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Also by Thomas Bulkowski

            

CHART PATTERNS:
AFTER THE BUY

 

Thomas Bulkowski

 

 

 

 

Wiley Logo

To Donna McCormick.

Abundant intelligence,

A kind soul,

A giving heart,

Wrapped in a frail body.

She is discovered treasure.

PREFACE

I used to think chart patterns were the footprints of the smart money. Now I believe the definition should include the dumb money, too, and everyone in between.

When I trade a stock, others are doing the same. We move price up or down, depending on how strongly we want to buy or sell. If enough of us buy a stock with enthusiasm and continue to buy, we force the stock to trend upward. Prolonged aggressive selling forces the stock down. That buying and selling creates patterns on the price chart, patterns that we see repeatedly.

Chart patterns have been around for decades. I expect them to be around in the coming decades, too, because the forces of buying demand and selling pressure will still be present to shape the charts. Machines may change the dynamics, but human emotion will still be there to leave the footprints.

The idea for this book came in the form of a question. What happens after I buy a stock showing a chart pattern?

Answering that question for 20 chart patterns took two years. The result is this reference book.

Most books focus on what triggers a buy. Fewer books focus on what happens next. I used 43,229 chart patterns pulled from bull markets to uncover the secrets to what happens after buying a stock. The results help select better buy signals so you have an increased chance of making money and avoiding disaster. All you have to do is match your setup to one of the configurations illustrated in this book.

Most chapters follow the same layout so using this reference book is easier, too. The Behavior at a Glance section illustrates how a chart pattern behaves, with the most important performance statistics right on the charts.

Identification Guidelines follow so even people new to chart patterns will know what to look for. And with almost 370 stock charts and illustrations, you have plenty of examples.

Next comes the Buy and Sell Setups, backed by statistics that describe how well they work.

The Best Stop Locations tell how often a stop in a chart pattern will trigger. That alone is worth the price of this book.

The section on Configuration Trading shows how your setup is likely to behave in the future. It is the heart of the book.

The Measure Rule tells how to set price targets and how often you can expect price to reach those targets for both up and down breakouts.

The Trading section gives examples of how to use the information and discusses actual trades.

You will find the Setup Synopsis charts at the end of each chapter to be invaluable. The charts combined the ideal setups in one location, making it easy to match your trade with what could happen after you buy.

Each chart includes labels for points of interest. Too many authors forget this step and leave you wondering where that price spike they are talking about really is.

Not so with this book.

I never leave you guessing.

But wait. There’s more.

Not only do I cover the most common and popular chart patterns, I include other patterns as well. Earnings misses, price mirrors, price mountains, and straight-line runs are just a few of the chapters that fill this book.

Whether you are new to chart patterns or are an established professional, this book has the information you need to better select trades that work. This book will give you the edge that all traders and investors need in today’s markets.

ACKNOWLEDGMENTS

Thanks to Dr. Tom Helget, Ross Hall, and Ronda Palm for their suggestions and help with molding this manuscript.

Thanks also to my editor, Tula Batanchie, for taking such good care of me, Vincent Nordhaus (senior production editor), and all of the other Wiley workers and subcontractors for making the birth of this book survivable.

ABOUT THE AUTHOR

Thomas Bulkowski is a successful investor with 35 years experience trading stocks. He is considered to be a leading expert on chart patterns and an internationally known author.

Bulkowski is a frequent contributor to Technical Analysis of Stocks & Commodities magazine and has written for the following magazines: Active Trader; Stocks, Futures and Options; The Technical Analyst; Traders; and The Trader’s Journal, and his articles have appeared on numerous websites.

Before earning enough from his investments to retire from his day job at age 36, he was a hardware design engineer at Raytheon and a senior software engineer for Tandy Corporation.

His website address is www.thepatternsite.com. There you will have free and open access to hundreds of original articles, research, and blog posts written by Bulkowski.