Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 20

How do you test chart patterns? It's not an easy question to answer. If you use commonly available software that tests trading strategies, you'll enter rules to model the shape of a double bottom, for example. When price closes above the top of the pattern, it signals an entry, so the software simulates a buy.

What about the exit signal? When do you sell? Should you use a stop‐loss order or a signal from MACD or even a moving average crossover? No. Why not? Because you're not testing the chart pattern. You're testing how well a stop‐loss order works or you're testing MACD or the moving average crossover system.

So I invented two tools I call the ultimate high and ultimate low to solve the testing problem.

Let's look at a chart so I can explain how these work and you'll understand the statistics in this book. Figure I.1 shows two chart patterns, a double bottom and a head‐and‐shoulders top. Let's take the double bottom first.