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Encyclopedia of Chart Patterns 2nd Edition
"The most complete reference to chart patterns available. It goes where no one has gone before. Bulkowski gives hard data on how good and bad the patterns are. A must-read for anyone that's ever looked at a chart and wondered what was happening."
-- Larry Williams, trader and author of Long-Term Secrets to Short-Term Trading
“The book is called an ‘Encyclopedia’ for a reason. In roughly 1000 pages, it contains 53 chart patterns plus 9 more event patterns which will pretty much cover you for any chart you come across…. if you take technical trading seriously, it is a book that should be on your shelf.”
―Alan Battista, Stockineer.com Book Review
From the Inside Flap
In each chapter of Encyclopedia of Chart Patterns, Second Edition you'll learn the following about each pattern:
- Results Snapshot—A statistical summary of pattern behavior, including its performance rank, breakeven failure rate, average rise or decline—all separated by breakout direction and market type (bull or bear)
- Tour—A broad introduction to the pattern
- Identification Guidelines— Characteristics to look for
- Focus on Failures—What failed patterns look like, why they failed, and how to avoid them
- Statistics—The numbers and what they tell you, separated into bull/bear markets and breakout direction, including average rise or decline, failure rates, volume shapes, performance by size, and busted pattern performance
- Trading Tactics—Strategies to increase profits and minimize risk
- Sample Trade—Puts it all together, showing the chart pattern in action, with hypothetical or actual trades using real data
- For Best Performance—A table of selection tips to boost performance
Encyclopedia of Chart Patterns, Second Edition also includes summary tables ranking chart- and event-pattern performance for easy reference; a glossary; a chapter on methodology explaining what each statistical table entry means and how it was calculated; and a visual index to make chart pattern identification a snap.
The result is today's most comprehensive and valuable technical analysis reference—one that will save you critical time in identifying chart patterns and increase your likelihood of buying near the price bottom and selling near the top.
- Publisher : Wiley; 2nd edition (May 2, 2005)
- Language : English
- Hardcover : 1040 pages
- ISBN-10 : 0471668265
- ISBN-13 : 978-0471668268
- Item Weight : 3.93 pounds
- Dimensions : 7.1 x 2 x 10.1 inches
- Best Sellers Rank: #794,763 in Books (See Top 100 in Books)
- Customer Reviews:
About the author
Reviewed in the United States on July 5, 2020
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So his book can be used as a real time reference, he presents a unique visual pattern index in the back. Find as close as possible a match to what you are confronted with on screen. Then look it up to see if his past study and commentary sheds useful light.
All very interesting. There is no question that Bulkowski has done an absolutely EXHAUSTIVE amount of work here. The mere ATTEMPT deserves appreciation. Many authors promote the patterns that support their pet trading plan in an idealized context with only vague qualifiers ("of course sometimes", "often"). Not something you should bank on in the messier real world without much testing and/or very careful risk management.
The most valuable insight from ALL his stats? More proof that there is no free lunch to be had. Even the best and most "reliable" of patterns have mere slightly better odds of prices going the one way instead of sideways or worse, the other. In "edge finding" that is, after all, about as good as it gets. But it is sobering (and oh so important) to know just HOW thin such edges usually are. That is why the word "edge" itself is so darn accurate. In the often razor thin sense of the word!
Alas his stats, welcome for the reason given, are not very bankable either. No standard deviation or Monte Carlo stimulation results are given to provide a firmer sense of the robustness of the findings.
Moreover this entire APPROACH to TA: gathering and trying to catalog follow-up results, suffers from it's own abstraction. He furthers a long tradition. But as a foundation for ACTION it is an incomplete approach that lends itself to the unjust charges that liken TA more to astrology or palm reading than science. The huge subjectivity is at once it's failure AND it's alibi against the charge of failure! "Didn't you notice that classic squiggle on the higher time frame?" "There it was a lower right shoulder you twit not an ascending triangle!" No wonder. This is just like "you knew darn well she was a Leo when you proposed but, sigh, you failed to note Mars was in the ascendancy on the day she was born." No wonder. Silly you.
Don't get me wrong. Give me a chart over fundamental number crunching or talking heads any day. Familiarity with reoccurring or unusual patterns on those charts absolutely helps. Of deeper value than cataloguing however is a focus on what does the observed action likely MEAN? What might it be saying about the supply/demand balance in the (limited) context of the time? What are the (always several) main possibilities going on underneath to create such a pattern? This is an alternate way of approaching TA. One that stands more on the shoulders of the likes of Wyckoff and is reflected today by such TA authors as Adam Grimes. While interpretation and decision is STILL inevitably more subjective art more than solved science (and has to be or there would be no one on the other side of the order books), to me THAT approach to TA has more promise and practical value than this book's.
Having said all this, the two approaches are not mutually exclusive. Bulkowski's work on patterns is still head and shoulders over going it alone with no point of reference. Going well beyond agnostic reporting, he also presents generous insight and tactical trading advice throughout. It remains to be seen how "handy" the reference is in the heat of battle.
