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Article Archive For Thomas Bulkowski
DownloadProfiting From Failure
ARTICLE SYNOPSIS ...Trading busted chart patterns might be the way to riches. Or not...
The Beazer Trade
ARTICLE SYNOPSIS ...Should you hold through earnings or not? Here's an examination of a trade made in a home construction stock, together with the notes and trading journal entries that support and explain the thinking behind the trade every step of the way...
Swinging NCR
ARTICLE SYNOPSIS ...Here's a breakdown of a recent momentum swing trade--from the initial search for a trade, to reading the chart, to researching the market context, the reasons for the buy, and the reasons for the exit. Was it successful? We find out. (Spoiler alert: It was)...
Do Fibonacci Retraces Work?
ARTICLE SYNOPSIS ...Traders often plot Fibonacci levels on their charts and some consider these levels important to trade around. Does this approach work, or is it just wishful thinking?...
The Swing Rule
ARTICLE SYNOPSIS ...Here's a technique that looks for a particular pattern of price swings to project a price target as the exit...
Is Trading Getting Harder?
ARTICLE SYNOPSIS ...As some chart patterns become more well known and as more people trade based on charts, have some patterns lost their reliability? Here is some research that could provide some answers, based on almost three decades of data...
The Best Chart Pattern Entry
ARTICLE SYNOPSIS ...Can traders better time the entry?...
Get More Value Using A Trading Checklist
ARTICLE SYNOPSIS ...What is a trading plan or checklist and how can it help?...
The Diving Board Trade
ARTICLE SYNOPSIS ...What is a diving board pattern and can you profit from trading one...
Reflecting On Price Mirrors
ARTICLE SYNOPSIS ...Can we use prior price movement to predict the future? Where will price be a week or a month from now? Here is a simple technique that will give you an answer. I call it a price mirror...
Finally! A Buy & Hold Sell Signal
ARTICLE SYNOPSIS ...When should you sell a long-term holding? Here's a trading setup that answers that question...
The Measure Rule For Price Prediction
ARTICLE SYNOPSIS ...You stare at a chart to try and figure out where prices will go. Will they go up or down? Here's one way to make a prediction using the height of common chart patterns, and the nice thing is, you can do it with a high degree of probability...
Vertical Runup
ARTICLE SYNOPSIS ...Sometimes you see a price move that just goes vertical. What happens after that move ends? The answer may be obvious to you, but there may be ways to find trading opportunities after the run is exhausted...
Anatomy Of A Trade: The One That Got Away
ARTICLE SYNOPSIS ...Have you ever traded with exceptionally bad timing? Here's one to ponder...
Bottom Fishing & The Ugly Double Bottom Setup
ARTICLE SYNOPSIS ...Profiting from bottom fishing is notoriously difficult, but this setup may help...
What Is The Best Purchase Price?
ARTICLE SYNOPSIS ...Have you analyzed your trading setup to determine what the best price is for buying a security? Here we explore some ways to do that...
10 Selling Tips
ARTICLE SYNOPSIS ...Do you spend as much time deciding to sell as deciding to buy? Here are 10 tips to make deciding when to sell easier...
Four Lessons From Three Decades Of Trading
ARTICLE SYNOPSIS ...If you had the opportunity, why not learn a thing or two from those who have already figured out what works and what doesn't? Here's a chance to soak up some wisdoms as one trader shares lessons he learned as he traveled along his 30-year trading journey...
The Trouble With Triangles
ARTICLE SYNOPSIS ...Have you traded ascending, descending, or symmetrical triangles and lost money when the trend reversed? Here's a look at how often triangle patterns fail....
Navigating Price Mountains
ARTICLE SYNOPSIS ...When stock prices start climbing or forming a price mountain, it's tempting to want to get in on the action. But should you buy a stock that's forming a mountain?...
The Truth About Dollar-Cost Averaging
ARTICLE SYNOPSIS ...Does dollar-cost averaging work? And what is zero-cost averaging? Find out more about these two concepts here....
Trading Smiles And Frowns
ARTICLE SYNOPSIS ...Can a technique this simple really boost trading profits? Find out more....
