Steve nison candle charting collection free download torrent

About The Author. Steve Nison is the foremost leader of the art of using candlestick charting as an analysis tool in studying market trends and making investment decisions. Includes bibliographical references and index. ISBN 1. Stocks-Charts, diagrams, etc. Investment analysis. N57 Learn how to make money in the beyond, even if you have candlesticks … Steve Nison is the foremost leader of the art of using candlestick charting as an analysis tool in studying market trends and making investment decisions.

Nov 01, Pages. Steve Nison must be given full credit and acknowledgment for pio- neering. Steve Nison provides a very thorough outline of candlestick charting in this book. Having introduced the candlestick technique to the West through two of his bestselling books, Steve Nison is regarded as a luminary in the field of candlestick charting.

In accessible and easy-to-understand language, this book offers expert instruction on the practical applications of candlestick charting to give every level of investor a complete understanding of this proven, profitable, and time-tested investing technique. Straightforward answers quickly clarify this easy-to-use charting method. Besides Bloomberg L. I want to thank those who took time from their busy schedules to review the introductions for Part Two of the book.

They are: Mr. When I asked them questions via fax I expected just brief answers. But these three NTAA members took their valuable time to write pages of explana- tions, complete with drawings. They were wonderful about sharing their candlestick experiences and insights with me.

I also want to thank them for reading over and providing information for Chapter 2 on the history of Japanese technical analysis. If there are any mistakes that remain, they are those that I failed to correct.

I want to thank again "idea a day" Bruce Kamich. Bruce is a friend and a fellow futures technician. Throughout our year friendship he has provided me with many valuable ideas and suggestions. Probably two of the most important were his suggestion that I join the MTA and his constant haranguing until I agreed to write a book about candle- sticks.

Then there's the publishing staff of the New York Institute of Finance. They were all great, but those with whom I worked most closely deserve extra praise. Susan Barry and Sheck Cho patiently, skill- fully and affably guided a neophyte author through the labyrinth of the book publishing business. Of course there is my family. At the time that I was writing this book, our newborn son Evan entered the picture with all the excitement about candlesticks, I came close to calling him Candlesticks Nison.

Try writing a book with a newborn and a rambunctious four-year-old daughter, Rebec- ca, and you start to get an idea of how much my wife, Bonnie, contributed to this book. She cared for the children while I maladroitly pummeled away at the keyboard. Obviously, she had the harder job. For each chapter's heading, and throughout the book, I used Japa- nese proverbs or sayings.

Many times proverbs in the United States are considered trite and are rarely used. This is not so in Japan where prov- erbs are respected. Besides being enjoyable to read, the Japanese prov- erbs offer insights into Japanese beliefs and perspectives. Tuttle, and Kenkyusha Ltd. Finally, I must give proper and legal acknowledgements to many of the services I relied upon during my writing and research.

Graphics reproduced herein under the permis- sion of the Chicago Board of Trade. The views expressed in this publication are solely those of the author and are not to be construed as the views of the Chicago Board of Trade nor is the Chicago Board of Trade in any way responsible for the contents thereof. A system so versatile that it can be fused with any Western technical tool? A system as pleasurable to use as it is powerful? If so, this book on Japanese candlestick charting techniques is for you.

You should find it valuable no matter what your background in technical analysis. Japanese candlestick charts are older than bar charts and point and figure charts. Candlesticks are exciting, powerful, and fun. Using can- dlesticks will help improve your market analysis. My focus will be mainly on the U.

Candlestick techniques can be used for speculation and hedging. They can be used for futures, equities, options, or anywhere technical analysis is applied. By reading this book you will discover how candle- sticks will add another dimension of analysis. Do not worry if you have never seen a candlestick chart. The assump- tion of this book is that they are new to you.

Indeed, they are new to the vast majority of the American and European trading and investing com- munity. If you are a seasoned technician, you will discover how joining Japa- nese candlesticks with your other technical tools can create a powerful synergy of techniques. The chapters on joining Japanese candlestick techniques with Western technical tools will be of strong interest to you.

