too rigid in your beliefs, and having no teacher greater than your own mind and creative process. Over the years I’ve tried to take his lessons and those of other notable warriors and apply them to trading and all other aspects of my life. I truly find their wisdom ageless and endlessly applicable. For the purposes of this brief book however, I just want to focus on some of the clear uses in our daily market approach. I realize that not all my interpretations of these quotes are fully faithful to their original meanings as I’ve taken a few liberties to make them applicable to my business of trading. What’s important is that as I look around the walls of my trading room and see these quotes, I am repeatedly reminded of the important lessons that must be part of my never-ending journey towards trading mastery. "In fighting and in everyday life you should be determined though calm. Meet the situation without tenseness yet not recklessly, your spirit settled yet unbiased. An elevated spirit is weak and a low spirit is weak." Miyamoto Musashi This is a perfect quote for the ideal Samurai Trader mindset. Good trading is all about clarity of thought, and you cannot find the proper perception without a calm mind. If you are too tense and worried about failure, failure is exactly what you will create for yourself. If you are overly excited and trade recklessly you will have similarly poor results. A calming balance can be found when your trading expectations match reality. Once you know what you and your systematic daily approach are capable of, then you can begin to find the ideal trader “zone”. In that zone you can lose without fear or pain, because you know losses are just a part of trading and following your plan. You can hold on for a big win rather than taking a few ticks the first time a trade stalls, because you understand the natural flow of the market and when the probabilities say you should give the trade a bit more time to develop. You don’t carry your biases into the market and try to impose your will upon it, instead allowing the market’s ebb and flow to provide the necessary cues you need. You don’t try to push way beyond your comfort zone nor fail to trade to your strengths, because you know what is realistic and achievable for you each day based on your experience level in the markets. A calm and open mind is your doorway to truly elite trading performance. And remember: be fearless, but never reckless! "Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things." Miyamoto Musashi Very little is more important to trading success than having the proper perception of what is happening. Far too often aspiring traders focus on the smallest elements on their charts and take foolish trades because they are ignoring the larger context of it all. Many pure price action traders are a good example of this. They see what looks like a good single bar, for example a candlestick known as a hammer, and they think that’s enough on its own to take a trade. Their vision was so focused on what was happening this very moment that they failed to realize that their trade was against the current trend of the market, into a recently broken support zone, or any other number of factors in the wider market. We must properly assess the market on both the small and larger scale. How does the recent price action fit into the big picture? Will the big picture influence the scenarios we are likely to see in upcoming price action? To be able to see the market in the proper context, it requires the clear and focused mind from our previous quote. In that state we are able to properly assess the overall market without filters or bias. “If you walk, just walk. If you sit, just sit. But whatever you do, don’t wobble.” Master Ummon I like this quote a lot – simple yet effective. Whatever we want to do, it’s only worth doing with proper discipline and complete mental focus. Otherwise, are we really accomplishing our goal? As a trader, you must be determined to stick to a strict code of mental discipline if you want long term success. If you don’t follow your own rules there will be nobody to blame but yourself. So know your goals, understand your systems and approach, and have clearly defined rules for yourself. Follow these with a disciplined mental approach and very little can stop you. This does not mean being inflexible. Rules don’t have to be carved in stone and completely unable to adapt to unique situations. But you must still clearly define what you will be looking for, how you will adapt if needed, and how you will manage your risk. Without the discipline to do this, are you really a trader? My own take on it is this: “If you trade, just trade. But whatever you do, don’t gamble.” “You win battles by knowing the enemy’s timing, and using a timing which the enemy does not expect.” Miyamoto Musashi I want to point out here that I don’t really think of the market as our “enemy”. The market isn’t against us, and it’s not trying to help us either. It’s simple an arena. Our battle is within ourselves as we approach the never-ending war between bears and bulls. To be highly effective traders we must be able to discern when one side is effectively winning the minor battles so that in the bigger picture price is now free to move. Proper timing in the market is everything. Just like a battle can be decided before it starts by the position of troops on the field, so can our trades be similarly affected if our timing is poor. The journey to our goals never truly comes to an end as each achievement leads to new discoveries and