Technical Analysis Basic & History Part (1)

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This story dates back to the 1800s.

In the city of Osaka, Japan, just as shares were traded in the stock market today, so was rice. Osaka was the only Rice Exchange in Japan. Farmers used to come from far and wide to buy and sell rice in Osaka. 

A man named Homma, a rice merchant at the time, came to Osaka to trade rice. He overheard a conversation between two farmers and said, “When I brought the rice to the market for sale, the price was 40 and it was 45 when the market closed. The price was 50 and when the market started on the third day, it was 60. “ Homma was upset to hear this. Everyone was shocked to see the increased prices. Because they did not know that the price of rice would go up from Rs 45 to Rs 60. 

Homma decided that the price of rice should be monitored and the buyer and seller of rice should also be considered. Homma began to study these things, but there was a problem. Homma was living in SAKATA, 600 km from Osaka Were. Now how to record rice prices? As a solution to this, Homma assigned a man every 6 km with a flag and with the help of that flag captured the market movement and started making charts on paper. After much effort, Homma set a record of Market Opening Price, Closing Price, Highest Price, Lowest Price. Made some charts While noting that continued to record for a few days, Homma saw some Signals and Patterns and started naming those Patterns as Doji, Tasuki, Harmi, Draganfly Doji etc. Homma then gave a specific reference to each pattern as the opening price and closing price of rice were the same when Homma named it “DOJI”. And this pattern became Homma’s new theory. 

            Homma was the first trader in the world. Understood the Physiology Behaviour of sellers and buyers by tracking the price of rice and used by Homma in trading. Homma’s method is the world’s first example in Technical Analysis. He used this method to succeed in 100 trades. A few years later, the Japanese government made him a Financial Advisor. Traders in Japan began to use these things. He was later renamed Japanese Candlestick by a trader named Steve Nison. After researching these things, he started using it in the stock market. 

            We will see the second part of Technical Analysis in the next blog. 

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