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Classical Charting Principles. What are These?

The beginning of the classical charting principles

Classical charting principles were formulated in 1933 by Richard W. Schabacker. A devotee of Charles Dow, who was the editor of Fortune Magazine.

Excerpt from Peter L. Brandt CFA Magazine interview October 2018.

How classical charting principles got launched?

He made the observation that prices, when plotted on a chart, tend to reflect when a market is going through a period of accumulation by strong hands. Or distribution by strong hands. What one is seeing in the chart is not directly what one perceives as important fundamentals. But rather a study of the supply and demand factors of the asset itself. That was the premise upon which Schabacker wrote his book—that a lot can be said about a market based on the chart itself. That the chart was a study of the supply and demand of shares. Not necessarily the fundamentals of an industry, or a business, or the overall economy. That’s really how classical charting got launched. Depending on the exact geometric dimensions of chart construction, one could at least make better than 50/50 predictions upon what might happen in the future. That was the origination of charts.

Excerpt from Peter L. Brandt CFA Magazine interview October 2018.

What can you learn from the chart?

In effect, the fundamentals that are really important are often reflected in the chart itself. The fundamentals of the economy. And trade wars, and government debts. And supply and demand within an industry—a lot of that ends up being reflected in the chart itself, if one becomes astute at trying to ascertain what the chart is telling you.

Excerpt from Peter L. Brandt CFA Magazine interview October 2018.

Can you use classical charting principles in trading?

Classical charting principles are a reliable tool for a technical analyst trader. Therefore, I also used these principles as a base for my trading approach. And I also decided to share my trading approach with anyone interested in trading by publishing all my trades on Capital Patterns. So now, that you have an idea about classical charting principles, you can start to look at real classical chart patterns, explained in detail.

What can you do next?

Before you continue with Capital Pattern, I think it’s important to know some basic stuff about it. Therefore, I recommend you to read this article: How to use Capital Patterns. It will be a great guide which will help you to understand how to effectively use all the resources available on Capital Patterns. An important thing that I want to mention is that if you have any question regarding trading you can ask me via Facebook or twitter. I’ll be more than happy to hear from you. And, if you want to get in touch with the classical chart patterns you can also subscribe to my newsletter.

Classical chart patterns

You can start the study of the most important reversal formations which are Head and Shoulders Patterns. And Inverted Head and Shoulders Patterns. You can continue with the Wedge Chart Patterns. Then, the triangles patterns: Ascending Triangle Patterns, Descending Triangle Patterns and Symmetrical Triangle Patterns might be just what you need to continue your study. You also need to know about the less reliable patterns like Cup and Handle Patterns, Double Bottom Patterns, and Double Top Patterns. And last but not least the Rectangle Patterns which are one of my favourites. I would also recommend you to tale a look at the Trading Blog. Easy to read articles! section. You’ll find a lot of interesting info inside.

Important detail regarding Capital Patterns

I want to tell you something important. The Capital Patterns blog is my entire voluntary work. It takes a lot of time to write an article, to analyse it, create the charts for it, draw each chart, comment each chart, explain each trade and so on. And, as you know, it is also totally free. Even Weekly Market Update PDF file that I’m uploading for free, each week, it’s really hard to do. I can do it only in the 48 hours of weekend, because I need to do it after the market closes, and before the market opens. Sometimes it takes even more than 7 hours from my weekend to do it.

The titanic work behind Capital Patterns project

I don’t want you to understand that I’m complaining. Because I’m not. It is my choice and I’m happy with it. It’s like my little baby. I just want to make you aware about the titanic work behind this project. And the hardest part isn’t the work itself, it’s the fact that this project “eats” from the time that I should spend with my family. So, considering that I’m also sharing a lot of useful information, for free, I’d really appreciate if you could support my Facebook and / or twitter page with a follow. It really helps a lot. This is my motivation. To create a community around Capital Patterns project. Therefore, you can do this using this link for my Facebook page and this link for my twitter account. You can also subscribe to my newsletter here.

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