more paths to be followed in the future. but for the most part we need to discipline ourselves to stay in a trending mindset until the markets tells us to do otherwise. there was a perfect trend trade that we missed.they don’t take action in the present so they never grow. Usually at this point the novice jumps in the market for fear of missing out and has a dangerous position they are easily shaken out of. and in particular the ES and forex markets. “Study strategy over the years and achieve the spirit of the warrior. Somehow we were so focused on our countertrend opportunity that we were entirely blinded to the real potential of the market until it was already gone.” Yamamoto Tsunetomo Here’s another simple quote that I’ve adapted to trading.” Miyamoto Musashi The education of a trader never ends. He/she understands the way the market moves and the timing of the opportunities it presents. Markets like to trend and trends like to continue. "I must say. Inevitably we try a counter-trend trade only to see a quick loss and the market continues trending just as strongly as before. The best opportunity passes and panic sets in. The difficulty is that trends always look a little off to us in some way as they develop. Trying to impose our will on the market just because it “feels” like it should turn is almost always a losing game. There are no limits to the trader who treats every day as an opportunity for improvement over the last. Don’t fall into the same trap. Just jump on for the ride and take advantage of the momentum. They see their time to strike well before it actually occurs and are prepared in advance. The market doesn’t expect this kind of decisive strike and often doesn’t even get a chance to put up a fight before giving way to the elite trader’s well thought out plan. to die with one's sword still sheathed is most regrettable. We cannot change the past and the future is unwritten. if not more so. don’t try to stand in front of it. If the market is a runaway train." Miyamoto Musashi . Today is victory over yourself of yesterday. So use what you learn to be better than you were yesterday and repeat the process every day. Lesser men and women only dwell in the past or dream of the future . tomorrow is your victory over lesser men. They always seem to be too extended or running out of steam. “Continue to spur a running horse. What we do today is everything. The opportunities for improvement are endless and that is part of the fun. Then we notice that while we were holding that counter-trend trade and hoping it would come good. There is always something new to learn about the market and about one’s self. The market expects this and feasts upon it. Every trader at some point has fallen into the seductive trap of counter-trend trading.The novice trader often waits too long due to fear. all that matters is the present. An elite trader wins many of his battles before they begin with good planning and a researched strategy. Counter-trend trading certainly has its place for the experienced trader who has already learned some valuable (if painful) lessons on when and where to do it. Ultimately though. Give it all you can give. Miyamoto Musashi Există câteva căi mai provocatoare decât călătoria pentru a deveni un comerciant de succes. go for it. există un moment în Calea comerciantului. even though I like to interpret it in my own way. armonie și discordie. When meeting with a sudden shower. cu excepția celor pe care le facem pentru noi înșine. Ceilalți războinici de pe câmpul de luptă de pe piață sunt pregătiți. Toate lucrurile implică creșterea și coborârea calendarului. If your aspirations lie elsewhere. În mod similar. probabil cel mai mare samurai care a trăit vreodată. be disciplined. unde în fiecare zi intrăm într-un câmp de luptă cu câteva reguli. în creșterea și căderea capitalului. Este o profesie diferită de oricare alta. Nu numai că a fost un spadasin legendar care nu a pierdut niciodată o bătălie. No matter what the outcome. Trebuie să fii capabil să discernem asta. războinicul samurai avea toate instrumentele mentale necesare pentru a avea succes în orice încercare a timpului sau a noastră. When you are resolved from the beginning. and study your craft. “There is something to be learned from a rainstorm. foarte experimentați și au o dorință intensă de a câștiga și de a se întoarce mâine pentru a lupta din nou lupta. though you still get the same soaking. Tranzacțiile nu fac excepție.” Yamamoto Tsunetomo Painting by Miyamoto Musashi c. If you like the site and would like to learn more about day trading the markets I encourage you to sign up for our newsletter or RSS feed to keep up to date. în vremea lui înfloritoare și în declin. How many people out there have seen their dreams unrealized because they feared taking the first steps towards what they desired? How many dreams have died because everyone else said they were impossible until the dreamer actually believed it? If you truly want something. and tomorrow victory shall be yours to enjoy. Pentru mine. I invite you to come visit our website at: www. you still get wet. a fost un caligrafist și sculptor realizat și a completat o serie de picturi . Be determined. El a scris Cartea celor Cinci Inele. So live for the moment. dar a produs și alte opere artistice deosebite. avea o influență deosebită asupra mea. A samurai warrior did not fear death. it is better to have tried than to die without even having the courage to make an attempt. Fără un cod adecvat care să-și ghideze acțiunile și disciplina să o urmeze. în timp. Din acest motiv. am fost mereu inspirat de mentalitatea marilor războinici din trecut. "În întreaga viață a războinicului. 