Knight teaches trendlines, the Head and Shoulders, and Fibonacci retracements through dozens of real historical charts with real prices and dates. The catch: roughly half the book is a tutorial for ProphetCharts, a specific charting product that no longer exists in the form the screenshots show.
The one idea
The book's real content is a repeatable way to read a chart's turning points using drawn lines: trendlines for ongoing trends, and the neckline for the Head and Shoulders reversal pattern. Knight's core claim is that a trendline or neckline is a psychological line in the sand between buyers and sellers, and that when price crosses it decisively, on volume, the balance of power has genuinely shifted. He backs this with dozens of named stocks and indexes (Yahoo in 2000, Broadcom in 2000-2001, Krispy Kreme in 2003, the NASDAQ Composite, the Dow), each with actual entry prices, breakout prices, and resulting percentage moves.
The second idea, layered on top, is that a broken support or resistance line usually gets retested before the real move happens. He calls this a retracement: price falls through the neckline, then climbs back to kiss the underside of that same line before resuming its fall. That retest is presented as the low-risk entry, because a trader can place a stop just a few cents above the neckline instead of miles above the original entry price.
A third, thinner idea rides along: Fibonacci retracement levels (23.6 percent, 38.2 percent, 50 percent, 61.8 percent, 100 percent) mark the same kind of support and resistance zones, but only on charts that turn out, after the fact, to be "Fibonacci-friendly." There's no rule given for identifying that in advance; you find out by drawing the study and seeing if the stock's past behavior already respected the levels.
What it actually teaches
Knight's practical trading sequence, drawn from the Head and Shoulders chapter and the closing chapter of trading rules, works the same way for any reversal pattern.
DRAW THE NECKLINE OR TRENDLINE
A valid line needs at least two touch points and must never be crossed by price between them. For a Head and Shoulders, the neckline should ideally touch five points: the outside of the left shoulder, both sides of the head, the right shoulder, and the retracement. The longer the line has held, the more it matters when it breaks; a 10-day trendline is close to meaningless, a 10-year one is not.
WAIT FOR A CONFIRMED BREAK ON VOLUME
Don't act on a partial pattern. Knight's own example: Broadcom (BRCM) built a neckline around $130 through mid-2000, faked a break below it on October 26, 2000, then reversed back above it the same day. Eight sessions later it gapped down for real on a volume surge and never looked back, losing about 90 percent of its value between November 7, 2000 and April 4, 2001. The lesson stated directly in the text: patterns are 70 to 80 percent visible well before they complete, and entering on the visible shape instead of the confirmed break "will backfire so many times that it simply doesn't become worth the extra profit."
USE THE RETRACEMENT AS A SECOND, CHEAPER ENTRY
AK Steel Holding broke a $19 neckline and fell to about $13. Shorting at $13 with a stop above $19 risks nearly 50 percent of the entry price, which Knight calls unacceptable. Waiting for the retracement back to just under $19 turns that into a stop set pennies away instead of dollars away. The stock in his example then fell to about $2, a genuine low-risk, high-reward setup, but he is upfront that most retracements aren't this clean: some overshoot the line and stop you out, some never come back at all.
SET A STOP AND A TARGET BEFORE YOU ENTER, AND CHECK THE RATIO
Risk is the gap between your entry price and your stop; reward is the gap between your entry and your target. His worked example: buy at $16, stop at $14, target at $36. Risk is $2, reward is $20, a 10-to-1 ratio he calls attractive. He contrasts that with buying at $34 with a stop at $15 and a target of $40, where the dollar profit is similar but the ratio makes the trade not worth taking. He also sets a hard floor on liquidity: avoid anything trading under 250,000 shares a day unless the setup is exceptional, because thin markets have wide bid/ask spreads and make your stop easy for others to hunt.
MANAGE THE OPEN TRADE WITH THE 'SOB FEES' RULES
Knight's own shorthand for his trading discipline: Stops (always in place, set the moment the order fills), Opening Bell (no new positions in the first 30 minutes of the session, and no after-hours trading), Balance (stay roughly balanced long and short since market direction can't be known in advance), Freshness (tighten stops as a position moves in your favor to lock in gains), Emotional awareness (recognize that fear shows up on favorable reversals and overconfidence on adverse ones), Exits (only two acceptable ways out: stopped out, or target reached, never an ad hoc close), and Sizing (keep initial position size consistent across instrument types).