'Trendy' Chart Patterns
ARTICLE SYNOPSIS ...Which chart patterns precede a strong breakout move?...
Trading Buy & Hold
ARTICLE SYNOPSIS ...There comes a time when you have to sell your long-term holdings. Here's how you know when to sell them....
The Eight Best-Performing Candles
ARTICLE SYNOPSIS ...After removing rare candlesticks and combining reversal or continuation rates with performance after 10 days, surprising winners emerge....
Investment Candles by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Which candlesticks work best as reversal or continuation patterns? Find out here. Investment-grade candlesticks work as reversal or continuation patterns at least two-thirds of the time (66%), and they are plentiful. By "plentiful," I mean that I sorted a list of 103 candlestick patterns by how often they appeared in the Standard & Poor's 500 from August 1996 to August 2006. I split the list and discarded the rare ones. That left just 13 candle types, which I describe here....
What You Don't Know About Candlesticks by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...In writing my latest book, Encyclopedia Of Candlestick Charts, I made some startling discoveries. I used more than 4.7 million candle lines (price bars) for the research with data going back as far as the 1980s in hundreds of stocks, but not all stocks covered the entire period. Re v eRs a l s w i n One famous technical analyst wrote that continuations perform better than reversals. That would make sense, since it is easier for price to swim with the tide than against it. There is just one problem: That's wrong. I tested this on thousands of chart patterns and candlesticks wi...
Top 10 Candles That Work
ARTICLE SYNOPSIS ...In my last article, I described 13 candlesticks that worked best as reversal or continuation patterns. That means price closed above the top of the candle pattern or below the bottom of it, signaling a reversal or continuation not just once, but reliably in thousands of cases. However, just because a candle acts as a reversal 66% of the time doesn't mean that price moves far beyond the candlestick boundaries. This article discusses candles that perform best over time -- that trend furthest -- but they may not be good reversal or continuation candidates....
Cloudbanks by Thomas N Bulkowski
Highs & Tight Flags by Thomas Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 27:12 (38-42): Highs & Tight Flags by Thomas Bulkowski Does the high & tight flag work as well as some say? Find out here. I have spent 30 years playing the markets. During that time, I have written several books including two encyclopedias covering 166 price patterns from chart patterns to event patterns to candlesticks, but one pattern outperforms the rest: the high & tight flag. New research indicates that this chart pattern may not live up to expectations. Let's take a closer look. WHAT IS IT? The high & tight flag was popularized by William O'Neil in his book,...
At The Close by Thomas Bulkowski
ARTICLE SYNOPSIS ...At The Close by Thomas Bulkowski Here's a handy set of tips on what to look for in a stock to add to your portfolio. Traders and investors are always shopping for bargain stocks. When you log onto your favorite website and see that the price of a stock has dropped 50%, does the half-off sale mean you should buy? Perhaps. This article reviews shopping tips to help improve your chance of picking a winning stock. TIP #1: BUY IN A BEAR MARKET AND HOLD IN A BULL MARKET I computed the year-to-year price change of 565 stocks from 2000 to 2009. The table in Figure 1 shows the results. For example...
Top-Performing Reversal Candles by Thomas Bulkowski
ARTICLE SYNOPSIS ...Top-Performing Reversal Candles by Thomas Bulkowski Three candle patterns outperform all others. Can you guess which ones? During research for my latest book, Encyclopedia Of Candlestick Charts, I explored the world of candlesticks and found which ones worked and which ones didn't. In this article, I take a closer look at the methodology I used and discuss three candle patterns that work exceptionally well. METHODOLOGY I spent a lot of time trying to figure out how to test short-term price patterns and found a method I believe works best. For a candlestick that acts as a reversal, price sh...
Sell Using Stops by Thomas Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:2 (28-32): Sell Using Stops by Thomas Bulkowski The use of stops separates the professional trader from the amateur investor. It doesn't matter what price you paid for a stock. What matters most is what you sell it for. Do you spend more time researching a buy candidate than you do a sell candidate? That's not necessarily a bad thing. I know I've turned on my computer only to discover, "Hey! I sold a stock!" The easiest way to sell a stock is to use a stop. It's painless. Once the stop is in place, it's almost worryfree. It'll do its job regardless of whether your...