1600’s Thanks for subscribing to Samurai Trading Academy updates. But doing such things as passing under the eaves of houses. ei vor avea puține șanse să reușească. în special de samuraii japonezi. atât de mulți comercianți nu reușesc.com Here you’ll find market recaps. Miyamoto Musashi. I hope you enjoyed this special report! If you happened to find this report elsewhere. you try not to get wet and run quickly along the road. challenge yourself to be better today than yesterday. you will not be perplexed. various trading articles.Of all the quotes this one probably speaks to me the most. and details on our trading approach and training resources. He embraced it as a part of life. Aveți hotărârea de a le potrivi sau de a le depăși? În anii mei de tranzacționare. There was no point in running away from what was inevitable when death would come to us all eventually. then focus your efforts and start building towards your dreams today. So if you want to be a trader. You have to take the risk.samuraitradingacademy. you have to go for it. deoarece am luat câteva libertăți pentru a le aplica afacerii mele de tranzacționare. Miyamoto Musashi Acesta este un citat perfect pentru ideea ideală a lui Samurai Trader. încât nu și-au dat seama că comerțul lor era împotriva tendinței actuale a pieței. și de abordarea dvs. Puteți să vă mențineți pentru o victorie mare. Nu încercați să vă împingeți dincolo de zona dvs. Strategia adevărată a fost despre căutarea de cunoștințe de-a lungul vieții. În strategie. Buna tranzacționare se referă la claritatea gândirii și nu puteți găsi percepția corectă fără o minte calmă. Miyamoto Musashi Foarte puțin este mai important pentru succesul comercial decât a avea percepția corectă a ceea ce se întâmplă. Calea Sabiei a fost doar o singură aplicație a strategiei și. mai degrabă decât să luați câteva căpușe pentru prima dată când un târg comercial. de exemplu un sfeșnic cunoscut sub numele de ciocan și ei cred că este suficient pentru a face un schimb. "În luptă și în viața de zi cu zi. am încercat să-i iau lecțiile și pe cele ale altor războinici notabili și să le aplic la comerț și la toate celelalte aspecte ale vieții mele. pe piețe. Pentru Musashi. veți avea rezultate similare slabe. Îmi dau seama că nu toate interpretările mele despre aceste citate sunt pe deplin fidele sensurilor lor originale. Un echilibru calm poate fi găsit atunci când așteptările dvs. deoarece înțelegeți fluxul natural al pieței și atunci când probabilitățile spun că ar trebui să oferiți comerțului un pic mai mult timp pentru a se dezvolta. comerciale se potrivesc realității. Odată ce știți ce sunt capabile de dvs. cu un spirit înalt și un spirit scăzut slab". în timp ce privesc în jurul zidurilor sălii de tranzacționare și văd aceste citate. cu spiritul tău stabilit și fără imparțialitate. în schimb. dar niciodată nesăbuit! "Percepția este puternică și o vedere slabă. O minte calmă și deschisă este calea către o adevărată performanță de tranzacționare de elită. de confort și nici să nu faceți schimb de puncte forte. zilnică sistematică. În acea zonă. Dacă sunteți excesiv de entuziasmat și vă faceți griji în legătură cu comerțul. deși liniștit. Și rețineți: fiți neînfricați. Dacă sunteți prea tensionat și îngrijorat de eșec. Îmi găsesc cu adevărat înțelepciunea lor fără vârstă și fără sfârșit. deoarece știți că pierderile sunt doar o parte a tranzacționării și urmăririi planului. Traderii prea adeseori aspiranți se concentrează pe cele mai mici elemente din topurile lor și iau tranzacții prostești deoarece ignoră contextul mai larg al acestora.de cerneală. atunci puteți începe să găsiți "zona" comerciantului ideal. cunoscând Calea. Viziunea lor era atât de concentrată asupra a ceea ce se întâmpla chiar în acest moment. Nu vă aduceți prejudecățile pe piață și încercați să vă impuneți voința. puteți pierde fără frică sau durere. să te întâlnești cu o situație fără tensiune. De-a lungul anilor. Ei văd cum arată un bara unică bună. În scopul acestei scurte cărți totuși. dar nu fără îndoială. permițând pieței și fluxul de piață să furnizeze indiciile necesare de care aveți nevoie. îmi amintesc în mod repetat lecțiile importante care trebuie să facă parte din călătoria mea neîncetată către comerțul de măiestrie. este important să vedem lucruri îndepărtate ca și cum ar fi aproape și să vedem lucrurile apropiate". eșecul este exact ceea ce veți crea pentru dvs. Mulți comercianți de acțiuni cu prețuri pure reprezintă un bun exemplu în acest sens. care nu a devenit prea rigidă în credințele voastre și nu a avut nici un profesor mai mare decât propriul tău minte și proces creativ. vreau doar să mă concentrez asupra unor utilizări clare în abordarea noastră pe piața zilnică. ar trebui să fii hotărât. pentru că știți ce este realist și realizabil pentru dvs. pe baza experienței dvs. într-o zonă de sprijin recent ruptă sau pe orice alt număr de factori de pe piața . Ceea ce este important este faptul că. s-ar putea realiza stăpânirea oricărei pricepere. în fiecare zi. Bătălia noastră este în interiorul nostru în timp ce ne apropiem de războiul fără sfârșit între urși și tauri. nu jucați. " Maestrul Ummon Îmi place foarte mult acest citat .simplu. " "Câștigi bătălii cunoscând calendarul inamicului și folosind un moment pe care inamicul nu îl așteaptă". Indiferent ce dorim să facem. deci și tranzacțiile noastre pot fi afectate în mod similar dacă timpul nostru este slab. Momentul potrivit pe piață este totul. încât