Munehisa Homma (Japanese) in 1700s, who traded the futures market discovered that emotions are always involved during trading in the market. There was impact of supply and demand but the trader's emotion was also an important factor to be considered.
Homma found that if he could understand the emotions of traders in the market, he could be able to predict what would happen next in future. The next thing to find was difference between buying price and value of rice he used to trade. This difference is still considered during trading in stock market. All these are based on Candlestick Chart analysis.
Even though there are various rule and indications about when you should sell your stock, Candlestick Chart gives the emotional reason to that question.
We have no bull or bear in the chart. But we have fear and greed in the chart. These information are always vital because they are the basis for trading. In the chart, greed means many people what to purchase the same stock and price goes up which is bullish market trend and if people fear about the decline in price they sell at some amount shorter than opening amount and bearish market trend is seen. So information is vital for traders whether it's regarding emotion or trend, the whole point is to find the best price to sell and purchase.
The small greed pattern normally indicated that traders are willing to purchase the stock or anything that the chart represent. Greed for stocks make them to purchase with the anticipation that stocks might go up.
In case of fear, people are careful with the profit margin. They do not want to reduce the profit margin so they now start to sell even if small red candle are seen in the cart. They all are conscious about reducing the opportunity loss as well. They do have rules or they follow someone's rule while trading stocks.
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