Here you have enough named pattern variations to last a life time. For me most of them can likely be reduced to just a half dozen major themes. One could get mislead by random noise by reading too much into the near limitless variations. In connecting dots, like much else in trading, simple broad strokes are better. Yet at a thousand large sized, NOT large font, pages, the book will get far more credit for thorough than simple.
Still Bulkowski deserves applause. There is obviously a life's work reflected here. Yes more unassailable, well grounded probability and results studies are badly needed to carry such work further. They can be applied to the sacred tenants of FUNDAMENTALS more objectively than to invariably PERCEPTION biased chart patterns. Likely to even more devastating effect. At the end of the day you still won't have a crystal ball. But at least you will know it and hopefully will act accordingly.
Bulkowoski's bulk effort will long stand as a weighty, genuine contribution to the quest. Sail on!
Instead, he just plunges in. Since I'm picking it up for the first time in a long time, let's start at the beginning: p. 11, "Broadening bottoms." I am generally aware of most of the patterns in the book, including this one, from other reading and from my trading. I've lost a lot of money over the long run due mostly to lack of emotional self control. Yet I seem to be able to convince myself I have some skill because for example I've made an average of about $470 per day day trading over the last 5-6 weeks, losing money on only about 3-4 of those days. So: Broadening bottoms:
Begins with nice pic of upward breakout from a BB in a downtrend. Thus a reversal. He then says, in BOLD, "Upward Breakouts." So far so good. Description of appearance fine. Yes, it's a short term bullish reversal. He then has a table with one column for Bull Mkt. and one for Bear:
.................................Bull Mkt.....................Bear Mkt
Perf. rank 17 out of 23 12 out of 19
[Does this mean that, of the 23 or so patterns he considers – let’s look at Table of Contents – this ranks low in dependability? And what would dependability mean? That if you BUY the breakout up, you’ll see a significant gain? What is significant? As a day trader, if I’m not trading too emotionally, I can do a decent job of looking at the larger pattern and taking a reasonable profit. But what the heck does he mean here? There are 53 chart patterns and another 10 or so ‘event patterns’ in the TOC. So what the heck does 17 out of 23 mean? And is all of this explained in the intro? Skimming it again, I don’t really think so. So, so far, I’m a bit lost.]
..............................................Bull Mkt.....................Bear Mkt
Break-even failure rate 10% 9%
[Hmm… so.. umm… again, I have to GUESS what this mean. Ummm… NO I HAVE NO IDEA. Am I just not thinking clearly enough? Let me guess.. umm.. ASSUME (and he says NOTHING about his ASSUMPTIONS about ENTRY) that you BUY on the breakout from the expanding wedge. Would a ‘break even failure’ mean it immediately plunges down, so you have to take a loss (unless you like to ‘pray and hold,’ a famous road to ruin I’ve been known to trap myself in)? So 90% of the time it continues up after the breakout? If so HOW FAR? As a day trader this is very important because the decision of WHEN TO TAKE PROFIT is just as important as WHEN TO ENTER.]
Ok so let’s skip to the next one, maybe we’ll gain insight:
..........................Bull Mkt..............Bear Mkt
Average rise 27% 21%
OK so this must mean.. um… that on the average, after breaking out upward from a broadening wedge in a downtrend, a stock will rise by 27% of… it’s price at the breakout? Huh? Well this would certainly be useless for day traders. No way I’m going to sit there for weeks to see if a 100$ stock doing this breakout goes up to 127$. Or is that not what he means?
So. Maybe I’m dumb. Thomas seems like he’s a really nice guy who’s put enormous work into this, and I’D LOVE TO BE ABLE TO MIND IT FOR ITS INSIGHT, BUT EVERY TIME I PICK IT UP I JUST GET FRUSTRATED.
But before I wrap this up and give it 2 stars (if I can change from original 3), let me skim rest of first chapter, and Intro…
Oops. Another skim of Intro doesn’t give much insight, and I confess I’m too tired to read (or reread) the rest of the first chapter, on Broadening Bottoms (certainly a basis for many a bad pun, but I’ll set that aside. Covid weight gains, anyone?). But I clearly remember reading some of these chapters in detail in past years and just ending up feeling a little…
By Viscount di Donnalucata on July 4, 2020
The only thing I am very disappointed is the packaging for the shipment used. This is a NEW hardcover book with 999 pages therefore it is quite heavy. Packaging material used was a mere lightweight bubble Kraft envelope, therefore the book was delivered with damaged corners on the cover & half of the internal corner pages on one end.
People who buy NEW printed books expect the book arrive in pristine condition. The packaging material used for shipping need to be in great care, like what Amazon used to do. Next order better come undamaged or I shall order from other online resources whenever I don't need to be concerned about the product referral fee gets to the author or product reviewer.
Top reviews from other countries
Bulkowski is clearly a serious trader who has made groundbreaking statistical investigation of both charts and candlesticks a key part of his trading. Whilst there are no magic bullets in the markets I found my understanding of chart patterns took a leap forward after reading this book and my timing of entries is hugely improved. One of the top five trading books I own.
What I would like to see from the author and Wiley are cheat sheets on the patterns. I've gone ahead and created my own, but standardized, ready reference cheat sheets would be a great additional resource. An online platform would be even better!