NEBULOUS PATTERNS

Most of the previously mentioned patterns have no clearly delineated form, and some may even appear unrecognizable or un-definable. In fact some of the typical arguments used to discredit technical analysis are the following:

1. Price patterns are not obvious, or only obvious after the fact.

2. No definitive patterns work all the time.

3. All technicians do not agree on the same pattern.

These are some of the arguments lodged against technical analysis. However, if we use this narrow-minded reasoning, we would also have to discredit all art, since people arrive at differing conclusions regarding the same art piece. All technical and fundamental analysts are never in agreement because the essence of trading is having disparate views about the prospects of a market. Those looking for precision and constancy are best advised to seek another occupation. We are fortunate when people come to differing conclusions, otherwise it would be quite a boring world indeed.

RICHARD WYCKOFF

Richard Wyckoff traded the stock market in the early and mid-1900's, and developed an extensive course for analyzing the market. Although developed for the stock market, the course is an excellent guide in learning how to view and trade any market. Many of the ideas are universal and may be applied in analyzing any market. He used a combination of price, wave, and point and figure charts in his analysis. He looked at relatively simple formations and developed his own terminology, such as a spring or shakeout. Price objectives could be obtained from different charts through measuring the horizontal length of a price pattern.

Wyckoff analyzed the market to determine where risk and reward were optimal for trading. He emphasized the placement of stops and the importance of controlling the risk of any particular trade. The interested reader can view the bibliography to obtain more information.