The candlestick chart is not what made Japan's richest man

Sakata's five methods are the trading rules left behind by the rice merchant once called the richest man in Japan. The candlestick chart that carries those rules today was not something he used while he was alive. Honma Munehisa was born in 1724 into a wealthy merchant family in Sakata, in what is now Yamagata Prefecture. He was the youngest son, yet he took over the family business at twenty three and went to the rice market at Dojima in Osaka. In 1730 the shogunate authorized a spot market in rice bills there, along with a futures market in representative brands of rice. It already had a membership system and a clearing function, which is why it is described today as the forerunner of organized futures exchanges.

The men standing every six kilometers

Two things are credited to Honma. He gathered a century of weather, rice prices and harvest records and worked out the statistics, and he learned the Osaka price before anyone around him did. That second one is where the story of signalmen on hilltops and rooftops, relaying prices by flag, comes from.

Ahead of the times: flag-waving communication and Japan's Dojima Rice Exchange (Nippon.com, retrieved 2026-08-11)

출처: nippon.com

The flag network was real. It does not appear to have been one man's invention. Around 1745 a rice broker named Gensuke arranged for signals to be sent from Honjo, and from there it became shared equipment that the brokers of the market used together. The gaps between relay points ran from four to twenty two kilometers. In later reenactments an Osaka price reached Wakayama in three minutes, Kyoto in four, and Hiroshima in under forty. The shogunate banned the practice in 1775 and reissued that ban until 1865. Put simply, a price that arrived days early was not a technique but a position, and that position was illegal for much of the period.

The five methods and 1868

The five methods are sanzan, sansen, sanpei, sanku and sanpo. Three peaks at the top is sanzan, which resembles what we now call a head and shoulders. Three valleys at the bottom is sansen, three rising candles in a row is sanpei, and three gaps in a row is sanku, a warning that the move is near its end. The last one, sanpo, says to stand aside while the market goes sideways. Those five appear to have been drawn onto candles only after his death. Steve Nison, who introduced candlestick charting to the West, dates the charts to around 1868, when the Meiji era began. Honma died in 1803.

Japanese contributions to data visualisation (The Data Visualisation Catalogue, retrieved 2026-08-11)

출처: datavizcatalogue.com

That source says there is hardly any evidence that Honma ever used the chart, and treats today's candles as cumulative work by many hands across several generations. What he did leave, in 1755, is San-en Kinsen Hiroku, a book about the mind of the market rather than a book of pictures.

A book from 1755 and a picture from 1868

The method kept his name, and the picture was attached later. What the record actually supports is the century of data and the price that arrived days early. So the question of what to look at today splits here. If the edge lives in the shape on the chart, the five methods are still a working tool, and if it lives in the position, then what the flags did back then is now divided between regulation and line speed.