Encyclopedia of Chart Patterns - Review
| Article Index |
|---|
| Encyclopedia of Chart Patterns - Review |
| Page 2 |
The Essential Chart Pattern Trade Manual
A review of Tom Bulkowski’s Encyclopedia of Chart Patterns (2nd Ed.)
Publisher John Wiley & Sons – February 2005.
Suggested Retail Price - $129.95USD
Based upon a glowing recommendation from a good friend who declared this book a "must have" for every trading library, it was with great trepidation that we began the daunting task of reviewing Bulkowski's new 1000+ page book Encyclopedia of Chart Patterns (2nd Edition).Having read countless stock market related books and attended seminars that promised much but delivered little, we expected to have found yet another cure for insomnia.
What a relief it was to instead discover an interesting expose on chart patterns that together with volume, price and trendlines present traders with the essential ingredients for a valuable discretionary trading system, replete with real market examples. Once initiated, we found ourselves looking forward to times when we could sit down with it again, poring over patterns of which we had not even have been aware before. It is easy to see why record-holding stock trader and host of www.chartpattern.com Dan Zanger includes it in his list of three essential books that should be in every trader’s library!
It is no joke that this book is termed an "Encyclopedia", as Bulkowski has obviously done exhaustive research on every chart pattern out there.Although there is ultimately no substitute for experience, it's too bad that this book was not around sooner. (The first edition was published in 2000). It would have saved many a trader including us thousands of dollars in painful, unnecessary losses, and countless hours in the school of hard knocks discovering new ways of losing money.
( See Read more.....)
Bulkowski has laid this book out in an easy to understand format, and he breaks each chart pattern down into basic components in a way that even the neophyte trader will comprehend.Readers may initially find the tables included for each pattern in the first chapter a little difficult to initially grasp. For example: frequency distribution, size statistics and failure rates are included for each pattern. However, by the end of the first chapter the explanations should become clear.
The trade examples at the end of each chapter summarize the ideas set out in the chapter, demonstrating how to trade the pattern.It may take a bit of time getting used to his language, for example some traders call a move to the downside a breakdown, where Bulkowski (and other people as well) call it a down breakout, but it should not take long before you fully understand his meaning.If you are still having problems as you progress, a full glossary and index are provided to clarify any and all definitions.
As you progress through the book there are lots of nuggets of wisdom that should help to maximize your potential for winning and minimize not only your chance of loss, but also the size of those losses when they occur.Some of the examples are obvious albeit not all that common, and thus provide a quick refresher for even the most seasoned trader.
The author has used over 38500 chart pattern samples to create the database for the book, and applies them to over fifty different chart patterns.The patterns are ranked against each other from best to worst, how they perform in bull and bear markets and how to trade each pattern.For traders who have a problem with setting targets for their trades, the book even breaks down, in percentages, how far each of the different patterns may potentially move.This will help the traders who are apt to take money off the table too quickly, thereby keeping them in profitable trades longer.For those traders suffering from stop-loss violation addiction, the book assists them in setting exits, by detailing historical pattern failure rate percentage.The book also delves into trading psychology that together with historical pattern success and failure rates will help boost your confidence in pressing the button.
Encyclopedia of Chart Patterns - Review
Last Updated ( Friday, 30 March 2007 )