Form And Pattern As A Trading Tool

Stocks & Commodities V. 9:5 (197-201): Form And Pattern As A Trading Tool by Robert Miner Form And Pattern As A Trading Tool by Robert Miner P attern recognition has been the topic of much technical literature. From the Elliott wave theory to Edwards and Magee, traders have been told that some fairly well-defined chart patterns indicate the market's position and the most likely outcome of the ensuing market activity, as indicated from a particular chart pattern. While it is important for every trader to be familiar with traditional chart patterns that have been found to be reliable indications of the market position, it is also important for the trader to analyze any individual market for the way in which it unfolds in bull or bear cycles and for patterns unique to that market. A trader will find that for every unique market there is often a form in which a cycle will unfold and there is a chart pattern of activity that develops at important junctures. MASTER OF THE GAME If a trader is to be successful, he should master every market he intends to trade by relentlessly analyzing that market from every perspective for as far back as data are available. There is no excuse not to be intimately familiar with a market and its peculiarities, as the data for every market as well as charting and analysis software are easily available. The trader must always keep in mind several concepts to make the right decision: 1. Market activity must be viewed from all perspectives and relationships: time, price, position and pattern. No single aspect of market activity can be viewed out of context of the other dimensions. 2. The trader must have a firm idea of the market's position in comparison with the long-, intermediateand short-term trends. The trader must recognize whether the market is in a position of strength or weakness or near a termination of a trend. 3. The trader must