Munehisa Homma – The Father Of Price Action Trading
In today’s article, we’re going to be taking a look at the life and legacy of one of the most famous traders you’ve probably never heard off. This was a trader who not only made a huge amount of money trading the markets ( legend has it has made close to 10billion when adjusted for inflation ) but someone who basically created price action trading as we know it today. Most, if not all of the core concepts we use in our trading today come from him.
So without further ado let get into the article and see who this amazing trader was…..
Munihisa Homma
The trader I was talking about in the introduction is a guy by the name of Munihisa Homma.
Munihisa Homma was a Japanese rice trader who lived in the city of Sakata between the years and He was born into a prominent family of rice merchants who had already acquired a significant amount of wealth by the time Homma was born. When he was a teenager Homma’s farther let him run a large portion of the family rice business. Being that he lived in the city of Sakata, Homma decided that it would be a good idea to go and trade at the small rice exchange that was found in the port. The bigg
1. Master Candlestick Patterns for Market Insights
"Japanese candlesticks are the language of financial markets, if you get the skill of reading charts, you will understand what the market is telling you, and you will be able to make the right decision in the right time."
Candlestick anatomy: Candlesticks consist of a real body (the area between open and close prices) and shadows (the wicks extending above and below). Long bodies indicate strong buying or selling pressure, while short bodies suggest little activity. Upper and lower shadows provide crucial information about price extremes during the trading session.
Key patterns:
- Doji: Indicates indecision and potential trend reversal
- Engulfing: Signals a potential trend reversal or continuation
- Hammer and Shooting Star: Suggest potential bottoms and tops
- Morning and Evening Stars: Indicate trend reversals
Understanding these patterns helps traders interpret market psychology and make informed trading decisions. Practice identifying these patterns on charts to develop pattern recognition skills and gain insights into market sentiment.
2. Understand Market Structure: Trends, Ranges, and Choppy Markets
Munehisa Honma (本間 宗久) is known as the father of the candlestick chart. He is believed to have been a rice merchant in 18th century Japan who traded the Dojima Rice market in Osaka. .
In , a Japanese rice spot market was transformed into a futures market for rice. This market used coupons for future delivery of rice. A secondary trading market for coupons emerged in which Munehisa Honma created the first candlestick charts from the historical price action. Historical stories from the time say that he created a personal communication network of men spaced approximately every 6 kilometers over a distance of some kilometers between Sakata and Osaka to track market prices as close to real time as possible.
He is believed to have written and published one of the first trading books of all time in ,The Fountain of Gold – The Three Monkey Record of Money. It was the first trading book known to ever be published on market psychology and trading psychology. In his book, Munehisa Honma explains that the psychology of the rice market was critical to success for a trader and that emotions drive rice prices. He explains that by identifying market sentiment a trader can take a position agai
Munehisa Homma or Sokyu Homma was the man who invented the use of candlestick charts for finding and profiting from chart patterns.
A lot of people refer to Homma as the ‘father’ or ‘God’ of price action trading, technical analysis and the use of candlestick charts because it was he who masterminded the idea on how they could be used to find trading opportunities.
Who Was Munehisa Homma?
Homma Munehisa was the son of a rice merchant that was already very wealthy before he was born.
Homma lived from until , wrote multiple books on his trading techniques and is rumored to have a networth of over $ billion in today’s dollars and in a good year made more than $10 billion dollars.
Homma was raised at an early age to take over the rice merchant operations and even given portions to control in his teenage years.
At the time the biggest exchange for rice was in Osaka. Because Homma lived in Sakata and the Osaka rice exchange was so far away, he began to trade his rice at the port in Sakata.
Homma went on to take over all of the rice operations on his fathers passing. He soon began trading at the much larger and far different rice exchange in Osaka.
Whilst in Sakat
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