If you are an amateur technician, you will find how effective candle- stick charts are as a stand alone charting method. The Japanese technicals are honed by hundreds of years of evolution. Yet, amazingly, we do not know how the Japanese analyze our markets with their traditional technical tool called candlesticks. This is disconcert- ing if you consider that they are among the biggest players in the finan- cial markets.

The Japanese are big technical traders. Knowing how the Japanese use candlestick charts to analyze both our markets and theirs may help you answer the question "What are the Japanese going to do? Why shouldn't we do the same?

If you do not learn about Japanese candlestick charts, your competition will! If you like reading about colorful terminology like "hanging-man lines," "dark-cloud covers," and "evening stars" then this book is for you. If you subscribe to one of the multitude of services now providing candlestick charts and would like to learn how to use these charts, then this book is for you. In the first part of the book, you learn how to draw and interpret over 50 candlestick lines and formations.

This will slowly and clearly lay a solid foundation for the second part where you will learn to use candle- sticks in combination with Western technical techniques. This book will not give you market omniscience. It will, however, open new avenues of analysis and will show how Japanese candlesticks can "enlighten" your trading.

Probably, many more of you have not. In December , I wrote an introductory article on candlesticks that precipitated an immediate groundswell of interest. It turned out that I was one of the few Americans familiar with this centuries-old Japanese technique. I wrote follow-up articles, gave numerous presentations, taught classes, and was interviewed on televi- sion and by newspapers across the country.

In early , I wrote a short reference piece for my Chartered Market Technician thesis about candle- stick charts. It contained very basic introductory material, but it was the only readily available information on candlestick charts in the United States.

This handout became very popular. Within a few months, Merrill Lynch, the publisher of the booklet, received over 10, requests. Was it the lack of information in the United States? I don't know the answer, but it has taken years of research to fit all the pieces together. I was fortunate in several ways. Introduction Perhaps my perseverance and serendipity were the unique combination needed that others did not have. In , I became acquainted with a Japanese broker.

One day, while I was with her in her office, she was looking at one of her Japanese stock chart books Japanese chart books are in candlestick form. She exclaimed, "look, a window. She told me a window was the same as a gap in Western technicals. She went on to explain that while Western technicians use the expression "filling in the gap" the Japanese would say "closing the window.

I spent the next few years exploring, researching, and analyz- ing anything I could about candlestick charts. It was not easy. There are scant English publications on the subject. My initial education was with the help of a Japanese broker and through drawing and analyzing candlestick charts on my own. It was a Japanese booklet which had been translated into English. Unfortunately, there were just ten pages on interpreting candlestick charts.

Nonetheless, I finally had some English candlestick material. A few months later, I borrowed a book that has had a major influence on my professional life. It contains about 70 pages on candle- stick charts and is written in English.

Reading it was like finding an oasis in a desert. As I discovered, while the book yielded a harvest of information, it took some effort and time to get comfortable with its concepts. They were all so new. I also had to become comfortable with the Japanese ter- minology. The writing style was sometimes obscure. Part of this might have resulted from the translation. The book was originally written in Japanese about 25 years ago for a Japanese audience. I also found out, when I had my own material translated, that it is dreadfully difficult to translate such a specialized subject from Japanese to English.

Nonethe- less, I had some written reference material. This book became my "Rosetta Stone. I chewed and grinded away at the new ideas and terminology. I was fortunate in another sense. Although Mr. Shimizu does not speak English, the translator of the book, Greg Nicholson, graciously acted as our intermediary via fax messages.

The Japanese Chart of Charts provided the foundation for the rest of my inves- tigation into candlesticks. Without that book, this book would not have been possible. In order to continually develop my abilities in candlestick charting techniques, I sought out Japanese candlestick practitioners who would have the time and inclination to speak with me about the subject.

I met a Japanese trader, Morihiko who had been using candlestick charts and who was willing to share his valuable time and insights. This was exciting enough! Then he told me that his family had been using candle- stick charts for generations! We spent many hours discussing the history and the uses of candlestick charts.

