Chart Patterns Trading: A Book Review

Chart Patterns Decoded

Plenty of free resources about chart patterns exist on the internet. What could one more book on chart patterns offer? Well, when it comes to "Trading Stocks Using Classical Chart Patterns", by Brian B. Kim, the answer is quite a lot actually. Believe it or not, as the book’s subtitle states, it has something to offer both the beginner, and experienced traders like myself. Don’t let the word “stocks” in the title deter you, the little nuggets of gold you get from reading this book apply to any tradable market, including forex. Whilst I would stop short of saying Kim’s book is the best I’ve ever come across in terms of classical chart patterns, it certainly has to be one of the most underrated. Priced at just £7.97 on the UK Amazon Kindle store, “Trading Stocks Using Classical Chart Patterns” is definitely good value for money.

Information From an Expert

Kim, right from the beginning, proves he is an experienced trader with abundant references to the importance of risk management. “What is most important, and what is not debatable, is managing our risk and limiting our losses”, says Kim in the first chapter. “Preserving my trading capital, not making money, is my first and only goal as a trader”. Those opening words could only be written by someone, who like most consistently profitable traders, have had to learn such lessons the hard way. I also found his honesty about chart patterns refreshing. He openly recognises that even perfect looking chart patterns will fail most of the time. Keeping failure and risk management constantly in the back of the reader’s mind, Kim proceeds to walk the reader through the theory and application of the core classical chart patterns.

Chart Pattern Devotion

The best aspect of the book is the sole devotion to the subject of classical chart patterns. Far too often, trading books veer off subject, be it about candlestick patterns or volume analysis. Kim, instead, devotes page space to the core classical chart patterns that matter. Head & Shoulders, Rectangle, Triangles, Pennants, Wedges, Flags, Channels, Double Tops and Bottoms, Horns and Diamonds are all covered. By staying on topic, Kim is able to devote more page space to real world scenarios with emphasis on market context. How to handle failed chart patterns, patterns within a pattern, and how to deal with both take profit, limit and stop orders sections provide particularly good insight. Furthermore, the author gives a unique glimpse into how he manages covering many markets. Practical advice rarely found in a book.

Handy Titbits for Experts

After reading Trading Stocks Using Classical Chart Patterns, I found myself picking up new tidbits of information along the way. For example, on my first read I learned about the last day rule concept in relation to candlestick patterns. Basically, the rule states that for short trades, a trader should place their stop loss just above the high of the last day in which prices trades above the break-out boundary. For long traders, the trader should put their stop just below the low of the last day in which prices trades below the breakout boundary. In addition, Kim gives his own modified approach, when required, to the last day rule. My second read unearthed even more valuable advice and tips. So, the book really does have something to offer experienced traders.  

Beginners Stand to Gain

Less experienced traders, meanwhile stand to gain a better understanding of the context and application of chart patterns that most free resources will ever provide. Sites like BabyPips and Investopedia are great free resources, but they can’t compare in terms of the detail and concepts provided by the book. After reading Kim’s chart pattern explanations and practical examples, novice traders are guaranteed to walk away with a better holistic understanding of how chart patterns work. Moreover, Trading Stocks Using Classical Chart Patterns makes the perfect desktop reference book when conducting your own chart analysis for a much lower price than similar educational resources.

The Right Chart Pattern Platform

Whether you are learning chart pattern analysis or ready to trade chart patterns, the VARIANSE cTrader platform has got you covered. A demo or live VARIANSE cTrader account allows you to save up to 50 chart templates and to have as many charts on screen simultaneously as possible. Likewise, when you open a cTrader demo or live account, you benefit from chart time frames from one minute all the way up to one month with true ECN market pricing. But don’t take my word for it, come and test for yourself why VARIANSE cTrader is one of the best platforms for chart pattern traders.