Book Title : Japanese Candlestick Charting Techniques

Author : Steve Nison

Review Date : March 2011


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About the Author

Steve Nison, Chartered Market Technician was the first to reveal the startling power of candle charts to the west, and is the Western World’s leading authority on the subject. He is the owner and principal of CandleCharts.com.

He has appeared on CNBC and has been the subject of articles in The Wall Street Journal, Barrons and Worth Magazine. In addition to this book he is also the author of Beyond candlesticks.

Nison has trained professionals in almost every major investment firm in 18 countries, and at the Federal Reserve, major Commodity Exchanges, the World Bank, the New York institute of Finance, and numerous universities.

Description

A form of technical analysis, Japanese candlestick charts are a versatile tool that can be fused with any other technical tool, and will help improve any technician's market analysis. They can be used for speculation and hedging, for futures, equities or anywhere technical analysis is applied. Seasoned technicians will discover how joining Japanese candlesticks with other technical tools can create a powerful synergy of techniques; amateurs will find out how effective candlestick charts are as a stand-alone charting method. In easy-to-understand language, this title delivers to the reader the author's years of study, research and practical experience in this increasingly popular and dynamic approach to market analysis. The comprehensive coverage includes everything from the basics, with hundreds of examples showing how candlestick charting techniques can be used in almost any market.

Inside Cover

In the first edition of Japanese Candlestick Charting Techniques, Steve Nison revealed, for the first time to the western world, the background and practical application of candlestick charts. Now, these colourful exciting techniques are hot on the lips of leading analysts, traders and brokers worldwide.

Completely informative and global in its outlook, this revised edition provides in-depth explanations of how candlestick techniques can be used in all of todays markets to help improve profits and decrease market risk.

This totally updated revision focuses on the needs of todays traders and investors with:

All new charts including intraday markets;
New candle charting techniques and refinements to earlier methods;
More focus on active trading for swing, online , and day traders;
Brand new section on western techniques in combination with candles;
A greater spotlight on capital preservation.

Back Cover

High praise for Japanese Candlestick Charting Techniques from leading financial experts.

“The candlestick charts and charting techniques provided by Nison have become an important tool for our international securities market making. They provide a wealth of information and are instrumental for our daily operations. The charting technique is valuable for the individual or professional investor.” Robert Hardy. Director of International Markets, Fleet Meehan Specialists (NYSE)

“Japanese Candlestick Charting Techniques is a must for the serious security or commodity trader. It is the definitive book … explained in plain, straightforward English. I have been a market technician for over 25 years and a money manager for more than 30 years and … have switched from my bar charts to candlestick charts. I believe that any technician who reads this book will do likewise.” H. Phillip Becker CEO H.P. Becker & Co.

“… a distinguished effort of research, analysis, and translation… not only complete and informative, but also enjoyable to read. Steve has done a good job of relating, and clearly illustrating, the way in which the Japanese candlestick charting technique fits in with and complement traditional Western technical tools … this book has become the standard text on the subject.” Robin Griffiths Chief Technical Analyst. HSBC Securities Inc.

“The combination of a wonderful tool like candlestick charts and Steve Nison to explain the proper use of them in trading, has enhanced my ability to predict the direction of stock prices immeasurable. I highly recommend this book”. Harold Yosco Partner, Van Der Moolen Specialists, USA

“Steve Nisans book, Japanese Candlestick Charting Techniques, is hands down the best book on technical analysis available. It is a valuable and crucial investment for anyone involved in the stock market.” Joshua Lukeman. Author The Market Maker’s Edge

“Nisan is the acknowledged Candlestick Guru. His seminars are packed not only because he possesses an encyclopaedic and dynamic knowledge of the material, but also because he is an outstanding teacher. Both of these qualities are evident in the revised edition of his seminal text, Japanese Candlestick Charting Techniques. Those traders who have read his book are convinced, and refer to it again and again. Learn it. Study it. Keep it near your terminal. The insights and tools it contains will help you make money in both the most stable and most volatile of markets.” Adam Shrager Training Manager, Knight Trading Group. Lecturer, Priceton University.


BookWorms View

Before taking up trading full time one of the many things I learnt during my conventional working career was that you couldn’t ask someone who worked for you to do a good job without providing them with the right tools for the task in hand. So the first thing I did when I decided to pursue the challenging art of trading was go out and spend £200 on a long list of books (my tools) to get me started. This book was not among that list at the time as I was unaware of it. My needs were far more basic and one of the challenges when starting out in this game is “Where do I start”?

