Munehisa Homma, a rice trader, is regarded as the originator of the concept. He used candlestick charts in the rice futures market, with each candlestick graphically representing four dimensions of price in a trading period. These four dimensions are the open, the high, the low and the close. A trading period is a time period from one second upwards.
Today, candlestick charts are used to track prices in all financial markets. These markets include foreign exchange (forex), commodities, indices, treasuries and the stock market. Stocks represent the largest number of traded financial instruments. The prices at which these instruments are traded are recorded and displayed graphically by candlestick charts. Candlestick charts are one of the most prevalent methods of price representation.
Candlestick chart analysis is an essential skill for traders. Candlestick charts are used to plot prices of financial instruments. The chart analysis can be interpreted by individual candles and their patterns. Bullish candlestick patterns may be used to initiate long trades. Bearish candlestick patterns may be used to initiate short trades.