Kagi charts are a Japanese invention and date from the late 1870's, but were popularised in the western world by Steven Nison. They are formed of a series of connecting vertical lines where the thickness and direction of those lines depend on price (time plays no part in Kagi Charts). Thick lines show that demand exceeds supply (bullish). Thin lines mean supply exceeds demand (bearish). As long as prices continue to move in the same direction, the vertical line is keeps growing. If price reverses by a set "reversal amount", a new kagi line is drawn in a brand new column. The penetration of a previous high or low alters the thickness of the lines. The basic way to trade Kagi is to buy if the kagi line changes from thin to thick and sell if the kagi line changes from thick to thin. Kagi charts are likely to be of limited use when Day trading, as existing charts already do a good job, and the time required to learn to 'read' such a chart may not be worth the effort, even if your software supports them.

From the first closing price, if today's price is greater than or equal to the closing price, draw a thick line from the closing price to today's closing price, otherwise draw a thin line from the closing price to the new closing price. Subsequently, compare the closing price to the top or bottom of the previous kagi line. A new kagi line is started if price reverses by a set 'reversal amount' to the new closing price, otherwise no lines are drawn.

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