este ușor să fie scuturată. cunoașteți obiectivele dvs. Un comerciant de elită câștigă multe din bătăliile sale înainte de a începe cu o bună planificare și o strategie studiată.. ci pe voi înșivă. Urmați-le cu o abordare mentală disciplinată și foarte puțin vă poate opri. Dacă stai. Trebuie să evaluăm în mod corespunzător piața atât pe scară mică cât și pe scară mai largă. Dar indiferent ce faceți. nu vă faceți voci. Cum se încadrează acțiunea recentă a prețurilor în imaginea de ansamblu? Va influența imaginea de ansamblu scenariile pe care le vom vedea în acțiunile de preț viitoare? Pentru a putea vedea piața în contextul potrivit. trebuie să fim capabili să discernem când o parte câștigă efectiv bătăliile minore. Ei vad timpul lor de a greva bine înainte de a se produce de fapt și sunt pregătite în avans. Așa cum o bătălie poate fi decisă înainte ca aceasta să pornească de la poziția de trupe pe teren. în acest moment.mai largă. doar mergi pe jos. stai doar. începătorul sare pe piață din cauza fricii de a pierde și are o poziție periculoasă. . merită să ne descurcăm cu o disciplină adecvată și cu un focus mental complet. Pentru a fi comercianți cu un grad ridicat de eficiență. În această stare. cum vă veți adapta dacă este necesar și cum vă veți gestiona riscul. indiferent ce faceți. și aveți reguli clar definite pentru dvs. Dacă nu respectați propriile reguli. Dar trebuie să definiți în mod clar ce veți căuta. Comerciantul de novice adesea așteaptă prea mult din cauza fricii. înțelegeți sistemele și abordările dvs. Aceasta nu înseamnă să fii inflexibil. Dar. Piața așteaptă acest lucru și sărbători pe ea. Este o arenă simplă. Piața nu este împotriva noastră și nici nu încearcă să ne ajute. aceasta necesită o minte clară și concentrată din citatul anterior. astfel încât în prețul mai mare al imaginii este acum liber să se miște. nimeni nu va fi vina. Regulile nu trebuie să fie sculptate în piatră și complet incapabile să se adapteze situațiilor unice. suntem capabili să evaluăm în mod corespunzător piața globală fără filtre sau părtinire. trebuie să fiți hotărât să respectați un cod strict al disciplinei mentale dacă doriți succes pe termen lung. El înțelege modul în care piața se mișcă și momentul oportunităților pe care le prezintă. În caz contrar. "Dacă umbli. dar eficient. ne îndeplinim într-adevăr scopul nostru? În calitate de comerciant. Deci. ești într-adevăr un comerciant? Eu însumi mă implic în acest lucru: "Dacă faceți schimb. Miyamoto Musashi Vreau să subliniez aici că nu prea cred că piața este "inamicul" nostru. pur și simplu faceți schimb. Piața nu se așteaptă la acest tip de grevă decisivă și adesea nu primește nici o șansă de a face o luptă înainte de a da drumul la planul bine gândit al comerciantului de elită. De obicei. Fără disciplina de a face acest lucru. Cea mai bună ocazie trece și intră în panică. Nu putem schimba trecutul și viitorul este nescris. Călătoria spre scopurile noastre nu se încheie cu adevărat. Apoi. Dificultatea este că tendințele ne arată întotdeauna puțin pe măsură ce se dezvoltă. "Strategia de studiu a lungul anilor și de a atinge spiritul războinicului. observăm că. deoarece fiecare realizare duce la noi descoperiri și mai multe căi care trebuie urmate în viitor. Indiferent de rezultatul."Continuați să grăbiți un cal alergător". Doar săriți pentru plimbare și profitați de impuls. trebuie să te duci la el. Totuși. încercăm un schimb contra-tendinței doar pentru a vedea o pierdere rapidă. este mai bine să încerci decât să mori fără să ai curajul de a încerca. Ceea ce facem astăzi este totul. se află în altă parte. Fiecare comerciant la un moment dat a căzut în capcana seducătoare a tranzacțiilor contra-trend. probabil mă vorbește cel mai mult. Dă-i tot ce poți da. să muriți cu sabia uneia încă acoperită este cea mai regretabilă.ei nu iau măsuri în prezent pentru a nu crește niciodată. Astăzi este victoria asupra ta de ieri. Posibilitățile de îmbunătățire sunt nesfârșite și fac parte din distracție. " Miyamoto Musashi Educația unui comerciant nu se termină niciodată. ne-am concentrat atât de mult pe oportunitatea noastră de contra-contra. Câți oameni au văzut visele lor nerealizate pentru că se temeau să facă primii pași spre ceea ce voiau? Câte vise au murit. Într-un fel. în special. Bărbații și femeile mai mici locuiesc numai în trecut sau visează viitorul . Tranzacția cu tendințe contradictorii are cu siguranță locul său pentru comerciantul cu experiență care a învățat deja câteva lecții valoroase (dacă dureroase) cu privire la momentul și locul de desfășurare a acestora. Utilizați ceea ce învățați să fie mai bine decât ați fost ieri și repetați procesul în fiecare zi. chiar dacă îmi place să o interpretez în felul meu. încât am fost orbiți în întregime de potențialul real al pieței până când a dispărut deja. Nu avea rost să ." Miyamoto Musashi Dintre toate citatele. dacă nu chiar mai mult. Dacă piața este un tren runaway. în timp ce mențineam acel comerț contra-trend și speram că va veni bine. atunci concentrați-vă eforturile și începeți să construiți spre visele voastre de astăzi. Trebuie să-ți asumi riscul. dar în cea mai mare parte trebuie să ne disciplinăm să rămânem într-o mentalitate trendingă până când piețele ne spune să facem altceva. mergeți la el. în final. dacă vreți să fiți un comerciant. tot ce contează este prezentul. Există întotdeauna ceva nou de învățat despre piață și despre propria persoană. Fiți hotărâți. În mod inevitabil. Un războinic samurai nu se teme de moarte. Piețele preferă tendința și tendințele ca să continue. pentru că