Tuesday, July 11, 2006

Book Review: "Getting Started in Chart Patterns" Tom Bulkowski

“Getting Started in Chart Patterns” is an excellent reference guide and one of the few books on the market which reports the performance of individual chart patterns (based on Tom’s extensive testing). Certainly it is a good leader to Tom’s mothership book, “Encyclopedia of Chart patterns” and is a bargain at $20 (even more so at the $13 Amazon is offering the book).

One of my pet peeves when I first got interested in Technical Analysis was the cost of many of the books and it was hard to find cheap books which provide a feeler as to what Technical Analysis is all about. Other than the “Encyclopedia” there is no other book out there of its type and is worth having on this merit alone.

The book is not without its faults. First and foremost was the irritating use of “Jake” as the protagonist of the real-world trades offered as examples throughout. The conversational style employed to describe the trades didn’t fit with the cold facts offered by the rest of the book and came across as too high school, if the author had stuck to the style of his chapter on “More Trades – Putting it all Together” then this would have been more appropriate. It’s a small gripe and others may disagree with me – but the real world trades nicely support the cold statistics on offer for each pattern.

The book has a handy chapter on The Top 10 Performing Bottoms, ranking them from 1-10 including flags, pipe bottoms, rounding bottoms, triangles, wedges, eve-eve double bottoms and the ever popular head-and-shoulder pattern. It would have been good to see the same treatment given to tops (there is a section on tops, but it is more haphazard in its composition), something for the next edition perhaps?

I did like the section on Busted Patterns as well as a cheat sheet index of chart patterns and a table showing a list of chart pattern performance and ranking which can be photocopied and stuck on a wall.

The book is best used as an accompaniment to a more introduction style book on Technical Analysis – it provides the performance data necessary to help develop your own scans for selecting stocks eg. For my own research, when is it important to include volume as a component of a scan.

Again, for the price you can’t go wrong.