He was an invaluable storehouse of knowledge. I also had an extensive amount of Japanese candlestick literature translated. Obtaining the original Japanese candlestick information was one problem. Getting it translated was another. Based on one estimate there are probably fewer than full-time Japanese-to-English transla- tors in America this includes part-time translators ' I had to find a trans- lator who could not only translate routine material, but also the highly specialized subject of technical analysis.

The direc- tor, Richard provided indispensable help to this project. He was a rarity. He was an American fluent in Japanese who understood, and used, technical analysis. Not only did Richard do a wonderful job of translating, but he helped me hunt down and obtain Japanese candle- stick literature.

Thanks to his help I might have the largest collection of Japanese books on candlesticks in the country. Without Richard this book would have been much less extensive. Before my introductory article on candlestick charts appeared in late , there were few services offering candlestick charts in the United States.

Now a plethora of services offer these charts. These include: Bloomberg L. Their popularity grows stronger every day. The profusion of services offering the candlestick charts attests to both their popularity and their usefulness. I have had calls and faxs from around the world requesting more infor- mation about candlestick techniques.

Why the extensive interest? There are many reasons and a few are: 1. Candlestick charts are flexible.

Users run the spectrum from first-time chartists to seasoned professionals. This is because candlestick charts can be used alone or in combination with other technical analysis techniques. A significant advantage attributed to candlestick charting techniques is that these techniques can be used in addition to, not instead of, other technical tools.

I am not trying to convince veteran technicians that this system is superior to whatever else they may be using. That is not my claim. My claim is that candlestick charting techniques provide an extra dimension of analysis.

Candlestick charting techniques are for the most part unused in the United States. Yet, this technical approach enjoys a centuries-old tra- dition in the Far East, a tradition which has evolved from centuries of trial and error. Then there are the picturesque terms used to describe the patterns. Would the expression "hanging-man line" spark your interest?

This is only one example of how Japanese terminology gives candlesticks a flavor all their own and, once you get a taste, you will not be able to do without them. The Japanese probably know all the Western methods of technical analysis, yet we know almost nothing about theirs. Now it is our turn to benefit from their knowledge. The Japanese use a combination of candlestick charting techniques along with Western technical tools. The primary reason for the widespread attention aroused by candle- stick charts is that using them instead of, or in addition to, bar charts is a win-win situation.

Introduction 5 As we will see in Chapter 3 on drawing candlestick lines, the same data is required in order to draw the candlestick charts as that which is needed for our bar charts that is, the open, high, low, and close.

This is very significant since it means that any of the technical analysis used with bar charting such as moving averages, trendlines, Elliott Wave, retracements, and so on can be employed with candlestick charts. But, and this is the key point, candlestick charts can send signals not avail- able from bar charts. In addition, there are some patterns that may allow you to get the jump on those who use traditional Western charting tech- niques.

By employing candlestick charting instead of bar charting you have the ability to use all the same analyses as you would with bar charting. But candlestick charts provide a unique avenue of analysis not available anywhere else. Part I of the book reveals the basics on constructing, reading, and inter- preting over 50 candlestick chart lines and patterns. Part explains how to meld candlestick charts with Western technical analysis techniques.

This is where the true power of candlecharts is manifested. This is how I use them. I have drawn illustrations of candlestick patterns to assist in the edu- cational process. These illustrations are representative examples only. The drawn exhibits should be viewed in the context that they show cer- tain guidelines and principles. The actual patterns do not have to look exactly as they do in the exhibits in order to provide the reader with a valid signal. This is emphasized throughout the book in the many chart examples.

You will see how variations of the patterns can still provide 'mportant clues about the state of the markets. Thus, there is some subjectivity in deciding whether a certain candle- stick formation meets the guidelines for that particular formation, but this subjectivity is no different than that used with other charting tech- niques.

You will have to decide these answers based on your trading temperment, your risk adversity, and your market philoso- phy. Likewise, through text, illustrations and real examples I will pro- vide the general principles and guidelines for recognizing the candlestick formations. But you should not expect the real-world examples to always match their ideal formations.

Consequently, I have included many such examples. These examples span the entire investment spectrum from futures, fixed-income, equity, London metal markets and foreign exchange markets.

