For the uninitiated, going Japanese in the Forex market may sound bizarre, but for those who are familiar with Forex options trading, they know that t...
For the uninitiated, going Japanese in the Forex market may sound bizarre, but for those who are familiar with Forex options trading, they know that the phrase has something to do with Japanese Candlesticks, one of the many seemingly complex concepts involved in the industry.
Japanese candlesticks, as far as Forex options trading is concerned, do not pertain to home design pieces, decor, or accessories. The term is used in the singular form and refers to a technical analysis illustration that the Japanese invented long ago to trade rice. It was Steve Nison, a Westerner, who discovered this Asian secret and shared it with the world, prompting it to become one of the most heavily relied-on technical analysis tools in the Forex market today. Japanese Candlesticks is in fact a chart that makes use of candles to indicate buying and selling activities.
It is best to explain Japanese Candlesticks by making a plea to the imagination. Think of a candle and the possible sizes it can have. If you find long-bodied candles in the charts, you'd be looking at indicate strong selling or buying, with the length representing the intensity of the selling or buying pressure. If, on the other hand, you find short-bodied candles in the charts, you'd be looking at weak selling or buying. Japanese Candlesticks also makes use of shadows to indicate hints about the current trading session. If you find candles that have long shadows, you'd know that the trading action took place over or above the opening and closing prices. If, on the other hand, you find candles that have short shadows, you'd know that the trading action took place near the opening and closing prices.
There are other indicators out there, but many experienced traders in Forex options trading recommend the use of Japanese Candlesticks to ascertain the best and worst times to enter the market, allowing one to protect his or her investment. Going Japanese can surely do you good in as you set out to become a successful Forex trader.
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