“I don’t see any candles. What are you talking about? “
The quick answer is this site is dedicated to learning something called Japanese Candlestick Charting. The charts we are referring to are used in technical analysis fields, such as stock market analysis and the “candlesticks” are symbols used on those charts to represent price movements.
A bit of History:
Munehisa Honma (also known as Sokyu Honma) (1724-1803) is credited as being the founder of Japanese Candlestick Patterns. Honma was a rice trader on the west coast of northern Honshu. His method was based on 160 pattern recognition rules. Honma emphasized trading in harmony with the trend. His rules were very successful, making Honma extremely wealthy. One source I found stated that Honma was so successful that he was made an honorary Samurai, but I cannot confirm that.
Up until around 1710 only physical rice was traded. About that time a futures market began to develop. Coupons promising delivery of rice at future time were issued. From this a coupon trading market emerged in which Honma flourished. Legendary stories claim Honma had a network of runners established every 6 Km between Sakata and Osaka to communicate market prices.
In 1755, he wrote “San-en Kinsen Hiroku”, “The Fountain of Gold – The Three Monkey Record of Money”, the first book on market psychology. He claimed that the psychological aspect of the market is critical to trading success and that traders’ emotions have a significant influence on rice prices. In keeping with his harmonious philosophy, he describes the rotation of the markets as Yin (a Bear market) and Yang (a Bull market).
Due to an isolationist policy in effect in the East, Western markets developed their own independent charting technique, known as the Bar Chart. It is pointed out that despite no communication between the two cultures, both developed charting symbols based on the same four key elements- Open, Close, High and Low. Candlestick charting was introduced in the West sometime in the late 1800’s. It is said Charles Dow was using this technique in the early 1900’s. However, it is generally accepted that Candlestick charting did not come into wide use in America until the 1970’s. At that time, it quickly became very popular due to the fact that more information can be learned at a glance than with the Bar chart. The coloring of the Candlesticks can give immediate indication of a chart’s trend.
Why Bulls and Bears?
Bulls are the buyers, Bears are the sellers. Picture how each animal attacks. A Bull will try to toss an opponent over his head with his horns. This is analogous with going up, as in an uptrend on a chart or a rise in price.
A Bear will stand up and slap his opponent to the ground. Again, this is analogous to going down on a chart, or a drop in price.