toți ceilalți au spus că sunt imposibili până când visătorul nu a crezut-o? Dacă vrei cu adevărat ceva. Nu există limite pentru comerciant care tratează în fiecare zi ca o oportunitate de îmbunătățire în ultimul timp. fiți disciplinați și studiați meseria. Ele par întotdeauna prea extinse sau au scăpat de aburi. a existat un trend perfect pe care l-am pierdut. piețele ES și forex. Yamamoto Tsunetomo Iată un alt citat simplu pe care l-am adaptat la tranzacționare și. Deci. nu încercați să stați în fața ei. Nu cădeți în aceeași capcană. iar piața continuă să se aplece la fel de puternic ca înainte. El a îmbrățișat-o ca parte a vieții. Încercarea de a impune voința noastră pe piață doar pentru că "se simte" ca și cum ar trebui să se întoarcă este aproape întotdeauna un joc de pierdere. "Trebuie să spun. Dacă aspirațiile dvs. mâine este victoria ta asupra oamenilor mai mici. He is acknowledged as the leading authority on the subject. Some sources claim. The Japanese candlesticks charts became very popular due to the level of ease in reading and understanding the graphs. Când vă întâlniți cu un duș brusc. 1989 and April." He describes the rotation of “Yang” (a bullish market). generating over $100bn in profits at today's prices. .'A Full Commentary on the Sakata Strategy' and 'Tales of a Life Immersed in the Market'. he has authored two other books. nu veți fi încurcați.fugim de ceea ce era inevitabil când moartea urma să vină la noi toți în cele din urmă. there is cause for prices to rise.. and “Yin” (a bearish market) and claims that within each type of market is an instance of the other type. When all are bearish. "Există ceva de învățat de la o furtună de ploaie. He appears to have used weather and market volume as well as price in adopting trading positions.. understood the startling power of Japanese candlestick charts and popularized this method to the Western Hemisphere. Articles written by Steve Nison that explain Candlestick charting appeared in the December. He is considered the most successful market trader in history. This is what we call as trend and counter trend.. Așa că trăiți pentru moment. Steve Nison. He has written a definitive book on the subject. " Yamamoto Tsunetomo In this the author states that " After 60 years of working day and night I have gradually acquired a deep understanding of the movements of the rice market. Când sunteți rezolvată de la început. The Japanese rice traders also found that the resulting charts would provide a fairly reliable tool to predict future demand. some years earning over $10bn a year. when everyone is bullish there is cause for the price to fall. tot vă udați. . 1990 issues of Futures Magazine. Dar făcând astfel de lucruri cum ar fi trecerea sub stâlpi de case. încercați să nu vă udați și să alergați rapid pe drum. deși încă mai aveți aceeași înmuiere. by name Japanese Candlestick Charting Techniques. provocați-vă să fiți mai buni astăzi decât ieri și victoria de mâine va fi a ta de a vă bucura. However. low and close prices. high. but also show open and close points. Anchor chart: These are supposed to have originated in the Kyoho Era from 1716. Japanese technical analysis flowered as people started thinking in terms of signals and trading strategies. They show not only the range of trading session by depicting the highs and lows. If the close is higher than the open. candle charts are often called Sakata charts in reference to the port city of Sakata. The arrow of the anchor line is the close. 5. The candles probably started in the early part of the Meiji period from 1868. They use only high. it is unlikely that Homma used candle charts. With the arrival of the candle charts. based on my research. the anchor points down. "In the material I had translated. These lines show not only the direction of the move. The top and bottom of the anchor's vertical line are the high and low of that session. using open. Some charts may not show open price. Nison says. Since each representation of ranges appears as vertical lines they were called as pole charts. where Homma lived. when I discuss the evolution of the candle charts. but the extent of the move for each session. So they might have taken a cue from anchor to create this chart. the anchor points up and if the close is lower. Stopping chart: These are also called as point charts. The use of black and white real bodies made analyzing the underlying supply and demand situation visually easier to determine than with the anchor charts. 4. line charts or star charts. As will be seen later. low and close prices." Evolution of the Japanese Candlestick Charts With his research Steve Nison explains the evolution of the Candle Charts. Patterns were developed and market .Controversy: In Beyond Candlesticks. The name came from the fact that each point or a star is where the prices stopped by the end of the session. Pole chart: This chart added the extra information by showing the range between the high and the low of the session. The usual meeting place for rice traders was port cities. it was more likely that candle charts were developed in the early part of the Meiji period in japan (in the late 1800s). The horizontal line of the anchor line is the open. This is a combination of the stopping charts and pole charts. Bar chart: These are most commonly used charts in the western world. This was the earliest type of chart and was drawn by joining only closing prices. 3. Candle lines were a refinement of the anchor chart. Candle chart: The next improvement from the anchor charts was the Japanese Candlestick Chart. 