stjorthotic Chapter 328 People Like the Color of Banknotes
Chapter 328 People Like the Color of Banknotes
Chapter 328 People Like the Color of Banknotes
After Mr. Potter finished speaking, Matthew was even more shocked than Mr. Potter.
He had seen Larry and Mr. Potter for a long time, and this was the first time that Mr. Potter did not call Larry by his first name, but by his surname, preceded by "Mr."
Matthew knew that this was not Mr. Potter's deliberate distancing or sarcasm, but genuine respect!
Matthew didn't understand why Mr. Porter was so shocked by Larry's chart, but he vaguely guessed that the chart Larry had drawn was far more complex than just the price fluctuations he was seeing.
Matthew looked at Larry, who still had a faint smile on his face and nodded slightly, saying, "Mr. Potter, you're right. This is my secret, and now it's our secret—"
Mr. Porter nodded, took a long breath, and slowly said, "My God, this is truly a surprise I never expected—it's not just about recording stock prices, but a graphical representation. The important thing isn't any graphical prediction—the most crucial point is that it illustrates the direction of least resistance in stock price movements!"
"What is the direction of least resistance?" Matthew couldn't help but ask.
Mr. Potter glanced at Matthew, took two steps without a word, picked up a pencil in one hand and a ruler in the other.
Quickly, he drew a line at the bottom of the previous set of falling candlesticks; it was a steep, downward straight line.
He then drew a line below the rebounding candlestick, a gently sloping, converging upward straight line.
Once the two lines were drawn, even Matthew, who knew absolutely nothing about stocks, understood instantly!
"My God! Oh, I see! The declines are very smooth and steep; but the rises are sluggish and lack any real strength—is this what you call a trend?"
Larry smiled and looked at him, saying, "So, what do you think the stock price should do next?"
"Continue downwards!" Mr. Porter said hastily, pointing to a blank space. "The stock's weak rebound indicates that the path of least resistance remains unchanged; it's still downwards—"
Matthew was somewhat skeptical. Although he had accepted the concept of "trend," he still didn't have an intuitive understanding of predictions and trends.
Mr. Porter glanced back at him, picked up the red and blue pencils, and handed them to him. "Mr. Browning, you can finish drawing the rest of the charts according to the stock price movement—"
"Okay!" Matthew became interested and took the red and blue pencils, continuing to draw charts based on a stack of transaction records on the table.
Mr. Potter stared silently at Matthew drawing charts, as if watching a tense episode of a Sherlock Holmes story, wondering when the stock price would start to plummet.
Larry smiled and took the hot dog, picked up a cup of iced tea from the table, and began to enjoy his lunch.
After a full two minutes, Matthew suddenly let out a heavy sigh, as if he had seen something astonishing—
Mr. Porter, who was watching him draw, stared wide-eyed, his expression extremely complex, showing both the certainty that his prediction was correct and the heaviness of feeling the pain of a stock market crash.
"It's really starting to fall further—" Matthew said in a low voice.
"Keep going—keep drawing!" Mr. Potter squeezed out the words from his throat.
"Okay!" Matthew's fingers were trembling slightly as he held the ruler and continued drawing day after day.
Larry walked over with a smile, chewing his food, watching as the stock price of American Tobacco & Fire plummeted to around $1.25.
It happened in the last few days! The stock manipulator behind this was planning to take advantage of me in the last few days. It's clear that he used a huge position, and he patiently waited for the bulls to start to weaken before carrying out his second sell-off!
The other party certainly didn't have any charts to look at, but to grasp the timing so precisely, they are definitely a master!
When drawing candlestick charts at this point, especially when drawing them by hand, Matthew could feel the weight of his pen as he put it down—it was like sketching a simple drawing of a storm.
The stack of American Tobacco stock quotes was quickly flipped to the last page, and Matthew drew the last candlestick. The final closing price had returned to two and a half dollars.
"Duke didn't make a move!" Mr. Porter suddenly said out of the blue.
"How do you know?" Larry asked with a smile.
Mr. Porter solemnly replied, "If it were an insider-driven stock price rebound, the stock price would not have risen so gently. This is a natural recovery in the stock price. The selling pressure from the short sellers has disappeared, and the bulls are gradually regaining lost ground through probing."
Matthew stared at the candlestick chart. I glanced at the stock price and said with a wry smile, "Is this just a test by the bulls? The stock price has already doubled from its lowest point!"
Mr. Porter didn't speak, but turned to Larry. "I must admit, this is the first time in my 30-plus years in the industry that I've seen stock price movements so clearly—it's a magnificent innovation. It filters out all the market noise and restores the most fundamental attributes of price. Brilliant! A magnificent invention! In my eyes, these simple charts are far greater than Edison's incandescent light bulb!"
