A full-color identification manual for 13 chart patterns, backed by Bulkowski's own trade logs and computer simulations across roughly a thousand stocks from 1991 to 2011. It teaches you to name a pattern fast, but its own numbers show the basic setup barely beats a coin flip after a stop is added.
The one idea
The book exists to teach recognition, not prediction. Bulkowski walks through minor highs and lows, trendlines, support and resistance, and gaps before ever naming a pattern, because his argument is that most of what traders call a 'pattern' is just two lines connecting normal price noise. Once the basics are set, he runs through 13 named shapes (rectangles, triangles, double and triple tops and bottoms, head-and-shoulders) with identification rules, a psychology section explaining why the shape forms, and worked examples pulled from real tickers and dates.
The second half turns those shapes into buy and sell rules: place a buy stop a penny above the top trendline, place a protective stop a penny below the bottom of the pattern, and use the measure rule (pattern height added to or subtracted from the breakout price) to set a target. He then tests that basic setup with real trade logs and a computer simulation of about a thousand stocks over 20 years, and reports the results plainly, including the ones that make the method look weak.
The honest core of the book is Chapter 19, Failures, and the busted-pattern chapters. Bulkowski shows patterns that broke out and immediately reversed, with real dollar losses from his own account, and states outright that chart patterns 'fail and they do so much too often.' That admission is more useful than the identification chapters, because it tells you what the pattern actually costs you when it does not work.
What it actually teaches
The basic buy setup Bulkowski tests across every pattern in the book follows the same sequence.
IDENTIFY THE PATTERN
Confirm at least two touches of each trendline (three preferred for rectangles) before treating a shape as tradable. A partial decline, where price touches the top trendline and pulls back without reaching the bottom trendline, predicted an immediate upward breakout 89 percent of the time across his 69 rectangle-bottom and 170 rectangle-top studies.
PLACE THE ENTRY
Set a buy stop a penny above the top trendline to catch the breakout automatically, so you are not chasing price after the fact.
PLACE THE STOP
Once filled, place a protective stop a penny below the bottom of the chart pattern. In his 20-year simulation this is the single biggest driver of the loss column: the average height of an ascending triangle was 13 percent, so a stop under the pattern low means an average 13 percent loss on that pattern when it fails, with an observed worst case of 38 percent.
SIZE THE TARGET WITH THE MEASURE RULE
Take the pattern's height (highest point minus lowest point) and add it to the breakout price for an upward target, or subtract it for a downward target. In his simulation he used a fixed 10 percent profit target and reports how often price actually reaches it: 58 percent of the time for downward breakouts from ascending triangles, only 42 percent of the time for descending triangles.
DECIDE WHETHER TO WAIT FOR A THROWBACK
Since 2000, price returned to the breakout price or trendline within 30 days in 58 percent of 10,305 chart patterns studied. Waiting for the throwback to clear removes the worst entries but also cuts the average gain: ascending triangles with a throwback averaged 28 percent versus 42 percent for those without one.
What it looks like Monday morning
A reader opens this book expecting a signal generator and instead gets an identification manual with the honest performance numbers stapled to the back. What changes Monday morning is the checklist for calling something a real pattern (two to three trendline touches, a measurable height, a defined breakout price) rather than eyeballing a squiggle and calling it a double bottom. That alone kills a lot of false pattern-spotting.
The second change is stop discipline. Bulkowski's own simulation shows that a stop placed below the pattern low, which is the textbook placement, produces an average loss close to the pattern's own height, sometimes 30 to 50 percent on a single trade. A reader who takes the book seriously starts sizing positions around that number instead of assuming a chart pattern stop is automatically tight.
| Pattern | Trades | Win/loss | Avg profit/loss | Avg hold (days) | Max loss |
|---|---|---|---|---|---|
| Head-and-shoulders bottoms | 1,274 | 82% | 7% | 40 | -53% |
| Double bottoms | 2,201 | 82% | 6% | 50 | -40% |
| Rectangles | 788 | 75% | 6% | 39 | -22% |
| Triple bottoms | 605 | 75% | 5% | 55 | -40% |
| Descending triangles | 597 | 74% | 6% | 25 | -33% |
| Ascending triangles | 922 | 70% | 4% | 46 | -38% |
| Symmetrical triangles | 1,243 | 69% | 5% | 33 | -36% |
Win/loss is percent of trades profitable; profit is capped near 10% by the fixed target, so it understates how far winners could have run.
Chart patterns fail and they do so much too often.Thomas N. Bulkowski, Visual Guide to Chart Patterns
Where it fails
- The simulation data is 20 years old and pre-dates the current market structure. The computer test covers July 1991 to July 2011, using roughly a thousand stocks. That window includes the dot-com crash and the 2008 financial crisis but ends before high-frequency trading, zero-commission retail flow, and algorithmic pattern-scanning became dominant. Bulkowski does not claim the win rates hold up in a market where thousands of bots are hunting the same trendline breaks he describes.
- The measure rule targets are hit less than half the time on several patterns. By the book's own tables, descending triangle downside targets hit only 42 percent of the time, and symmetrical triangles were the worst upward-breakout performer at 71 percent reaching just 10 percent, versus 83 percent for head-and-shoulders bottoms. The book presents these numbers without flagging that a sub-50-percent hit rate on a directional target is close to a coin flip once you account for the stop loss on the other side.
- Every simulation trade assumes a perfect fill and a hard 10 percent exit. Bulkowski states the simulation used a fixed 10 percent profit target and a stop a penny below the pattern low, with no trailing. He notes this understates real returns (some trades ran to 50 percent or more) but it also means the reported win/loss ratios do not reflect how an actual discretionary trader manages a position, and the $10-a-trade commission assumption from 2011 is now irrelevant to zero-commission brokers, which changes the breakeven math for small, frequent trades.
- The worked examples are Bulkowski's own closed trades, chosen by him. The buy-setup chapters walk through specific trades (a 17 percent gain in 37 days, a 55 percent gain in three months, a 25 percent gain in five days) pulled from his personal trading notes. There is no accounting for how many similar setups he passed on or that failed and went unmentioned; the failure chapters show losers, but they are a separate, shorter section, not a matched sample against the winners shown earlier.
- It assumes you already have years of chart-reading screen time. The book teaches you to name a pattern, but repeatedly leans on judgment calls Bulkowski makes from experience: whether a decline is a 'partial decline' versus a real breakdown, whether a triangle is 'as treacherous' as a bad example he shows and should be avoided, whether a small triple bottom should be discounted because 'small patterns tend to underperform.' None of those calls are reduced to a hard rule a beginner can apply mechanically.
Who it is for
Buy it if
You want a clean visual reference for what 13 classic chart patterns actually look like, with real tickers and dates instead of textbook cartoons, and you want the identification rules (trendline touches, height, breakout price) spelled out precisely enough to test yourself. It also works as a companion to Bulkowski's own encyclopedia-style research if you already trade chart patterns and want his stop-placement and throwback data in one place.
Skip it if
You are looking for an edge you can start trading Monday. The book's own simulation shows basic breakout-and-stop trading on these patterns produces average gains of 4 to 7 percent against average losses of 4 to 13 percent, over a dataset that ends in 2011. Anyone hoping for a system, not a glossary, will be reading 300 pages to arrive at numbers that do not clearly beat a coin flip after costs.
As an Amazon Associate I earn from qualifying purchases. It costs you nothing extra, and it does not change what gets recommended or what the verdict says.