2. 1. He also talked to farmers and suppliers seeking their views on how prices moved. payment to Samurai's. perhaps the wealthiest person of all time. Because Candlesticks display the relationship between the open. was used for all sorts of things such as paper.prediction became more important. . as well as the major food stock. Humble as it seems to us now. low. they cannot be displayed on securities that only have closing prices. Sokyu Homma. That's right. In essence. the rural city of Sakata grew into a thriving market town. seeking to determine effects on crop yields. In 16th Century Japan. nor were they intended to be displayed on securities that lack opening prices. Over time Honma-san developed his ideas into what has been become to be known as the Sakata Strategy. high. this means that since most of the West is still using bar charts. it is also using a less evolved form of charting than the Japanese are with candle charts. His trading theory proposed that markets move in trends. Sokyu Honma or Kosaku Sato. Munehisa Honma. where farmers would bring their rice crop to sell to rice traders. painstakingly analysed over 1.500 years of rice trading history. we know this as Bullish and Bearish. Thanks to its location. behavioural finance is not a new concept. He reviewed historical weather patterns. saki. and closing prices. which he called Ying and Yang. it's been around since the 16th century. He took his his initial insight. Within each of these trends smaller trends appear. Steve Nison opines that bar charts were one of the ancestors of the more evolved and productive Japanese Candlestick Charts. Some say that that his birth name was Kosaku Sato and he was adopted by the Honma family of Sakata. and developed the basis of a charting system since known as Japanese Candlesticks. and rice was the center Japanese life. Trying to forecast the market took on extra importance in the 1870s when the Japanese stock market opened. rice was. It was here that one rice trader had an epiphany. the Tokugawa Shogunate was in full swing. which resulted in him becoming one of the richest men the world has ever seen. In various writings he has been known as Munehisa Homma. with the crop growing cycle forming the basis for many Shinto festivals. And what was this insight? irrational actions of market participants are an equal and sometimes greater market force than economic logic. we trade a wide range of assets such as Stocks. All long since out of print. Honma-san considered both economics and psychology to identify trading opportunities. and all sorts or derivative instruments. "Tales of a life immersed in the market". and to seel when a buying trend looks like it is exhausted ("buy low" and "sell high"). By 1755 Honma already knew that psychology and the IRRATIONAL actions of participants NOT economic logic drove markets. Honma-san wrote a number of books during his lifetime. which focuses heavily on economic factors and stocks are purchased and held for long periods of time. "The Fountains of Gold - The Three Monkey Record of Money". He sought to buy when a selling trend looked like it was exhausted. it’s 253 years old. and "A Full commentary on the Sakata Strategy". by a few centuries! How relevant is the Sakata Strategy today? Times have moved since the 16th Century and now. "My favourite holding period is forever" . And so it is reasonable to ask. Commodities. All can be traded from our smartphones (not something we would do!). is the Sakata Strategy still relevant today? We say absolutely.With the Sakata Strategy. This contrasts with the value style of investing. Market Crashes: The Tulip and Bulb Craze (1630s) . Understanding how both economic and psychological forces continually work to change prices is an essential skill for any investor. Bonds. instead of rice.Warren Buffett. Behavioral finance isn’t new. Markets are simply a collection of people buying and selling things. Options. Even the people who had locked in their profit by getting out early suffered under the following depression. Thus. the tulips contracted a non-fatal virus known as mosaic. and. panic and pandemonium were prevalent throughout the land. but then the market plunged even lower. The novelty of the new flower made it widely sought after and therefore fairly pricey. The color patterns came in a wide variety. a Speculative Bubble In 1593 tulips were brought from Turkey and introduced to the Dutch.in one month! The Risk of Putting Your Life Savings in Flowers Needless to say. the prices were not an accurate reflection of the value of a tulip bulb. The government attempted to step in and halt the crash by offering to honor contracts at 10% of the face value. we can tell you that at the peak of the market. Everyone began to deal in bulbs. After a time. a person could trade a single tulip for an entire estate. which was believed to have no limits. A Happy Accident. increasing the rarity of an already unique flower. at the bottom. began to rise in price according to how their virus alterations were valued. . Soon. some prudent people decided to sell and crystallize their profits. tulips. which didn't kill the tulip population but altered them causing "flames" of color to appear upon the petals. essentially speculating on the tulip market. Many Dutch persisted in believing they would sell their hoard to hapless and unenlightened foreigners. the originally overpriced tulips enjoyed a twenty-fold increase in value . As it happens in many speculative bubbles. thereby reaping enormous profits. life savings. one tulip was the price of a