What it looks like Monday morning
A reader picks a handful of liquid names, pulls up a long-term chart, and starts by drawing the longest clean trendline they can find rather than the most recent one, since Knight's examples repeatedly show that a multi-year line matters far more than a multi-week one. For any stock that looks like it's rolling over, they mark the potential neckline and simply wait: no entry until the break is confirmed and, ideally, until the retracement back to the line has happened or clearly failed to happen.
Before placing any order, they write down three numbers first: entry price, stop price, target price, and they check whether reward divided by risk clears something like 3-to-1 before bothering. They also write down the volume figure for the stock and skip anything under roughly a quarter million shares a day. None of this requires ProphetCharts specifically; any charting platform with a trendline tool and a volume pane does the job Knight describes.
| Stock/index | Length of move | Strength of move |
|---|---|---|
| Allied Capital | 70 days | +69% |
| Melco Crown | 348 days | -87% |
| Isle of Capri Casinos | 364 days | -88% |
| Hutchinson Technology | 397 days | -69% |
| Hovnanian Enterprises | 639 days | -98% |
| Russell 2000 index | 157 days | -47% |
| Allegheny Energy | 188 days | -55% |
| Prologis | 129 days | -95% |
Seven of the eight are bearish Head and Shoulders breakdowns and one is a bullish Inverted H&S; the book presents these as illustrations, not as a random or complete sample, so no win rate can be derived from them.
There is no more important feature to the H&S pattern than the neckline, because the neckline defines whether the pattern is complete.Tim Knight, Chart Your Way to Profits
Where it fails
- It's a software manual wearing a trading book's cover. Chapters 2 through 7 and 16 (roughly a third of the page count) teach ProphetCharts specifically: which toolbar icon is the trendline tool, how to right-click to duplicate a drawn object, how the Preferences menu works. ProphetCharts was Prophet Financial Systems' product; Prophet was acquired by INVESTools in 2005, which was itself acquired by Ameritrade in 2009, the year before this edition published. A reader today cannot follow the screenshots against a live product in the way the book assumes.
- The book's own price-target formula produces a nonsensical result on its own example chart. Knight describes the classic H&S measured move (peak minus neckline, subtracted from the neckline) and then immediately shows a chart, Authentidate Holding, where that formula "would yield a nonsensical negative value." His fix is to abandon the calculation entirely and "judge each chart independently," which removes the one piece of the method that looked like real math and replaces it with pure discretion.
- The case studies are hindsight-selected, and the one tally the book does give is thin. Figures 13.83 through 13.90 label eight H&S/IHS breakouts with their length and percentage move: -69%, +69%, -87%, -88%, -69%, -98%, -47%, -55%, -95% (one bullish IHS in the batch, the rest bearish H&S). That is not a win rate, it is eight winners shown because they worked; the book never counts how many H&S setups formed a clean neckline and then failed to break it, so there's no way to judge the pattern's actual hit rate from the text.
- The trading rules assume tools and a regime that have moved on. Chapter 13 explicitly notes "there is still an uptick rule in place for selling a stock short, which means that if a stock is falling straight down, your order will not be filled until the stock moves up a bit." The SEC eliminated the original uptick rule in 2007 and replaced it with a narrower alternative uptick rule in 2010, after this edition's manuscript was largely written; a reader relying on this detail for short-selling mechanics is working from a rule that no longer applies as described.
- Position sizing gets a mnemonic, not a system. The 'Sizing' rule in SOB FEES says only that "initial position sizing must be consistent among instrument types irrespective of anticipated opportunity." There is no percent-of-capital guidance, no discussion of how stop distance should scale position size, and no portfolio-level risk cap anywhere in the book. A reader has to build that half of risk management from an entirely different source.
- It quietly assumes you already have real-time data and a broker that supports contingent orders. The neckline-break entries Knight recommends depend on placing a contingent sell-short order the moment a specific price is crossed intraday, and he assumes access to streaming charts and an options search tool. A reader on end-of-day data or a bare-bones broker interface cannot execute the entries the book walks through, even though the pattern-reading part of the method doesn't require any of that.
Who it is for
Buy it if
You want a large library of real, dated, priced chart examples to train your eye on trendlines, Head and Shoulders, and Fibonacci retracements, and you're willing to skip or skim the software-tutorial chapters. It also suits someone who wants Knight's SOB FEES discipline rules (stops always on, no first-30-minutes trades, stay balanced) as a short, opinionated checklist.
Skip it if
You're looking for a system with a measurable edge or a tested win rate; the book never quantifies one and its own price-target formula fails on its own example. Skip it too if you were hoping to actually use ProphetCharts alongside the text, since the product the screenshots show no longer exists in that form.
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