Larry laughed and continued, "It also depends on the specific stock. The more intense the competition in a stock's price, the more accurately the candlestick chart reflects the true situation. If the trading volume is very low, then even if you draw a chart, it won't mean anything."
"Why?" Matthew asked.
"Because stock prices are very easy to manipulate, and trends can be deceiving!" Mr. Porter said in a deep voice before Larry could answer.
"Oh, right—hmm, that makes sense!" Matthew said, staring at the candlestick chart, seemingly understanding but not quite.
Larry laughed again, explaining nonchalantly, "Low trading volume or a small market capitalization can both distort stock prices. The former indicates a lack of sufficient bidding process, while the latter is highly likely to be manipulated—"
Mr. Potter nodded in agreement.
Matthew stared intently at the candlestick chart, his gaze almost burning. "Does drawing this chart mean I can make money buying stocks in the future? Predicting future stock prices using this chart—"
Larry chuckled and shook his head, replying sincerely, "Don't take this stuff too seriously. As Mr. Porter just said, the main function of this kind of chart is to confirm the direction of least resistance in stock prices. It's proof of facts, not a guide for prediction—besides, charts can only reflect the past, not the biggest, most deeply affecting hidden dangers in the market right now—"
"What potential danger?" Matthew asked hastily.
Before Larry could answer, Mr. Porter summed it up again, "Market manipulation! No matter how well a candlestick chart is drawn, it can't explain or prevent market manipulation! It's an unknown variable, one that most people can't predict in advance—"
Larry nodded slightly in agreement.
Matthew first looked at Mr. Potter, then at Larry, before slowly nodding.
Mr. Porter stared at the candlestick chart, then suddenly chuckled. "No! Larry, you missed something. For stock prices, the more participants and the fiercer the competition, the more effective this chart becomes—in another sense, the fewer people involved, the more effective it is!"
"No way? Isn't this a contradiction?" Matthew exclaimed in surprise.
Larry smiled, nodded slowly, and revealed the answer: "—Yes! This graphical method is most effective the fewer people who know it! That's why, Mr. Potter, I had you send everyone away—"
This graphical representation won't remain a secret forever; besides, sooner or later, others will also come up with such charting methods. However, the true essence of this market is always to make a fortune quietly. Until the vast majority of people know about candlestick charts, this indicator will be relatively more effective.
Mr. Porter nodded solemnly, giving Larry a deep look. "A brilliant idea! Larry, thank you for sharing this chart with me. By the way, what did you call it again?"
"Candlestick chart!" Larry replied with a laugh.
"Why is it called a candlestick chart?" Mr. Porter asked again.
[”
Mr. Porter's question stumped Larry. Yes! Why is it called a candlestick chart?
My past self only knew what happened, but not why it happened.
After thinking for a while, Larry simply made it up, "It's Old K. He once watched me trade stocks and casually remarked that it would be fun if we could connect all the closing prices together! That's why I call it a candlestick chart."
Mr. Porter suddenly realized, "So it was Old K who inspired you, that's why it's called the candlestick chart."
Larry blushed slightly, but nodded firmly. "There's another way to draw candlestick charts: based on the rise and fall, you can turn the vertical lines into colored solids. Of course, if there aren't enough colors, you can draw them hollow or solid—"
However, this method, where the left horizontal bar represents the opening price and the right horizontal bar represents the closing price, is easier to draw, which is why I used this method—but in terms of intuitiveness and aesthetics, the second method is better.
Matthew drew the second candlestick pattern as Larry instructed, and Mr. Porter watched and nodded in approval, but in the end he still asked that question—
"Larry, I understand all of that, but why did you draw the rising candlesticks in red and the falling ones in blue? Shouldn't the falling ones be red? Red is the easiest color to attract attention! It's a warning color, it should be the color of falling ones."
"————"
Larry was speechless. He had been so focused on drawing that he had drawn the rising candlesticks in red and the falling candlesticks in blue, following the custom from his previous life in China.
However, cultural inertia exists; for Europeans and Americans, red does indeed more easily represent a warning color.
They might think that red represents war, fire, or warning—but they wouldn't understand that it can also represent celebration.
After all, only agrarian societies can regard the sunrise as an auspicious sign for food production, while maritime peoples, staring at red, only think of blood.
Larry was determined to do it all by himself, starting by changing the meaning of the colors on American candlestick charts —
But after thinking for a moment, Larry still smiled and said to Mr. Potter and Matthew, "Sir, you are absolutely right. From now on, I will change the two colors. Red will represent a decline, and blue—ah, no! It should be green, green will represent a rise!"
Matthew and Mr. Potter nodded solemnly in agreement.
Larry chuckled to himself, thinking, "Oh well! When in Rome, do as the Romans do. After all, the dollar is green too."
People like the color of banknotes!