What Time Frame Is Right For You? by Thomas Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:8 (44-47): What Time Frame Is Right For You? by Thomas Bulkowski Finding the right time frame for your trading may make life easier for you -- and your trading successes more sustainable. A trader I'll call Jennifer made big bucks at her sales job, and her lifestyle matched her income. She drove a fancy car and lived in a big house. Between sales calls and in her off-hours, she developed a foolproof trading system. So she quit her job and started trading bonds and currencies full time. I read a recent study that looked at income from traders. Just 4% of those surve...
The Beginning Trader by Thomas Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:10 (40-44): The Beginning Trader by Thomas Bulkowski Here are some tips to help a beginning trader become profitable. You may be approaching retirement and want to supplement your income or earn enough money to afford the rising cost of health care. You may be a decade out of college, employed at a boring job, and yearn to have a 30-foot commute. Your dreams may be of trading for a living and making a six-figure income while taking days or even weeks off without a boss asking where you've been. This article will help steer you in the proper direction to achieve tho...
What Powers Chart Patterns? by Thomas N. Bulkowski
The Simple ABC Correction by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:1 (52-55): The Simple ABC Correction by Thomas N. Bulkowski This chart pattern reliably signals an extended move up. Take a look. An old joke says that if an investor buys land in an earthquake zone, it will be his own fault. When I see a simple ABC correction in a stock, it reminds me of pavement pushed up by an earthquake. The upward price trend shifts downward in a stair-step correction and then the price trend resumes its upward march, many times for an extended rally. Figure 1 shows what I'm talking about. An upward price trend begins at point 1 and soars to ...
Volume Shapes And Chart Patterns by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:8 (36-39): Volume Shapes And Chart Patterns by Thomas N. Bulkowski Do volume shapes predict postbreakout performance from chart patterns? In the second edition of my Encyclopedia Of Chart Patterns, I introduced a concept that I call volume shapes. I reviewed 38,500 chart patterns and catalogued each according to one of five volume shapes: flat, receding, rising, U, and dome, and then measured performance after the breakout. Here, I will examine the various volume shapes and some of the chart patterns, and discuss performance. VOLUME SHAPES Flatliners: Figure 1 s...
Rotten Apples? Spotting Adam And Eve Double Tops by Thomas N. Bulkowski
Does Volume Matter? by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...V. 22:6 (18-22): Does Volume Matter? by Thomas N. Bulkowski If a chart pattern breaks out on high volume, is it a blessing or a curse? Recently, I was reading some reviews on Amazon.com for a book on technical analysis, and one reader comment that stuck in my mind was that the author didn't discuss volume. Maybe it's because volume isn't important, I thought. In my daily routine, I rarely look at volume unless I'm considering a trade. Otherwise, it doesn't even appear on my screen. But how important is volume? Does a high-volume breakout really suggest a better-performing pattern? Does a rec...
Identifying Bearish Chart Patterns (II) by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Identifying Bearish Chart Patterns (II) by Thomas N. Bulkowski Here's the second and final installment about bearish chart patterns. S omeone I know once made the bold statement that there is a chart pattern for any trend that ends. I don't know if that's true, but here are 10 bearish patterns you should know about. ISLAND REVERSAL Island tops are some of the easiest patterns to recognize. Figure 1 shows an example. Prices gap upward, meander around, then gap down. The gaps align, meaning that they share at least one common price. Thus, price seems to hover like a blimp above the surroundi...
Tiny Chart Patterns: Stinkers Or Stalwarts? by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:4 (44-48): Tiny Chart Patterns: Stinkers Or Stalwarts? by Thomas N. Bulkowski Recognizing tiny chart patterns may be all the edge you need to make a killing in the market, but do they work? In two prior articles, I discussed bullish chart patterns of long duration. This article discusses smaller chart patterns: some you may have heard about, and some that may be new to you. None of the patterns is longer than a few days. Daytraders in stocks or commodities may find them useful, but some of the patterns may also help longer term investors. Sometimes these tiny patte...
