Customer Reviews

Encyclopedia of Chart Patterns (Wiley Trading)

5 star:		(28)
4 star:		(13)
3 star:		(7)
2 star:		(1)
1 star:		(4)

 

 

I don't even know Mr. Bulkowski, but I felt compelled to write this review. One particular reviewer points out a few apparent discrepancies in this 672 page volume of research. It does not matter whether you are an author or have been published in trading-related magazines.

The reviewer sarcastically poses that since the "rectangle bottom" stats on page 659 portray a zero faulure rate, that traders can get rich and never lose money!

If you truly read the entire text, including Mr. Bulkowski's opening remarks that define his fresh statistical-analysis approach, then everything falls into place.

Furthermore, the author addresses the "zero loss stat" for the rectangle formation on pages 440 and 444. He states that the "sample size" was small for this pattern and said: "Let me emphasize that because I did not find any failures of rectangle patterns with upside breakouts does not mean there are none."

This is a good and comprehensive book with a very fresh statistical approach for analyzing classic (and newer) bar chart formations. There is a wealth of information addressing each of the many patterns. It is offered up to the reader as copious amounts of quantified data that any trader/investor can draw from to incorporate into his or her own trading.

I too am an author, and I trade stocks full-time for a living. This book is a great resource and fits in the top 15 T.A. books of which I own roughly 300.

Yeah, he called a "dogi" a "hanging man." To me that doesn't detract from the other 671 pages.

Buy it, read it and use it!

This book is a must-have for anyone interested in technical analysis, whether just starting out or more experienced. It is a thorough review of patterns not seen since Edwards and Magee (1948) and deserves the name "encyclopedia". The author takes a scientific approach and does not make "claims" for one pattern or another, as a critical reviewer states. He clearly acknowledges that patterns, as with any technical method, only indicate, they do not dictate, and we are always working with probabilities. The back-testing that yields statistics on pattern performance (failure rate, average gain, etc.) is useful, but best of all is the absolutely clear description of the patterns with identification guidelines. Of the 100 or so books on technical analysis on my bookshelf, this is far and away the most-consulted. I have been using statistics-based technical analysis for over 20 years (moving averages, stochastics, and the like), but increasingly see patterns like double tops, triangles, etc. This book is an invaluable adjunct to software-generated statistics-based technical analysis. I am a professional financial writer on technical analysis as well as a money manager.

I have always wondered - how reliable are chart patterns? Now I know. Tom gives you every statistic necessary to give you the confidence needed to trade these patterns. If you want to know what each pattern should look like, what the average rise or decline is, what the success rate is of each pattern, how to deal with failed patterns and strategies for maximizing profit and minimizing risk - then this 2nd edition is a must.
I have been trading for 25 years and this is the first book I have read that gives me the confidence to take action.
Bravo Tom.
Vince

I have been using statistical techniques for many years and thought most "patterns" are mostly in the eye of the beholder. I have yet to see a head-and-shoulders. But some patterns are so obvious that recently I have looked for definitions and explanations. This author not only provides them, but also has done the heavy lifting of testing 500 securities over 5 years in order to say how often each pattern is successful, how much you are likely to make from it, etc. This has never been done before and is very useful. "Encyclopedia" went to my top 10 technical analysis list in the first ten minutes I had it. It will be the most dog-eared book since Edwards and Magee.

Many years ago, when I was a college student in China, one of my most enjoyable moments was to sit in library reading Encyclopedia Britannica, which always gave me new perspectives for the world. It was natural that the title of this book attracted my attention and I bought it immediately. What a wonderful reference book to add to my trading library! I only wish I had it before the market crashed in 2000, when I lost all my trading accounts.

This reader-friendly book consists of Part One Chart Patterns (53 chapters) and Part Two Event Patterns (10 chapters). Each chapter focuses on a specific chart pattern with informative details. The RESULTS SNAPSHOP and TOUR are very useful to give readers a general idea of each chart pattern. The IDENTIFICATION GUIDELINES and TRADING TACTICS give readers a practical trading guide. The STATISTICS shows the author's new approach to analyze each chart pattern scientifically. The SAMPLE TRADE is a fictitious story to illustrate a trading circumstance. The FOCUS ON FAILURES provides necessary warnings for each chart pattern. All the technically complicated information is smartly rendered in layperson's language. I think if every trader (day traders, swing traders, position traders, and buy-and-hold investors) reads this book, we will be on the same page and will act similarly. Then, our trading will become more consistently profitable.

