It is very likely that all trading systems began with a chart and, when something is going wrong we come back to a price chart to get a better view of the problem. Nowhere can a picture be more valuable than in price forecasting. Elaborate theories and complex formulas may ultimately be successful, but the loss of perspective is rarely corrected without a simple chart. We should remember the investor who, anxious after a long technical presentation by a research analyst, could only blurt out, “But is it going up or down?” Even the most sophisticated market strategies must capture the obvious trends or reversals. Before any trading method is used, the past buy and sell signals should be plotted on a chart. Those signals should appear at logical points and confirm the technique; otherwise the basis of the strategy or testing method should be questioned, or the rules should be checked for mistakes.

Through the mid-1980s technical analysis was considered only as chart interpretation. In the equities industry that perception is still strong. Most traders begin as chartists, and many return to it or use it along with their other methods. William L. Jiler, a great trader and founder of Commodity Research Bureau, wrote:

One of the most significant and intriguing concepts derived from intensive chart studies by this writer is that of characterization, or habit. Generally speaking, charts of the same commodity tend to have similar pattern sequences which may be different ...

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