Since my background is in the futures markets, most of my charts are from this arena. I also look at the entire time from intra-day to daily, weekly, and monthly candlestick charts. For this book, when I describe the candlestick lines and patterns, I will often refer to daily data.

For instance, I may say that in order to complete a candlestick pattern the market has to open above the prior day's high. But the same principles will be valid for all time frames. Two glossaries are at the end of the text. The first includes candle- stick terms and the second Western technical terms used in the book. The candlestick glossary includes a visual glossary of all the patterns. As with any subjective form of technical analysis, there are, at times, variable definitions which will be defined according to the users' experi- ence and background.

This is true of some candlestick patterns. Depend- ing on my source of information, these were instances in which I came across different, albeit usually minor, definitions of what constitutes a certain pattern. For example, one Japanese author writes that the open has to be above the prior close in order to complete a dark-cloud cover pattern see Chapter 4.

Other written and oral sources say that, for this pattern, the open should be above the prior high. In cases where there were different definitions, I chose the rules that increased the probability that the pattern's forecast would be correct. For example, the pattern referred to in the prior paragraph is a reversal sig- nal that appears at tops.

Thus, I chose the definition that the market has to open above the prior day's high. It is more bearish if the market opens above the prior day's high and then fails, then it would be if the market just opens above the prior day's close and then failed.

Much of the Japanese material I had translated is than specific. Part of this might be the result of the Japanese penchant for being vague.

The penchant may have its origins in the feudal ages when it was accept- able for a samurai to behead any commoner who did not treat him as expected. The commoner did not always know how a samurai expected him to act or to answer. By being vague, many heads were spared. However, I think the more important reason for the somewhat ous explanations has to do with fact that technical analysis is more of an art than a science.

You should not expect rigid rules with most forms of technical analysis-just guideposts. Yet, because of this uncertainty, some of the ideas in this book may be swayed by the author's trading philosophy. Another example of subjectivity: In the Japa- nese literature many candlestick patterns are described as important at a high-price area or at a low-price area. Obviously what constitutes a "high-price" or "low-price" area is open to interpretation.

This could be viewed as a limitation. Extended experience with candlestick charting in your market specialty will show you which of the patterns, and variations of these patterns, work best. In this sense, subjectivity may not be a liability. As you gain experience in candlestick techniques, you will discover which candlestick combinations work best in your market.

This may give you an advantage over those who have not devoted the time and energy in tracking your markets as closely as you have. As discussed later in the text, drawing the individual candlestick chart lines requires a close. Therefore, you may have to wait for the close to get a valid trading signal.

This may mean a market on close order may be needed or you may have to try and anticipate what the close will be and place an order a few minutes prior to the close. You may also prefer to wait for the next day's opening before placing an order.

This aspect may be a problem but there are many technical systems especially those based on moving averages of closing prices which require a closing price for a signal. This is why there is often a surge in activity during the final few minutes of a trading session as computer- ized trading signals, based on closing prices, kick into play. Some tech- nicians consider only a close above resistance a valid buy signal so they have to wait until the close for confirmation.

This aspect of waiting for a close is not unique to candlestick charts. On occasion, I can use the hourly candlestick charts to get a trade signal rather than waiting for the close of that day.

For instance, there could be a potentially bullish candlestick pattern on the daily chart. Yet, I would have to wait for the close before the candlestick pattern is com- pleted.

If the hourly charts also show a bullish candlestick indicator dur- ing that day, I may recommend buying if the prevalent trend is up even before the close. The opening price is also in the candlestick lines. I hope that, as candlestick charts become more common, more newspapers will include openings individual stocks. Candlestick charts provide many useful trading signals. They do not, however, provide price targets. There are other methods to forecast tar- gets such as prior support or resistance levels, retracements, swing objectives, and so on.

Some Japanese candlestick practitioners place a trade based on a candlestick signal. Candlestick patterns should always be viewed in the context as to what occurred before and in rela- tion to other technical evidence. With the hundreds of charts throughout this book, do not be sur- prised if you see patterns that I have missed within charts. There will also be examples of patterns that, at times, did not work. Candlesticks will not provide an infallible trading tool.