Of course, this is not a book to read from cover to cover. Instead, it is a must-have reference book. Any time I found a chart pattern showing a potential for profits, I checked it with this encyclopedia and designed a proper plan to trade with the pattern. This way, I learned while I earned. However, this book is not a crystal ball, but a great trading tool, which you should master. Should we ask more from a book?

Guang Lu, Ph.D.

Whether you are a novice or experienced technician, the Encyclopedia of Chart Patterns is a much needed reference.

I have read many of the "best" books on Technical Analysis, and ALL of them pass off unsubstansiated market folklore as competent, rigorous analysis. This book actually makes an attempt to prove some of its claims with evidence, making it a stand head-and-shoulders (forgive the pun) above the rest.

Bulkowski does an excellent job of describing various formations, providing performance statistics, such as percentage of correct and failing trades, average gains (or declines) and most likely gains or declines.

No book is perfect--I could think of a number of ways to improve the it: 1) some stats on inter-rater reliability--could several chartists see these formations using these rules, and do they come to the same conclusion (bullish, neutral, bearish)? 2) Do chart patterns work better on different types of stocks (large vs. small cap) or sectors 3) how important is the market (or sector) trend when evaluating a pattern? Should bearish patterns be given less weight in a rising market? Testing the patterns over several market cycles would also help. The scope for creative, individual research is endless.

I would hope this book sets a new standard in the technical analysis literature--actually trying to provide some quantitative evidence for theories.

Market technicians, who are always looking for respect from fundamentally oriented traders, should follow Bulkowski example and become more scientific in their approach.

If I were to be deprived of all the trading books in my collection but one, that would be The Encyclopedia. Unlike other literature on the patterns, in this book you will not find clauses like "most of the time", "usually", "seldom". All the information as it's related to the pattern trading is thoroughly backtested.
Few words about the author are due here. I do not believe you will find more ethical individual in the trading community than Mr. Bulkowski is. Unlike others who use their books as an advertising medium to lure you into subscription to their services and seminars, the author simply does not do that. His web site is FREE and he sells nothing but his book.
I can't even say that this book is highly recommended or you should buy this book... Nothing like that. I believe you owe yourself having this book on your desk 24/7 if you are to trade chart patterns. If you do not trade chart patterns then... you should not trade at all as all the "indicators" are nothing but derivatives of the price and volume behavior. Turn of all that noise and focus on patterns and volume and that's what this book is teaching you to do.

Save yourself at least a year of back testing strategies using tradestation and collecting statistics.

This book is an encyclopedia, not a "psychological" trading type book. This is dry and technical information, statistics, numbers, etc. I wouldnt have it any other way. Make sure you have a trading platform that will allow you to put this information to good work.

This book is a must.

For years the "experts" have been regurgitating the same old stuff with respect to chart patterns, "This is what a double top looks like; This is what a pennant looks like; yada yada yada." Finally, Bulkowski gives us something we can really use: a book based on actual market testing. Want to know the reliability of the cup-with-handle - look it up! Want to know the likelihood that you will make at least 25% on the breakout of an ascending triangle - look it up! Of course, there are no absolutes in trading, however, this book gives plenty of statistically relevant information that one would be foolish to ignore. I wouldn't think of trading without it.

Technically, this is a very useful book in that it presents hard to find statistics on the patterns like the price expectation, failure rate, very detailed. For example, the author even included a statistic on the volume behavior for the 'head and shoulder' pattern, which is very helpful. -You may not find those facts in any other book. The approach the author took is certainly a step forward towards 'scientific' technical analysis.

However, the presentation is poor and too wordy which makes it uneasy to follow, especially when you compare it with the classics like John Murphy ans Steve Nison's. There are too many uneccary words and most of the 'trading examples' are nothing more than stories (it is also not clear if those stories are fabricated or real). They do not contribute to the technical merit of the book but occupy a considerable portion of the book.

I'll keep it but do expect a revised version.