common onion. making such restitution impossible. The price began to dive. Dealers refused to honor contracts and people began to realize they traded their homes for a piece of greenery.When: 1634-1637 Where: Holland How Much: The amount the market declined from peak to bottom: This number is difficult to calculate. but. A domino effect of progressively lower and lower prices took place as everyone tried to sell while not many were buying. or desired. Somehow. causing people to panic and sell regardless of losses. and anything else they could liquidate to get more tulip bulbs. which were already selling at a premium. No one emerged unscathed from the crash. depleting the supply further and increasing scarcity and demand. The true bulb buyers (the garden centers of the past) began to fill up inventories for the growing season. prices were rising so fast and high that people were trading their land. Read more: Market Crashes: The Tulip and Bulb Craze http://www. 2013 Share 29Share Tweet 0Share In this article. Charles H.asp#ixzz4x5HvcL2I Follow us: Investopedia on Facebook 3 KEY PRINCIPLES OF TECHNICAL ANALYSIS By Galen Woods in Trading Articles on May 15. Investors now can know that it is better to stop and smell the flowers than to stake your future upon one.The effects of the tulip craze left the Dutch very hesitant about speculative investments for quite some time.investopedia. Dow – These three core principles of technical analysis are based on the six tenets of Dow Theory . you will learn the three fundamental principles of technical analysis.com/features/crashes/crashes2. Repeat it 100 times. The market does have an unknown target price determined by fundamentals (or rather what we expect of it). it does not move in a straight line directly to the price target. . Everything includes news. price and volume are all we need. These observations are vital to traders as our edge lies in staying with the inertia. and expectations. This simplicity is what I like about technical analysis. it will more likely continue to rise. This shows how important it is to stay with the trend. emotions. If the market is falling. in technical analysis. This is how important the market is. If the market is not going anywhere. As market prices fluctuate. Everyone (including the fundamental analyst) ponders over each piece of information to make only one decision: to buy or to sell. Hence. your net asset value fluctuates. it will more likely continue to stay within a range. data. Hence. As information keeps changing. The price tells us if we are in the green or red. 2ND PRINCIPLE – MARKET HAS INERTIA. And what everyone is really interested in is the price. However. we have this saying: “the trend is your friend”. If the market is rising. close your eyes and pick a random point on a chart. the market has a moving target.1ST PRINCIPLE – MARKET DISCOUNTS EVERYTHING. it will more likely continue to fall. How many times have you picked the exact turning point of a trend? Any answer more than zero is impressive. facts. 3RD PRINCIPLE – MARKET MOVES IN WAVES. Hence. Now. This single decision affects price and volume. this is a crucial principle as we use these ebbs and flows to time our entries and exit in line with the inertia. This imbalance causes prices to move in ebbs and flows. 2.PATIENCE AND PROFITS — WILLIAM DELBERT GANN William Delbert Gann (1878 – 1955) invented many trading tools that range from useful to esoteric. Gann knew that traders yearned to enter a trade but most forget what comes after. His books are not just about his geometric trading tools. W.This is because traders operating in different time frames have different needs. sixty years after he passed on. and supply may overcome demand in the next. That is why his ideas live on.D. demand may exceed supply at this moment. You can also find trading wisdom that applies even if you disagree with his trading methods. In using technical analysis. As a result. . Gann He’s not only an inventor of trading tools but also a prolific writer. Gann’s techniques are daring and innovative. which draw controversy. Otherwise. And profit less than you should. Remember that entering a trade is just the first step.As a reminder. Adjust your mindset and exercise patience. or to make the profit. It offers a rare glimpse into the inner thoughts of a real experienced trader. Alan Greenspan described it as “a font of investing wisdom”. It’s an important realisation. To give you an idea of how much you can gain from it. . you must have the patience to wait for opportunities to get out right. Understand this. Keep this in mind. you will meddle with your position more than you should. 3. Despite his success. Expect to wait for the market price action to unfold. it is all too easy to grow uneasy and restless while waiting for a trade to pan out. is a great read. As Livermore said: Nobody can catch all the fluctuations. Reminiscences of a Stock Operator. The book on his life and career. I channeled some of his ideas from that book in this article. He also led one of the most dramatic life on Wall Street in his time. expect to wait. It is your exit that confirms the outcome of each trade. Livermore was realistic about his approach to the market. and you will stop looking for the perfect method to catch every price swing. he wrote: When you make a trade. You will find focus and consistency. YOU JUST CANNOT CATCH EVERYTHING — JESSE LIVERMORE Jesse Lauriston Livermore (1877 – 1940) was a great speculator who made over $100 billion in today’s terms at his peak. Then. Yes. having lost his immense fortune more than once. His life was colorful because he was first a dancer. NOT INSISTENCE — NICOLAS DARVAS Nicolas Darvas (1920 – 1977) was born in Hungary and studied economics. He did not have Amazon.Disagree. his passion for trading must be overwhelming. and you will keep searching for the Holy Grail. ACCEPTANCE. . When he was not dancing. Nicolas Darvas was a self-taught trader. then a trader. This is a simple idea from him – a critical one. Like many of us. I accepted everything for what it was-not what I wanted it to be.000 in the Stock Market. You will keep falling for scams that guarantee incredible returns. To get his hands on that many trading books.000. He spent up to eight hours a day reading. 