Frequently Asked Questions

Click on my books below to take you to Amazon.com They pay for the referral on most items and that helps pay for the cost of this site.

I started with $2,000 and bought shares in stocks valued between $5 and $20. Over time, I added more capital and increased the buy range to stocks valued up to $60 and trade in lots of at least $20,000. Stocks valued below $5 tend to go bankrupt or are in financial difficulty and make poor trading candidates.

Your annual income can be unlimited, but don’t be deceived. An article in the September 2005 issue of Active Trader magazine discusses an accounting firm that handled the tax returns for over 1,000 stock traders. In 2004, 36% of the traders showed a profit and just 4% made over $50,000. If you expect to make $100k in your first year, you had better think again. You may be lucky if you don’t lose that much!

Save your money and become debt free, invest wisely, and get lucky. That’s what I did. If that doesn’t work for you, marry wealth or inherit! Buy low and sell high. If a stock doesn’t go up, don’t buy it.

No. I use my own charting package that I wrote.

I have about 450 stocks which I review each day. Among them are the major indices plus natural gas, oil, and copper.

What chart patterns are the most reliable?

Based on the "break-even failure rate" (price fails to move more than 5% after the breakout. A low break-even failure rate is a good thing). See Rank.

Price is the best indicator! I also look at the commodity channel index (CCI) for divergence (price moves one way and the indicator goes the other way) and for confirmation of short term trades, and Bollinger bands. When price nears a horizontal BB, it tends to bounce off it. Also, when the bands narrow, expect a breakout from congestion. I have studied and used RSI (Wilder's relative strength index) and MACD (moving average convergence/divergence). RSI has its uses for intraday trading.

The measure rule varies from chart pattern to pattern, but it usually involves finding the pattern’s height and adding it to (upward breakouts) or subtracting it from (downward breakouts) the breakout price. The result is the target price. A better method is to compute the height as just described and multiply it by the " Percentage meeting price target." Click here to view the measure rule formulas and details.

I write for several magazines including Active Trader ( www.activetradermag.com ); Stocks, Futures and Options ( www.SFOmag.com); Technical Analysis of Stocks & Commodities ( www.traders.com) . Some of them offer my articles for sale.

I’ve also written for Traders’ ( www.traders-mag.com) and The Technical Analyst (www.technicalanalyst.co.uk).

• Getting started in chart patterns is for people new to chart patterns and ones that want to learn how I make money trading patterns. It contains many useful trading tips and it is an easy read.
• Encyclopedia of chart patterns, (get the second edition), is a reference book packed with statistics and information on scores of chart patterns. If you are a serious trader that wants to know what others see in the markets, this is the book.
• Trading classic chart patterns has several chapters that discuss the basics but it is mostly a reference book. It tells how to use a simple scoring system for chart patterns that helps pick patterns that work.

For more information on my books, click here.

The larger bricks and mortar stores carry them or you can order them. Also, the e-retailers such as Amazon.com and others carry them. Click here for more information on my books.

I have a page dedicated to my favorite books. Click here to visit with them.

Nope. And I am not looking to start one either.

Let’s just say I enjoy my privacy. Send an email instead. I’ll be able to give you a more thoughtful answer.

• I do not want to be in the business of selling software.
• I do not want to worry about people ripping me off by selling my software on the Internet and pocketing the money.
• I do not want to pay $0,000 to upgrade my software development tools.
• If you want to contribute to the Bulkowski Software Development Fund, buy Amazon.com items through this website and tell your friends to do the same! Spread the word. Post ThePatternSite.com references on your favorite group, chat room, or blog.

No. They are too valuable to just give away. And promising you will not share them with anyone will not work either. You will have to fork over big bucks in a licensing deal if you want them.

First I identify the peaks and then I find the valleys in a historical price series. Once I have those, then it is just a matter of stitching them together. A triple top is just three peaks near the same price. The algorithms are simple ’if-then-else’ constructs but the package is quite accurate and very fast.

If you want a more technical approach, then create a software package (genetic algorithm) that when given a date range where a known-good chart pattern appears, it will determine the recognition rules and then find other examples, learning from its mistakes. That will likely take longer to build than the 3 months or so it took to write Patternz.

I use Value Line (available free in most libraries) to pick companies I know are solid fundamentally. I look for price to have a heartbeat, meaning up and down movement over the years. I look at the yearly price range. If it is just a few points wide, I will move onto the next stock. I avoid selecting companies too expensive or too cheap. The preferred price range is about $10 to $ 20. That means I can buy many shares without worrying about them heading for bankruptcy (like penny stocks trading near $0). I select stocks with a positive price to earnings ratio (if Value Line shows NMF in the P/E ratio box at page top, I will skip the stock). I also select stocks for a large 3-5 year price appreciation.

I build a list of at least five stocks in each industry, just to be sure I have good representation. If the stock is a utility, I look at the yield first then safety rating and read about how safe the dividend is in their view. I will look at the payout ratio, debt load, and other fundamental factors before adding it to my list of stocks.

I used to pour over each company but no longer. The price trend usually tells the story about the company, and that is all I need.

Because there is no money in it. Years ago I paper traded using chart patterns on the short side and found that I could not make money trading them. Recently, I proved that it is always best to stay on the long side, even in a bear market. Click here to view the study.

On the way down, bullish chart patterns disappear. For example, you do not see a double bottom forming when a stock continues making new lows. When the market bottoms, bullish chart patterns appear, but that is not the time to buy. Those patterns will have upward breakouts, but many will fail soon after. The market has not begun trending and it is a dangerous time to trade. Eventually, a market trend will form and the bullish chart patterns will begin to work, as you would expect. Those with upward breakouts will have price continuing to rise. That is the time to buy.

No. That is because I have never worked in the securities industry. I'm a self-taught investor that does not lecture, peddle useless but expensive tapes and other junk to unsuspecting novices. I don't have personal contacts that I can share because my world revolves around email. Sorry.

The NASD offers a free check of any NASD-registered brokerage showing the background, business practices, and conduct. Here's the link: www.nasd.com/brokercheck.