Gauging Gaps by Thomas Bulkowski
ARTICLE SYNOPSIS ...Gauging Gaps by Thomas Bulkowski Should you trade the gap? Here are some gap performance numbers to help you decide. Suppose you've been following a chart pattern. Say prices gap upward, piercing the trendline in a breakout. Do you buy the stock, expecting an unusually large gain? How long will it be before prices return and close the gap? I will address those questions here. GAP TYPES Prices gap when today's high is below yesterday's low, or today's low is above yesterday's high. A chart of the pattern will show a gap between the prices....
Predicting Prices With Support And Resistance by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Predicting Prices With Support And Resistance by Thomas N. Bulkowski Support and resistance are important chart patterns. Read this to find out why. I consider support and resistance (SAR) the most important chart patterns. Why? By finding SAR, you can predict how far prices might climb and how far they might fall before you trade. Isn't that worth something? That's like a blackjack dealer sneaking a peek at the top card in the deck and telling you to take it because you'll win. Is he pulling your leg? Does support and resistance work? Let's find out. First, some definitions. Support occurs...
The CCI Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...The CCI Trade by Thomas Bulkowski It's not when you buy but when you sell that counts. These two trades used the commodity channel index as a sell signal. Many traders will tell you it's easy to buy a stock but difficult to sell. When you sell determines whether you make a profit or a loss. A buy and hold strategy in a rising market is a winning strategy -- until the trend changes. After that, holding on too long leads to reduced profits and even losses. So when do you sell? The easy answer is that you should sell when prices reach their maximum, but determining that point takes skill and luc...
Uncommon Chart Patterns by Thomas Bulkowski
ARTICLE SYNOPSIS ...Uncommon Chart Patterns by Thomas Bulkowski Some bullish chart patterns are rare, and some are simply not well known. Read this to find out about both. A few months ago, I received e-mail from someone asking about identification techniques for chart patterns. I suggested the e-mailer could buy one of my books, but short of a brain transplant, I could do little else. This article addresses the identification problem by highlighting guidelines for some lesserknown bullish chart patterns. BROADENING FORMATIONS, RIGHT-ANGLED AND DESCENDING In Figure 1 you see a right-angled, descending, broade...
The Scoring Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Scoring Trade by Thomas Bulkowski Here's a scoring system for symmetrical triangles that helps predict performance. How do you make money in a bear market without selling short? By picking winners. How do you gain the experience necessary to pick winners? Good question. Someone once said you should print a chart of your favorite stock each morning, stare at it for eight hours every day, and then -- two years later -- trade the stock. There is much truth in that: acquiring experience has few shortcuts. I review 225 stocks daily, but it takes just 15 minutes. As fast as the computer can loa...
Eve & Adam Double Bottoms by Thomas Bulkowski
ARTICLE SYNOPSIS ...Eve & Adam Double Bottoms by Thomas Bulkowski If you read this author's first two articles about the Adam and Eve combinations of double bottoms, the Eve & Adam combination should be a snap. It combines elements from the Eve & Eve and Adam & Adam double bottom combinations, with performance that nestles comfortably between the two. Of the four varieties of Adam and Eve combinations, the Eve & Adam pattern is the rarest. Just finding good examples for this article proved challenging. When attempting to distinguish between the double bottom varieties, compare each bottom with its opposite. If ...
Adam & Eve Double Bottoms by Thomas Bulkowski
ARTICLE SYNOPSIS ...Adam & Eve Double Bottoms by Thomas Bulkowski Here's the final part of a four-part series discussing double bottoms. If you read my article in the January 2003 STOCKS & COMMODITIES about the Eve & Adam double bottom, you can guess that an Adam & Eve double bottom (AEDB) is its mirror image. If you think I saved the best for last, though, you would be wrong, as an AEDB's performance falls between the best-performing Eve & Eve pattern and the worst-performing Adam & Adam pattern....