They do, however, add a vibrant color to your technical palette. Candlestick charts allow you to use the same technical devices that you use with bar charts.

But the candlestick charts give you signals not available with bar charts. So why use a bar chart? In the near future, candlestick charts may become as standard as the bar chart.

In fact, I am going to make a bold prediction: A s more technicians become comfortable with candlestick charts, they will no longer use bar charts. I have been a tech- nical analyst for nearly 20 years. And now, after discovering all their benefits, I only use candlestick charts. I still use all the traditional West- ern technical tools, but the candlesticks have given me a unique perspec- tive into the markets.

Before I delve into the topic of candlestick charts, I will briefly discuss the importance of technical analysis as a separate discipline. For those of you who are new to this topic, the following section is meant to empha- size why technical analysis is so important.

It is not an in-depth discus- sion. If you are already familiar with the benefits of technical analysis, you can skip this section. Do not worry, if you do not read the following sec- tion, it will not interfere with later candlestick chart analysis information. Yet the markets are influenced at times, to a major extent, by emotionalism. An ounce of emotion can be worth a pound of facts. As John Keynes stated, "there is nothing so disastrous as a rational investment policy in an irra- tional Technical analysis provides the only mechanism to mea- sure the "irrational" emotional component present in all markets.

Here is an entertaining story about strongly psychology can affect a market. Soybeans were sharply higher. There was a drought in the Illinois Soy- bean Belt. And unless it ended soon, there would be a severe shortage of beans. Suddenly a few drops of water slid down a window.

More than pairs of eyes [the traders- editor's note] shifted to the big windows. Then came a steady trickle which turned into a steady downpour. It was raining in downtown Chi- cago. The shouts cascaded from the traders' lips with a roar that matched the thunder outside. And the price of soybeans began to slowly move down.

Then the price of soybeans broke like some tropic fever. It was pouring in Chicago all right, but no one grows soybeans in Chi- cago. In the heart of the Soybean Belt, some miles south of Chicago the sky was blue, sunny and very dry. But even if it wasn't raining on the soybean fields it was in the heads of the traders, and that is all that counts [emphasis added]. To the market nothing matters unless the market reacts to it. The game is played with the mind and the emotions [emphasis added].

In order to drive home the point about the importance of mass psy- chology, think about what happens when you exchange a piece of paper called "money" for some item like food or clothing? Why is that paper, with no intrinsic value, exchanged for something tangible?

It is because of a shared psychology. Everyone believes it will be accepted, so it is. Once this shared psychology evaporates, when people stop believing in money, it becomes worthless.

Second, technicals are also an important component of disciplined trading. Discipline helps mitigate the nemesis of all traders, namely, emotion. As soon as you have money in the market, emotionalism is in the driver's seat and rationale and objectivity are merely passengers.

If you doubt this, try paper trading. Then try trading with your own funds. Technicals can put objectivity back into the drivers seat. They provide a mechanism to set entry and exit points, to set ratios, or levels. By using them, you foster a risk and money management approach to trading. As touched upon in the previous discussion, the technicals contrib- ute to market objectivity.

It is human nature, unfortunately, to see the market as we want to see it, not as it really is. How often does the fol- lowing occur? A trader buys. Immediately the market falls. Does he take a loss. Usually no. Although there is no room for hope in the market, the trader will glean all the fundamentally bullish news he can in order to buoy his hope that the market will turn in his direction.

Meanwhile prices continue to descend. Perhaps the market is trying to tell him something. The markets communicate with us. We can monitor these messages by using the technicals. This trader is closing his eyes and ears to the messages being sent by the market. If this trader stepped back and objectively viewed price activity, he might get a better feel of the market. What if a supposedly bullish story is released and prices do not move up or even fall?

That type of price action is sending out volumes of information about the psychology of the market and how one should trade in it. I believe it was the famous trader Jesse Livermore who expressed the idea that one can see the whole better when one sees it from a distance.

