Trading Classic Chart Patterns
Trading Classic Chart Patterns
A practical solution for profitably using popular chart patterns In his follow-up to the well-received Encyclopedia of Chart Patterns, Thomas Bulkowski gives you a practical game plan to capitalize on established chart patterns. Written for the novice investor but with techniques for the professional, Trading Classic Chart Patterns includes easy-to-use performance tables, vivid case studies, and a scoring system that makes trading chart patterns simple. This comprehensive guide skillfully g
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Jun 30, 2010 4:36 pm |
Review by Thomas Bulkowski for Trading Classic Chart Patterns
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I wrote the book for novice investors with useful information for the seasoned pro. The Getting Started section explores Trendlines (including internal trendlines and tails, point spacing, number of touches, length, angle, volume), backed up by performance statistics for each; Support and Resistance (round number, moving average, chart pattern, trendline, old high/old low, horizontal consolidation region, including price prediction); Stops (various types including beta-adjusted trailing stops); and common trading mistakes.Chart pattern reference section: Each chapter examines one pattern type and describes the chart pattern as it behaves under various conditions. I score performance in easy to use and understand tables. For example: Diamonds with downward breakouts occurring in small cap stocks have declines averaging 27% (score: +1), mid caps decline 23% (score: +1), and large caps decline 19% (score: -1). If the diamond chart pattern you’re looking at is in a mid cap stock, then it scores +1. Continue scoring your chart pattern using the other eight tables and total the scores. Totals above zero suggest performance above the median; totals below zero suggest underperformance. Patterns with totals greater than zero typically perform two to three times better than those scoring less than zero. No guarantees, but the method tends to highlight stock chart patterns that will do well and discards those that won’t. Think of the scoring method as another checklist to consult before trading, not as a trading system replacement, so you can continue using the investment tools most comfortable to you.Case studies in each chapter walk you through applying the method to your chart pattern and discuss actual trades I made, where possible.Statistics Summary and Analysis at the end of the book compares the performance results in sixteen tables for both bullish and bearish chart patterns. Glossary and Methodology defines terms and statistical methods so you can reproduce the results yourself.
There is almost no overlap between this book and my prior one, “Encyclopedia of Chart Patterns” (Wiley, 2000)….
Jun 30, 2010 4:56 pm |
Review by L. Masonson for Trading Classic Chart Patterns
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This 439-page book is authored by Thomas Bulkowski, a successful full-time investor and trader for over 20 years. In his spare time, he previously penned the Encyclopedia of Chart Patterns (2000). For those investors and traders who want to know the performance characteristics of specific popular chart patterns, this book provides the nuts-and-bolts. The book is not light reading and requires a great deal of concentration if you expect to get the most out of it. If you are beginning investor or trader then you may want to wait a bit until you’ve mastered you chart patterns and terminology before delving into this book. If you like statistical data and like to work with numbers, then this book will make you happy. Each chapter on the chart patterns follow a similar template so that you know what to expect in future chapters as far as format is concerned. The book is divided into two parts. Part I (85 pages) presents new research on trendlines, support and resistance, placing stops, selling considerations, and common trading mistakes. Part II (about 300 pages) reviews in detail 14 chart patterns (market tops and bottoms, head-and-shoulders, rectangles, triangles and scallops – rounded bottoms). Bulkowski also provided a 19-page summary of the bullish and bearish patterns with their performance statistics. Also included is a 9-page glossary and the methodology used to determine the statistics for each pattern.To give you flavor as to one of Bulkowski’s findings, consider the most bullish trading patterns. He found the best performance was the descending triangle pattern with an upside breakout. He found the average rise after the breakout for a short-term pattern was 49%. The next best was breakouts from an intermediate-term rectangle pattern with a 42% average rise. And long-term triple bottoms can in third with a return of 41% after breaking outHe looked at the most popular patterns and found the characteristics that make them tick.
Bulkowski developed a chart pattern scoring system that helps select better performing chart patterns to trade. Scores above zero infer that the pattern will most likely beat the median, while scores below the median infer that the pattern will be a non-performer. Bulkowski also includes a few case studies for each pattern to aid in the understanding of the patterns and scoring system.Bulkowski suggests that you use the information in the book on the behavior of chart patterns with the scoring system, combined with your own research (such as how the industry group is behaving) and other technical and fundamental indicators to develop your own trading strategy.Overall, Bulkowski presents a masterful text on the most-often used chart patterns. But instead of giving you generalities, he provides specifics based upon detailed statistical analysis. Knowing which patterns work best under which conditions will certainly put the odds of investment success in your favor. Therefore, I highly recommend this book to serious students of the market. This is money well-spent.
Jun 30, 2010 5:44 pm |
Review by Des Hartman for Trading Classic Chart Patterns
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I’m a software developer writting a program to do chart patterns. I used his first book, but there were conceptual pieces missing. This book fills in the gaps and more. This is an excellent buy and well worth the money! If you are serious about Chart Patterns, then I would suggest this book as a first read and then the encyclopedia of Chart Patterns as a reference. Good humor in the book as well. I like that.
Jun 30, 2010 5:45 pm |
Review by for Trading Classic Chart Patterns
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There are tons of books in the market on chart patterns but most seem to be copying out from the same sources or from each other. There are only a handful of books that really attempt to see how well these patterns work and under what circumstances. This is one of the better book in this group.This can be heavy reading if you are not a detail oriented person. I do not agree with all his methodologies in coming up with the statistics and scores but that is absolutely better than nothing. The methods are more refined than my own first attempt so I feel I learn something from his approach and it is worth the money (and the weight to carry the book)The person who complained about the trend channels missing should look at his other book – Encyclopedia of chart patterns, which is also a delight.I wouldn’t take the statistics blindly though as these numbers can vary greatly under different assumptions and circumstances.
Jun 30, 2010 6:25 pm |
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I highly recommend this book to people interested in chart pattern analysis. It is not an “easy read” – it requires concentration and time. The level of detail and complexity, however, is what makes the book so useful.So many trading books put forth simple rules to trade and offer no evidence that their rules work. Anyone who’s tried trading knows it is anything but simple – if it were, everyone could become a millionaire in their spare time after reading a couple of books or buying some infomercial product. This doesn’t happen. What does happen is that the individual trader has to compete with people who have enormous 1) experience, 2) money, and 3) analytical resources – think big investment banks, hedge funds, and mutual funds. To even think of competing, you’ve got to learn as much as possible about the complexity of the market. It isn’t simple, learn it in a weekend stuff – people spend years and millions of dollars trying to figure it out.So, in the quest to figure it out, this book is one good tool. It offers statistically backed information on which chart patterns work most often, under which conditions. It doesn’t include every chart pattern (someone suggested his other book is more inclusive – I haven’t read it yet). It is complicated and really not an introduction to technical analysis (there are a lot of good books for that). But assuming you know the basics, and you want to go a little deeper, it’s a great book. Where else can you get this kind of tested information? Otherwise, you have to figure it out yourself – through experience (probably costly and not as thorough) or backtesting (certainly time consuming and not as thorough). I’d rather read the book.
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