The New Market Wizards: Conversations with America's Top Traders

by Jack D. Schwager

Although I employ technical analysis to make my trading decisions, there are a few important differences between my method and the approaches of most other traders in this group. First, I think very few other technical traders have gone back more than thirty years in their chart studies, let alone more than a hundred years. Second, I don’t always interpret the same pattern in the same way. I also factor in where I believe we are at in terms of long-term economic cycles. This factor alone can lead to very substantial differences between the conclusions I might draw from the charts versus those reached by traders not incorporating such a perspective. Finally, I don’t simply look at the classical chart patterns (head and shoulders, triangle, and so on) as independent formations. Rather, I tend to look for certain combinations of patterns or, in other words, patterns within patterns within patterns. These more complex, multiple-pattern combinations can signal much higher probability trades.