Getting Started in Chart Patterns, 2nd Edition

Chapter 1

Introduction to Chart Patterns

An investor I'll call Gina e-mailed me her story. She had saved $100,000 in her IRA. Then she bought this book and used its teachings to grow her account. She bought exchange-traded funds that tracked the metals. A year later, her account was worth $1.1 million. She made a million in one year. Wow.

I had a hard time believing her story so I talked to my brother. “She's an outlier.” She's the exception to the rule, the one person in the world that makes it to the very top. She was in the right place at the right time and did everything right to make a bundle.

If Gina can do it, why not you?

What Are Chart Patterns?

Have you ever strolled into the woods and found footprints in the soil? If it's muddy, you may see bird tracks. You may also find larger tracks from cats, dogs, and even deer. You don't see the actual animal, just their tracks. If you follow the tracks, perhaps you can discover a beautiful creature.

When people trade a stock, they leave behind a footprint. Volume increases. The price bar printed on the chart may also change. String enough of those price bars together and they form patterns, which we call chart patterns.

chart patterns

chart patterns are recurring formations that appear on price charts. They reflect the trading behavior of professional traders, companies, and individuals.

I used to think that chart patterns were ...