Not to discourage you, but thought you might find it interesting to know that candlestick analysis is barely used in Japan any longer. Charts in Japan are still printed using candlesticks
but if you go to a bookstore in Japan, it's almost impossible to find a book on candlestick analysis on the shelves. Either they found it not to be as effective as once thought or have moved on to something better. Again, this it just FYI, and wish you success in your study.
I always wondered what sparked the interest in candlestick analysis in the west. Just something new?
I gave a long essay here once about what you've discussed including the history about Japanese Candlestick patterns.
You asked what sparked the interest in it here in the west?
In a nut shell in comparison to my prior very detail explanation, several traders (institutional, floor and fund) from the west were transferred or employed in Japan when they met Japanese traders that used the ancient
analysis. The few books out there were all in Japanese but many traders used the analysis. The western traders than asked the Japanese traders to translate it for them.
One of those traders was a guy name Steve Nison and he then had one of those "light bulb" moments. He decided to be the first to market this analysis in the west to see if there was an interest. There was a strong interest and then later he marketed it in other countries. Today, it has been translated in many different countries but
misused by most traders as
trade signals.
Simply, there's a huge difference between analysis versus trade signals. In other words, analysis precedes trade signals. In other words, Japanese Candlestick Analysis was not designed to be used alone and it was designed to be used with market context.
In contrast, most folks that don't understand it or it didn't work for them...they attempted use it alone without context...resulting in them ignoring the analysis for the purpose of using them as trade signals. Heck, even most software or codes do a poor identification job of them and I've never seen any software that's able to identify them with context. The most common problem is that most will try to use them as trade signals.
They can be used successfully for position size management, trade management after entry and as clues to search for the market context (analysis) prior to the appearance of any trade signals.
Japanese Candlestick Analysis
works but you really gotta understand how to use them and most books out there are really for dictionary (illustration) purposes but traders attempt to use those books as trade signals.
Unfortunately, most traders are just interest in some easy route or short cut instead of using them the way they were designed along with passing forward that bad habit.
