Times change; and those who do not change are left behind. The bar chart form of financial price presentation has served us well for hundreds of years, but it has been superseded by something better which is new but at the same time quite old. It’s just that an invention from hundreds of years ago has been rediscovered and reborn into the financial world of today. The bar chart - the “old way” - does well enough, even in real time, in showing the observer the advances and declines in prices during the trading day; but it is hard to follow visually, and even more difficult to extract from it any sense of the human emotional factor which is driving the many independent decisions which enter into each move up or down in prices as shown.

All of it jumps into lifelike form when price action is shown in candlestick chart format. The bar chart, rather than being a simple vertical line, is expanded or “bumped out” into a cylinder, in which the area between the opening price and the closing price is left unfilled (or “white”) if the closing, or latest or current, price is higher than the opening price; and filled in or marked in black if the closing, or latest or current, price is lower than the opening price. This is simplicity itself; and still it reveals so much about the “group-think” of the traders. The viewer of all of this activity on the computer screen becomes something of a psychologist; which is entirely apt, because this is the heart of candlestick trading.

The most compelling way to watch this activity is in real time. The activity on the computer screen is akin to a motion picture. The display is in fact moving all the time; sometimes the data input is measured in short seconds before the next impulse arrives. This form of presentation is especially attuned to human nature, because we respond instinctively to pictures. Everyone loves pictures.

If we accept as a given that most stock trading is prompted by human emotion rather than by pure logic, then it necessarily follows that the better we understand the emotional process the better we can understand and foretell what result the cumulative effect of human emotion is likely to produce next. Paradoxically, the more we understand the human emotion which drives investment decisions of others, the more unemotional and logical our own response to it can be; and therein lies the great benefit of candlestick trading.