Form And Pattern As A Trading Tool
by Robert Miner
Pattern 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-, intermediate-
and 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 have a well-defined trading plan that reflects his trading goals.
4. The trader must have specific trading strategies to take advantage of his knowledge of the market and
its position to fulfill his trading plan.