Homma learned a lot about what would likely happen with the price of rice (futures contracts as we call them now) based on how traders acted during the morning period when rice inventories had been rumored to be flush or seasons where drought or unseasonably early rains damaged the rice harvest. He'd watch as wealthier traders didn't want to appear desperate would wait until the end of the day to buy, in hopes that denying sellers their large demand would drive the price of rice down. However, if a moderate or wealthy buyer would enter the market early it would set off a domino effect of rising rice prices.
Often times when new students of trade begin trading they take a lot of time to learn to manage their own personal psychology. However, with Homma's method of showing increasing and decreasing price action with the candlestick's wicks to demonstrate the overall movement of the price he was actually aiming to better understand the psychology of the other buyers and sellers. His framework was that one could control one's own mind best by being equipped with the tools to understand what other traders were likely to do in any given circumstance.
The Options Trading Journey