Identifying Bearish Chart Patterns (I) by Thomas N. Bulkowski
ARTICLE SYNOPSIS ...Identifying Bearish Chart Patterns (I) by Thomas N. Bulkowski Bearish chart patterns form at the top of a bear market. What do they look like? Since March 2003, the market has been trending upward. As I write this in August 2003, I'm starting to see bearish chart patterns dotting the stock market landscape like storm clouds brewing. What should you know about bearish chart patterns? This two-part article takes a close look at them. ...
Bullish Chart Patterns by Thomas Bulkowski
ARTICLE SYNOPSIS ...Bullish Chart Patterns by Thomas Bulkowski Can you recognize bullish patterns when they appear? Find out what they look like here. One day, the market will find a bottom and start building a base from which to launch another bull market. Will your market. Will your trading missiles be ready? How will you know when the time comes to turn the key and start buying again? One way is to look for bullish chart patterns and trade them, cautiously, when they appear. What should you look for? To answer that, let's look at some of the more common chart patterns. BROADENING BOTTOMS Figure 1 shows a g...
The Truth About Trendlines by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Truth About Trendlines by Thomas Bulkowski Many of the rumors about trendlines are true. Find out what the facts are here. Is it true that the longer a trendline is, the more significant it becomes? The answer is yes, but this in turn raises other questions. How long should the trendline be to qualify? What is meant by significant? While researching my book Trading Classic Chart Patterns I found lots of platitudes, but little substance. No one seemed to knowhow well trendlines behaved, or at any rate no one was telling. I decided to find out. A BRIEF REVIEW In case you are unfamiliar w...
Eve & Eve Double Bottom by Thomas Bulkowski
ARTICLE SYNOPSIS ...Eve & Eve Double Bottom by Thomas Bulkowski Here's a look at one of the four combinations of double bottoms. You may be familiar with double bottoms, but have you ever heard of an Eve & Eve double bottom? I hadn't heard of them myself until a few years ago, when I was researching my latest book, Trading Classic Chart Patterns. After discovering the Adam & Eve combinations of double bottoms on HARDRightEdge.com, I expanded their findings to include all four types: Eve & Eve, Adam & Adam, Eve & Adam, and Adam & Eve. I'll discuss the latter three types in future articles. This article will focu...
Making Cents Of Throwbacks And Pullbacks by Thomas Bulkowski
ARTICLE SYNOPSIS ...Making Cents Of Throwbacks And Pullbacks by Thomas Bulkowski What are they and how can we use them? Find out what they are and how they perform. When I started investing more than 20 years ago, I thought technical analysis was nothing more than mysterious squiggles on a chart. Now, I am a chart pattern trader who's not afraid to dig for answers. While completing work on my latest book, Trading Classic Chart Patterns, I uncovered some intriguing performance tips for stock investors and chart pattern traders. This article discusses those tips for throwbacks and pullbacks. BACKGROUND AND IDENT...
Adam & Adam Double Bottom by Thomas Bulkowski
ARTICLE SYNOPSIS ...Adam & Adam Double Bottom by Thomas Bulkowski If you see this type of double bottom, it may mean you need to make a quick exit. discussed the Eve & Eve double bottom chart pattern in the November 2002 STOCKS & COMMODITIES. If the Eve & Eve double bottom represents the classic double bottom, then the Adam & Adam must be the new kid on the block. It lacks everything the Eve & Eve double bottom has going for it....
The Bounce Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Bounce Trade by Thomas Bulkowski A double bounce following a long decline spells a trading opportunity. Find out why. I 'm not sure exactly how I happened upon this chart pattern. I noticed that after a long, perhaps straight-line decline, stocks often bounce -- not once but twice. Figure 1 displays an example of this. In the fall of 1997, National Semiconductor (NSM) peaked at $42.875, along with other stocks in the semiconductor industry. A year later, it reached a low of just $7.4375, an astounding decline of 83%. As can be expected, but rarely anticipated correctly, the stock bounced....
Chart Pattern Surprises by Thomas Bulkowski
ARTICLE SYNOPSIS ...Chart Pattern Surprises by Thomas Bulkowski What chart patterns are really reliable, portending significant moves? This S&C author did some research,and we present the results from his survey of some 15,000 patterns. In exploring and answering questions about the stock data we follow and the technical tools we use, sometimes we make startling discoveries. These discoveries may help you improve your investment performance or just add to your general knowledge. I spent a year studying more than 15,000 chart patterns while I was working on my book, Encyclopedia Of Chart Patterns . Of the dozens...
