What are trading patterns?

Charts tracking stock and financial market prices show repeating patterns that can be considered statistically relevant. Using these trading patterns to study the financial markets opens windows on human trading behavior, reflecting group dynamics as well as the wisdom and the madness of crowds.

The Stock Market and its trading patterns show a repetitive behavior that can be used to generate extraordinary money-making opportunities. Nothing new happens in the patterns of stock market trading or stock speculation. Market patterns repeat over and over for smart investors ready to take these opportunities.  The amazing thing is that these patterns have been known for centuries, not decades, but centuries. And they have generated an incredible amount of wealth. They are a crystal clear window into the mind of the market. Using stock charts to track these patterns can generate an infinite number of possibilities for smart market players.

And in these patterns we can recognize, analyze and organize human group-thinking as well as both the wisdom and madness of crowds. And we can benefit from their mistakes and inefficiency. Understanding these patterns provides knowledgeable investors with unlimited profit making opportunities.

In the stock markets, as well as in any other field of nature, movement patterns repeat. The common element of human emotion drives that behavior. Human nature and behavior both follow and generate repetitive patterns.

Emotions are at the core human nature and behavior. Emotions can always get in the way of human intelligence. We can regularly see this in the displays of panic buying and panic selling in all stock markets.

We can use this knowledge both to make money or to avoid losses.

How is this possible? In the same way we predict natural patters. Think about it. We are able to predict the tides of the oceans so well that they became known and predictable to anybody. As a matter of fact we know that it takes six hours and 12.5 minutes for the water at the shore to go from high to low, or from low to high.

Those 6 plus hours are the typical period between tides around the world. However, in the financial markets the pattern and rhythm is not nearly as predictable or exact as patterns followed by the moon which causes tides. In the financial markets patterns are most of the times more complex and sometimes hidden. But we can still be able to recognize, analyze and organize any stock price movement into a predictable event.

Emotions tied to greed, fear, ignorance and hope powerfully drive much of the market action. Those forces apply to everything and everybody involved in trading. That includes newbies and veteran traders, retail investors and large banks. Human emotions are represented in the patterns displayed on any stock market chart. And we can spot it and make our next move.