Candlestick Charting: Origins And Background Quiz!

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| By Ashley_lonie

Ashley_lonie

Community Contributor

Quizzes Created: 1 | Total Attempts: 106

Questions: 7 | Attempts: 108 | Updated: Mar 20, 2023

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Candlestick charting has a long history and provides investors with many advantages in investing. Use this quiz to test your knowledge of its origins and solidify your understanding of the importance of candlestick charting in today's financial markets.

Questions and Answers

1.

Candlestick charting was developed over 150 years ago in China. It was used to track price changes in the rice market.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
False, candlestick charting was developed in Japan.

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2.

Candlestick charts are valued for being highly visual and clearly representing market sentiment.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
True, candlesticks are highly visual. This makes them easy to read. They are also effective at making market psychology apparent.

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3.

Candlestick charting was brought to the attention and use of Western investors in 1990 by Steve Nison.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
True, Steve Nison introduced candlestick charting in 1990 through the publication of his book, Japanese Candlestick Charting Techniques.

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4.

It is important to memorize most candlestick chart patterns to use the technique effectively.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
False, rather it is important to memorize the ten most widely used and effective patterns and to recognize signs of market psychology in candlesticks.

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5.

Candlestick charting is not useful for identifying market reversals early in the cycle.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
False, in fact candlestick charting is most useful for accurately identifying key market reversals early on.

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6.

Candlestick charting is not well known by professional investors. Thus, it gives those who learn the technique a distinct advantage in the market.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
False, most professionals investors are familiar with candlestick charting and actively use this method in their investment decisions. Because candlestick charting is widely used by individuals and companies with influence over the majority of market share, markets are predictably effected by their patterns. Thus, it is useful for the retail investor to gain knowledge in this technique to further level the playing field and see the early signs that professionals are also basing investment decisions on.

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7.

To create a candlestick chart, do you need a data set that contains open, high, low, and close values for each time period?
- A.
  
  Yes
- B.
  
  No
- C.
  
  Not necessary, but it depends.
Correct Answer
A. Yes

Explanation
To create a candlestick chart, it is necessary to have a data set that contains open, high, low, and close values for each time period. These values are used to represent the price movements of an asset during a specific time frame. The open, high, low, and close values are depicted through the use of candlestick shapes, providing valuable information about the price action and trends. Without these values, it would not be possible to accurately represent the price movements and create a candlestick chart.

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Candlestick Charting: Origins And Background Quiz!

Candlestick charting was developed over 150 years ago in China. It was used to track price changes in the rice market.

Candlestick charts are valued for being highly visual and clearly representing market sentiment.

Candlestick charting was brought to the attention and use of Western investors in 1990 by Steve Nison.

It is important to memorize most candlestick chart patterns to use the technique effectively.

Candlestick charting is not useful for identifying market reversals early in the cycle.

Candlestick charting is not well known by professional investors. Thus, it gives those who learn the technique a distinct advantage in the market.

To create a candlestick chart, do you need a data set that contains open, high, low, and close values for each time period?