Munehisa Homma / The rice merchant of Sakata and the legend of candlestick charts
An Edo-period rice trader from the port town of Sakata who profited so much in the rice market that he was called the “God of the Markets”. His name is tied to the candlestick charts and the Sakata Five Methods that traders around the world use every day, although historians still debate whether he really invented them.
1730Year the shogunate recognised futures trading at the Dojima market
~12xGrowth of the Homma family’s wealth, 1731–1755 (2,551 → 31,074 ryō), which a THE PAGE article credits to his skill
3 daysHow long the teachings say to wait when you feel you must buy or sell right now
一
ProfileQuick facts
Name本間宗久, read Honma Sōkyū; known in the West as Munehisa Homma
BirthplaceThe port town of Sakata, Shōnai domain (today Yamagata Prefecture, Japan)
LifespanBorn around 1717–1724 (sources disagree) · died 1803
LearningLearned trade in the family business and went to Edo at 16 to broaden his horizons
Main marketRice, in the Sakata market, the Dojima market in Osaka, and Edo
Family businessThe Homma merchant family, the 新潟屋 (Niigataya) shop
ReputationNicknamed 相場の神様, the “God of the Markets”, for his profits in the rice market
Key ideasRead the market’s mind, wait patiently for your moment, and don’t get greedy when profit is close to target
二
Emaki · Life scrollFrom Sakata rice merchant to God of the Markets
Homma’s life had highs and lows. Scroll through the picture scroll to follow his path. Years are approximate because many Edo-period records disagree.
Early 18th centurySakata
Born into the Homma merchant family of the Niigataya shop in Sakata, a key rice-shipping port on the Sea of Japan coast
YouthEdo
Travelled to Edo to see the wider world (Japanese Wikipedia says at age 16)
Mid-1700sSakata
Once proposed rice speculation to his father but was refused as not a proper way to trade. Later he ran the Niigataya shop while his nephew 本間光丘 (Mitsuoka) trained in Himeji, and made large profits speculating on rice in Sakata
Around age 37Parting ways
Mitsuoka cut family ties with his uncle and made him leave the shop (according to THE PAGE)
Low pointEdo
Moved to Edo, speculated badly on rice and went bankrupt
After bankruptcyOsaka
Rebuilt himself, then made a huge rice speculation in Osaka, home of the Dojima market, earning so much that people called him 出羽の天狗, the “Tengu of Dewa”
Around age 50Edo
Took the name 宗久, moved to Edo, succeeded again and reconciled with Mitsuoka. He then traded physical rice and lent money to domains (大名貸)
1803Farewell
Died. Books said to contain his teachings, such as 宗久翁秘録, were compiled and published later
1991The West
Steve Nison publishes Japanese Candlestick Charting Techniques, and candlestick charts and the Homma name become known worldwide
三
Dojima Rice ExchangeThe Dojima rice market: the model for futures markets
In the Edo period, samurai were paid stipends in rice, not money, so rice was both food and currency. Osaka was the hub where the daimyo shipped rice to sell, and the Dojima district became the market that set rice prices for the whole country.
Two kinds of trading took place here: 正米, physical rice that was delivered, and 帳合米, paper contracts with no rice delivered. Traders posted margin and settled only the price difference, the same principle as the futures and CFDs we trade gold with today.
1697The rice market moves to the Dojima district of Osaka
Candle workshopCandle lab: build a candle with your own hands
A single candle tells the story of the fight between buyers and sellers over one period, using four prices: open, high, low and close. Move the sliders and see what the candle is called and what it says.
Japanese names in brackets are what Japanese traders call them. The interpretations here are general guides; always read them in the context of the trend.
五
Sakata five methodsSakata Five Methods (酒田五法)
Five chart patterns named after Homma’s hometown, used to spot reversals and moments when a trend will continue. Pick each method to see an example.
三山 · Sanzan
Three mountains
Price makes three peaks but cannot break higher. If the middle peak is highest, it is the pattern the West calls Head and Shoulders, a sign the uptrend may be over. Upside down at a low (逆三尊), it signals a reversal up.
三川 · Sansen
Three rivers
Some books use it for the inverted 三山 at a low. Another popular meaning is a group of three candles at a reversal, such as 明けの明星 (Morning Star) at a low: a long red candle, a small candle, then a long green candle; and 宵の明星 (Evening Star) at a high, which is the reverse.
三空 · Sanku
Three gaps
Price opens away from the previous candle (a gap) three times in a row. 三空踏み上げ, an overheated uptrend, is often used as a place to scale out of profits, while 三空叩き込み, three gaps down in a sharp downtrend, often marks selling pressure running out.
三兵 · Sanpei
Three soldiers
Three long rising candles in a row at a low (赤三兵, or Three White Soldiers) show buyers taking control, while three falling candles at a high (黒三兵, or Three Black Crows) show sellers coming in.