The education I gained from that first list of books was well worth the initial investment, and after a few divergences I was starting to get much more of an idea about my trading preferences. I was on the third iteration of my trading business plan and starting to become far more focussed.

That focus was developing an interest in raw Price Action trading as I have outlined in the complementary review to this of Pring On Price Action - Review. Price Action charts often use Hi-Lo bar charts, but my personal preference is to use Japanese Candlestick Charts. For me (because of my preferences) bar chart price action patterns and Japanese Candlestick patterns overlap to the extent that I regard them as virtually the same – although many purists may disagree with me (and probably rightly so). I do maintain however that one of the objectives of any traders education must be to develop your own set of techniques with which you are fully conversant and totally comfortable.

So, after the above preamble what about this book and why did I buy it? It is clear that it is regarded as the foremost Western work on Japanese Candlestick Charting Techniques and is often regarded as the “bible” of those techniques. I have not read it from cover to cover as I regard it more as a reference book to dip into whenever I need to research or reference a price action chart pattern. For my purposes I find it the perfect companion to Pring.

Japanese Candlestick Charts are discussed at length on the internet and you can find all of the patterns analysed and referenced there. But as I mentioned previously if you use these patterns you need to get the right tool for the job and this book is it. I think trying to use Japanese Candlestick Charts without this book would be like trying to learn boxing with one hand tied behind your back (come to think of it we did do an exercise where we boxed one handed (the left), but luckily in the ring we always had both hands available). This book is the right tool for the job because it contains everything I need all in one place on the shelf above my trading terminal. This means no wasted time hunting around the internet trying to find out what a certain pattern signifies.

The first part of the book outlines all of the Japanese Candlestick patterns with a comprehensive discussion of the patterns significance, comparisons to Western analogies and comments about how to trade them.

In the second part of the book Nison merges the art of Japanese Candlestick Charting with the use of more Western indicators such as trend lines, retracement levels, oscillators and volume. The conclusion discusses how to exit trades using measured moves and how Nisan uses the convergent power of these Eastern & Western techniques to help forecast moves in the NASDAQ. Many useful strategies are outlined that can help any trader (new or experienced) start to develop or sharpen up their own systems or trading styles.

Finally there is a Candlestick Terms and Visual Dictionary covering all of the patterns discussed in the book.

Again this is one of those books that once you dip into it you will realise how indispensable it is. The information contained in this high quality book can be used to help you hone your own price action (or other) techniques to perfection. I am of the opinion that you have to continually invest in yourself whatever you choose to do in life and as my objective was learning about price action I think this book is worth many multiples of what I paid for it.

To conclude I’d like to quote from the book where Nisan discusses not the candlesticks themselves, but The Importance of Protective Stops. His views in the quote below strongly echo those found in “Trading in the Zone” and Schwagers Market Wizards. The importance of words such as these just cannot be emphasized too strongly.

Excerpts from Nisan in-page box “The Importance of Protective Stops”.

“A stop should be placed at the time of the opening trade since this is when one is most objective. Stay in the position only if the market conforms to expectations. If subsequent price action either contradicts or fails to confirm these expectations, it is time to exit. If the market moves opposite to the chosen position, you may think, “Why bother with a stop? It is just a short term move against me”. Thus you stubbornly stay with the position in the hope that the market will turn in your direction. Remember two facts:-

• All long-term trends start as short-term moves.
• There is no room for hope in the market. The market goes its own way without regard to you or your position.

The market does not care whether you own it or not. The one thing worse than being wrong, is staying wrong. Lose your opinion, not your money. Be proud of the ability to catch mistakes early……………”

I have lost count of how many times the powerful statement above saved me the price of this book. This must be rated another 5 stars.

BookWorms Rating - 5 Stars


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I have this book. Expensive but very good imo. Definitely the 'blble' on candlesticks and worth buying if you want to understand candles, patterns and how to use them in your trading.

I agree with sarniacherie, and book reviewer, Expensive ,very good and 5*****, it will help

Thanks for another excellent book review, BookWorm, these are going to make my letter to Santa even easier later this year.

While there is a lot of information of varying quality and detail about Japanese Candlesticks scattered around the internet, a single definitive source of reference pulling the subject together in one place has got to be an essential piece of any trader's library.