Are Three-Bar Patterns Reliable For Stocks? by Thomas Bulkowski
ARTICLE SYNOPSIS ...Are Three-Bar Patterns Reliable For Stocks? by Thomas Bulkowski Futures traders often use a three-bar swing low as a reversal pattern,but is the three-bar pattern reliable for stocks?Find out here. I discovered this gem of a pattern while prospecting for ideas in a recent issue of STOCKS & COMMODITIES.In the interview with Kevin Haggerty was the following pattern description: One example [to determine a change in direction ]is a three-bar pattern,which is the same one that futures traders use.The stock establishes a low price as a swing point.Once the stock closes above the high of the low ...
The Dead Cat Bounce by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Dead Cat Bounce If you trade stocks long enough, you might have an event take your stock down 25% to 70% in a single session. Then the situation gets grim. Here's a review of the dead cat bounce chart pattern and a strategy to minimize any additional losses. Warren was a novice investor who'd never suffered some of the ups and downs of a volatile market. He called me shortly after the market closed one day, and he was so excited, it took me a moment to recognize his voice: "Oxford just went from 69 to 26. That's a decline of 62%! I'm thinking of buying because after such a large drop it'...
Improving The Win-Loss Ratio With The Relative Strength Index by Thomas Bulkowski
ARTICLE SYNOPSIS ...Improving The Win-Loss Ratio With The Relative Strength Index by Thomas Bulkowski Here's a refresher on the relative strength index, and how to improve your win-loss ratio. Technical analysts can be divided into two basic camps -- those who rely on charts and those who use indicators. Of course, you can use both methods; you might even want to combine them using statistics. If you know your indicator well enough, you should be able to examine any chart and tell when the indicator is going to signal. That may be part of the secret of being a successful investor: Knowing when your tools work a...
Double Tops by Thomas Bulkowski
ARTICLE SYNOPSIS ...Double Tops by Thomas Bulkowski It takes more than twin peaks to make a double top. Here's a refresher on the formation. Double tops aren't hard to identify. Novice investors with just a smattering of technical knowledge can identify any two peaks close together as a double top. But there's more to double tops than simple identification, and in my study of the formation and creating subroutines to recognize them, the selection criteria came into sharp focus. A good example of a double top is shown in Figure 1 and distinguishing characteristics are outlined in Figure 2. The twin peaks are t...
Double Bottoms by Thomas Bulkowski
ARTICLE SYNOPSIS ...Double Bottoms by Thomas Bulkowski The mirror image of a double top, the double bottom is a more profitable longer-term play. Find out why. At first, I thought double bottoms were just double tops flipped upside down, but I was wrong. It's not the formation that's the puzzle; it's the price trend leading to a double bottom. With double tops and many reversal patterns appearing near the top of a price series, the approach leading to the pattern is usually steep. Prices rise rapidly, execute a reversal pattern, then drop just as quickly. With bottom formations, you can still have that type of...
V.15:11 (516-521) The Weekly Reversal by Thomas Bulkowski
ARTICLE SYNOPSIS ...What's a weekly reversal and how does it work? Here's a refresher on this intriguing formation. Maybe you've felt it. Every once in a while, you feel really good. You begin to believe that you know everything there is to know about a subject. You know that's not true, but the feeling persists. And such was the case when I started reading analyst John Murphy's latest work, The Visual Investor. After reading the first chapter, however, I knew I was wrong; I didn't know everything there was to know about technical analysis. I discovered weekly reversals. So what are they and how well do they re...
On Rising Wedges by Thomas Bulkowski
ARTICLE SYNOPSIS ...On Rising Wedges by Thomas Bulkowski As your stock rises and sector rotation becomes more pronounced, it's wise to be alert to a chart formation called a rising wedge. Rising wedges can get you out at the top before your stock tumbles. Here's a refresher on this intriguing formation. Rising and falling wedges share common traits with the triangle family. In previous articles, I discussed three forms of triangles -- symmetrical, ascending and descending triangles. Recall that symmetrical triangles have bounding lines -- one slopes upward, while the other slopes downward. In ascending triangles...