三法 · Sanpō
Three methods · resting
A long rising candle, followed by three small candles pulling back inside its range, then a long rising candle breaking higher (上げ三法, or Rising Three Methods), shows the trend is continuing. In Japanese texts 三法 also means knowing when to rest and wait when the market is unclear.
六
Market psychologyTeachings on the mind: the market is a contest with your own greed
Books said to collect Homma’s teachings, such as 宗久翁秘録 and 相場三昧伝, say almost nothing about technique. They focus on the mind and on waiting for the right moment, and it is still doubtful whether he wrote them or they were compiled later.
三日待つべし
Wait 3 days
「売買共、今日より外商い場なしと進み立つ時、三日待つべし」 When you feel you must buy or sell today and only today, wait 3 days first
腹八分
Stop at eight parts full
「八、九分通り仕当たり候うとき、必ず勝ちに乗るべからず」 When you have taken eight or nine parts of the profit, don’t chase more; lock in the gain safely (from the same passage as the next item)
欲を深くするな
Don’t let greed lead
「必ず必ず欲を深くし迷うべからず」 Never let greed lead you astray
七
Legend or factMyth or fact?
Homma’s story has been retold so often that myth and fact are mixed together. Tap each card to see what the evidence says.
Opened 0 / 7 cards
八
Apply to Forex and goldUsing Homma’s thinking in Forex and gold
Use it right away
Candlesticks are the tool Forex and gold traders use most, but the same pattern can mean something different in the wrong place. The real lesson from Homma is not chart patterns but patience and controlling greed.
Look at the big picture first Open H4 or D1 to see which trend price is in and whether it is near key support or resistance
Look for patterns at key levelsA Hammer at support or a Shooting Star at resistance carries more weight than a pattern in the middle of a range
Wait for the candle to close This is the modern version of the 3-day rule: don’t enter on a candle that hasn’t closed yet
Take partial profit at eight parts Set a profit target, scale out at around 80%, and trail your stop on the rest
Gold (XAUUSD) often prints long-wicked candles around US news. Check the the economic calendar before you read any candle.
九
LessonsLessons for Forex and gold traders
Your checklist
0/4
01
Wait for the candle to close before you decide
The modern 3-day rule is waiting for the candle to close and confirm. A signal mid-candle can always change, especially in volatile gold.
02
Scale out at eight parts
Set a profit target, then close part of the position at about 80% of it and trail your stop on the rest. No need to ride it all the way.
Homma got rice price news faster than others. Today that means knowing the economic news schedule before you open a trade, so big news doesn’t catch you out.
04
Even the God of the Markets went bankrupt
In Edo he speculated badly and went bankrupt. A position size that suits your account is what keeps you alive until the day you’re right.
十
Quiz5-question quiz
Question 1 / 5
In what year did the shogunate recognise futures trading at the Dojima market?
In 1730 the shogunate officially recognised 帳合米 trading at Dojima. 1697 is the year the market moved to the Dojima district.
Who wrote 三猿金泉秘録 (1755)?
The author is 牛田権三郎. English sources often wrongly attribute it to Homma.
Who made candlestick charts popular in the West in 1991?
Steve Nison published Japanese Candlestick Charting Techniques in 1991.
What was the 帳合米 traded at Dojima?
A paper contract: traders posted margin and settled the price difference, much like today’s futures and CFDs.
What is a candle whose open and close are almost equal called?
Doji (同時線 or 十字線): buying and selling pressure are evenly matched.
0/5
十一
Trade like HommaFollow in Homma’s footsteps: where to start
Candlesticks, the tool Homma is called the father of, are what traders use every day. Start practising with these tools on 1TRADER.
Did Munehisa Homma really invent candlestick charts?
There is no confirming evidence. The books said to hold his teachings don’t mention charts, and one theory is that his name was attached to candlesticks and the Sakata Five Methods later. But he really was a successful Edo-period rice trader.
What are the Sakata Five Methods (酒田五法)?
A set of five candlestick patterns: 三山 three mountains, 三川 three rivers, 三空 three gaps, 三兵 three soldiers and 三法 three methods. They are used to spot reversals and moments when a trend will continue.
Why is the Dojima rice market important?
The shogunate recognised futures contract trading at Dojima in 1730. Traders posted margin and settled only the price difference, so it is known worldwide as a pioneer of organised futures markets.
How do you use candlesticks with Forex and gold?
Read candles together with support, resistance and the bigger trend, wait for the candle to close and confirm before entering, and always set a stop loss. The same pattern can mean different things in different contexts.
Educational content, not investment advice. Records of Edo-period figures are limited and many stories were passed down by word of mouth; we mark how reliable each claim is in the text. · risk disclosure · Forex glossary