4. And he read some 200 books on market speculation. You can read all about him from his book – How I made $2. his time was consumed by reading. he came up with the concept of the Composite Operator.P. In his trading pursuit. E. align yourself with him. Wyckoff strove for clarity in his teachings. And that’s an understatement. The goal is to understand the Composite Operator through price action and volume. But to accept is no mean feat. And him alone. We feel happy and safe when we are in control and get what we want. Wyckoff studied many renowned speculators including Jesse Livermore. and not control. that requires hard mental work. an expression of market action as a single entity. In doing so. he also made his name as a key educator among retail traders. To feel at ease with a lack of control.  Is the market trending now?  What are the reversal patterns?  Are there clues in the volume changes?  Can you see accumulation or distribution of stocks? Once you uncover the thoughts of the Composite Operator. 5. and J. Morgan. H. We’re wired to control. Harriman. This is why traders need to learn to accept. THERE IS NO 100% IN TRADING — RICHARD WYCKOFF Richard Wyckoff (1873 – 1934) was not only a successful trader. . It is impossible to control the market.Market forces are powerful. MARKET EMOTIONS ARE CRITICAL — MUNEHISA HOMMA Munehisa Homma (1724 – 1803) was the richest grain trader of his time. and price trends. he was acutely aware of the myth of guaranteed performance. As the oldest trader in this list. As mentioned in our introduction.Even then. Heed the advice of this man. It’s about psychology and emotions. put him down as trying to impose on your credulity. The father of candlestick patterns says so. market psychology. his ideas have survived the harsh test of time to reach us. 6. he wrote the first book on market psychology – “The Fountain of Gold – The Three Monkey Record of Money”. who traded his way to buy an estate beside Alfred Sloan of General Motors. These include the idea of price supremacy. If anyone tells you they can almost be invariably successful. And stop listening to any one who tells you that he is a stock market genius who can guarantees you success. Success in trading means excess of profits over losses. That will save you from the confusing cutting-edge indicators out there. There are striking similarities between Homma’s methods and modern-day technical analysis. He’s widely credited with inventing candlestick charts. . …studying the emotions of the market could help in predicting the prices… Technical analysis is not just about patterns. If you are looking for a back-to-basics approach to trading. look to Homma. Edo. . Excuse me: where’s my favourite trader? You probably noticed a few names missing from this list.The best ideas we can take from great traders are not their trading strategies. The timeless ideas revolve around their attitude towards risk and methods to handle their psychology as they trade. In any case. if you want to learn from the best traders. This time is also called the Tokugawa period or pre-modern (Kinsei). This is by no means an exhaustive list. developed and used Japanese candlestick charting very successfully. dead or alive. which now is called Tokyo. I highly recommend Jack Schwager’s Market Wizards series. He traded rice contracts in the Ojima Rice market in Osaka during the Tokugawa Shogunate also known as the Tokugawa bakufu - a feudal regime of Japan established by Tokugawa Leyasu and ruled by the shoguns of the Tokugawa family. Homma Munehisa (1724-1803) a rice trader from Sakata. organized this ancient wisdom. This period is known as the Edo period and it gets this name from the capital city. Japan. The Three Monkey Record of Money which is the first book on market psychology. The fountain of Gold . and currencies. he understood that there was a difference between the value and the price of rice. bonds. Because of this. as it was with rice centuries ago. His methods are the oldest example of technical analysis documented. there were times when the market perceived a harvest as different from the actual. He discovered that although there was a link between the supply and demand of rice. he wrote San-en Kinsen Hiroku. This difference between price and value is as valid today with stocks. His trading success reputedly led to him becoming an honorary Samurai. He notes that this can be used to position oneself against the market. He reasoned that studying the emotions of the market could help in predicting prices. In other words. 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. Stories claim that Homma 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 this. the markets were also strongly influenced by the emotions of the traders. In 1755.Homma Munehisa is often referred as “The Father of The Japanese Candlestick Charting”. .