The Bump-And-Run Reversal by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Bump-And-Run Reversal by Thomas Bulkowski Here's a new chart pattern that suggests when to take profits before a trend change begins. Included is a review of past performance. Isn't it strange how an idea occurs? Being hit by a falling apple led Sir Isaac Newton to extrapolate that the apple was acted upon by the same force as that which allows the moon to orbit the Earth. Similarly, while I was doing research on price prediction, a thought came to me when I came across an illustration showing the measure of a head-and-shoulders formation. I wondered if there were a simple measuring tech...
Beta-Adjusting Trailing Stops by Thomas Bulkowski
ARTICLE SYNOPSIS ...Beta-Adjusting Trailing Stops by Thomas Bulkowski Have you ever wondered how to improve the performance of your favorite indicator or trading system? By using your indicator to signal a buy and a beta-adjusted trailing stop to get you out, you could improve your investing results. If you're like many traders new to technical analysis, you spend scores of hours adjusting parameters on indicators trying to improve your trading system's performance. You may have tried to combine several indicators to help gauge buy and sell decisions. You may have tried to add your own special twist to popular...
The Head-and-Shoulders Formation by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Head-and-Shoulders Formation by Thomas Bulkowski I was doing research in the public library when a staffer asked me if I could help an elderly lady find a chart of TWA [TWA]. The investment materials are sparse at the library and the periodicals that were available didn't have what she needed. The library does have an Internet connection, how-ever, so we went surfing looking for a Web page to chart the stock. Within minutes, we had printed out what she was looking for. Before the ink was dry, she asked me if I knew anything about charts. I told her I did, a little, at which she pointed ...
The Failed Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...The Failed Trade by Thomas Bulkowski Sometimes a trade doesn't work out the way you hoped it would, but you can always learn from your mistakes if you take the time to review your trades. Take a lesson from this failed trade. After I began trading in the stock market in earnest, I started a notebook with commentary about all my trades. In it, I discuss the reasons for buying a stock and note them shortly after purchase. When I sell a stock, I note reasons for the success or failure of the trade. The notebook is divided into investment styles: Trend channel trade, triangles, 1-2-3 trend chang...
On Symmetrical Triangles by Thomas Bulkowski
ARTICLE SYNOPSIS ...On Symmetrical Triangles by Thomas Bulkowski You might have seen triangle formations and wondered what they were all about. You might have been caught on the losing side of a descending triangle and wondered what happened. For those of you who've wondered what was going on, here's the first part of a two-part refresher course on the three basic types of triangle formations and how to use them in your investment decisions. Before I buy a stock, I search the price chart for familiar patterns. The last thing I want to do is to purchase a stock, only to see it drop down beyond my stop, resulting...
V.14:11.Ascending and Descending Triangles by Thomas Bulkowski
ARTICLE SYNOPSIS ...Ascending And Descending Triangles by Thomas Bulkowski Last issue, symmetrical triangles and the ways to trade with this particular chart formation were the topic at hand. This month, we present two more variations of the triangle, the ascending and descending triangles, their attributes and how to use them in your investment decisions. Triangles are a class of chart formations that serve as a pictorial description of a market that is marking time. Often, a triangle represents a consolidation after a trend, allowing for the news driving the trend to be fully discounted by the market particip...
A Trend Channel Trade by Thomas Bulkowski
ARTICLE SYNOPSIS ...A Trend Channel Trade by Thomas Bulkowski Here's a trade that combines fundamentals, trend channels, pattern recognition and volume. Selecting a stock to trade means more than just throwing darts. For my own trading, I use statistically positioned trend channels, a method that allows me to define the boundaries of a trend. When dealing with trend channels, you're faced with a declining stock that you still want to purchase. What makes you so sure that the stock will turn around and climb instead of plummeting? Here's a top-down approach to trading the trend channel, using market trend analys...
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