Technicals make us step back and get a different perhaps, better perspective on the market. Third, following the technicals is important even if you do not fully believe in their use. This is because, at times, the technicals are the reason for a market move.

Since they are a market moving factor, they should be watched. Fourth, random walk proffers that the market price for one day has no bearing on the price the following day. But this academic view leaves out an important component-people.

People remember prices from one day to the next and act accordingly. To wit, peoples' reactions indeed affect price, but price also affects peoples' reactions. Thus, price, itself, is an important component in market analysis. Those who disparage technical analysis forget this last point. Fifth, and finally, the price action is the most direct and easily acces- sible method of seeing overall relationships.

There may be news not known to the general public but you can expect it is already in the price. Those who have advance knowledge of some market moving event will most likely buy or sell until current prices reflect their information. Thus, current prices should reflect all available information, whether known by the general public or by a select few. For those who are in a rush to get to the "meat" of the book that is, the techniques and uses of candlesticks , you can skip this chapter, or return to it after you have completed the rest of the book.

It is an intriguing history. Among the first and the most famous people in Japan to use past prices to predict future price movements was the legendary Munehisa He amassed a huge fortune trading in the rice market during the s.

Before I discuss Homma, I want to provide an overview of the economic background in which Homma was able to flourish. The time span of this overview is from the late s to the mids.

During this era Japan went from 60 provinces to a unified country where commerce blossomed. From to , Japan was a country incessantly at war as each of the daimyo literally "big name" meaning "a feudal lord" sought to wrestle control of neighboring territories. This span between and is referred to as "Sengoku Jidai" or, literally, "Age of Country at War.

By the early three extraordinary generals-Nobunaga Oda, Hideyoshi Toyotomi, and Ieyasu Tokugawa-had unified Japan over a year period. Their prow- ess and achievements are celebrated in Japanese history and folklore.

This era is referred to as the Tokugawa Shogunate. The military conditions that suffused Japan for centuries became an integral part of candlestick terminology. And, if you think about it, trad- ing requires many of the same skills needed to win a battle.

Such skills include strategy, psychology, competition, strategic withdrawals, and yes, even luck. So it is not surprising that throughout this book you will come across candlestick terms that are based on battlefield analogies. There are "night and the "advancing three soldiers pattern", "counter attack lines", the "gravestone", and so on.

The relative stability engendered by the centralized Japanese feudal system lead by Tokugawa offered new opportunities. The agrarian econ- omy grew, but, more importantly, there was expansion and ease in domestic trade. By the 17th century, a national market had evolved to replace the system of local and isolated markets. This concept of a cen- tralized marketplace was to indirectly lead to the development of techni- cal analysis in Japan.

Hideyoshi regarded Osaka as Japan's capital and encour- aged its growth as a commercial center. Osaka's easy access to the sea, at a time where land travel was slow, dangerous, and costly, made it a national depot for assembling and disbursing supplies.

It evolved into Japan's greatest city of commerce and finance. Its wealth and vast store- houses of supplies provided Osaka with the appellation the "Kitchen of Japan. In Osaka, life was permeated by the desire for profit as opposed to other cities in which money making was despised. The social system at that time was composed of four classes. In descending order they were the Soldier, the Farmer, the Artisan, and the Merchant.

It took until the for merchants to break down the social barrier. Even today the traditional greeting in Osaka is makka" which means, "are you making a profit? In Osaka, Yodoya Keian became a war merchant for Hideyoshi one of the three great military unifiers.

He became very wealthy-as it turned out, too wealthy. The Bakufu was apprehensive about the increasing amount of power acquired by certain merchants. In , certain officials and merchants tried to corner the rice market. The punishment was severe: their children were executed, the merchants were exiled, and their wealth was confiscated.

The rice market that originally developed in Yodoya's yard was insti- tutionalized when the Dojima Rice Exchange was set up in the late s in Osaka. The merchants at the Exchange graded the rice and bargained to set its price. Up until , the Exchange dealt in actual rice. After , the Rice Exchange began to issue and accept rice warehouse receipts.

These warehouse receipts were called rice coupons. These rice receipts became the first futures contracts ever traded.