Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 32

I mentioned this setup in the introduction to this chapter. Look for a bullish pattern and buy it when it confirms. Sell when a bearish pattern appears. For example, Figure 1.7 shows a double bottom at AB. The two valleys bottom near the same price. The squiggles turn into an actual double bottom when price closes above the horizontal line. That happens at C (the breakout). The next day, D, you buy the stock at the opening price and receive a fill of 7.40.

Figure 1.7 Here is a swing trade using a double bottom and a double top.

From then on, you look for a bearish pattern, one that says the stock is going down. A double top appears at EF. The two peaks top out near the same price. It confirms as a valid double top when price closes below the horizontal line, G. The next day, you sell your shares at the open and receive a fill at 10.60. The difference is $3.20 or 43% above the buy price.

In fact, if you had spotted an earlier double top (I), you could have sold a day after the downward breakout (J) and received a slightly better fill, at 11.00, for a net gain on the trade of 49%.

If you sold the day after J, you might be kicking yourself for selling too soon. Why? Because price continued to rise to E and higher to F. If you were astute, you may have recognized a 2B pattern at F and sold sooner, making even more money. Don't look for the 2B pattern in this book because I don't review it. Visit my website for details if you're interested in the 2B.

Of course, I cherry picked this trade, and often things aren't as easy as this example suggests. But the idea is simple. Buy bullish patterns and sell bearish ones. Yes, you'll have to find stocks that you believe show promise in an industry doing well and during a rising market (you will want the stock, industry, and market trending in the same direction for the best result).

You may want to score the chart pattern, too. I described the scoring mechanism in my second book, Trading Classic Chart Patterns. A review of the technique over a decade later shows it still works well. It will help you select patterns that perform better and avoid the duds.