[Tigerman11]

Hi, I am new to the site and wish I had found this before I jumped into the markets 7 months ago, but glad I know of this site now! I have been watching David's videos and like his straight-forward common sense style. I am on the trading patterns section(double top, bottom, head and shoulders, etc.). When you are looking at a chart after the fact, it is very easy to see the trend and patterns that have formed, but obviously we as traders cannot see the pattern develop before it actually does. That is why I am confused. I have looked at some charts of securities on my watchlist and see things that potentially resemble double tops or bottoms or whatever, but cannot be sure. How do more seasones traders know these things are happening before or as they are happening? What about false signals? Also, because we are in a pretty crazy market and I have never experienced a real bull market, could this be the reason I am having such a difficult time with chart patterns? Until very recently, I was only looking for uptrends because I had no idea how to short. Now I have shorted three times and been successful all three so I feel much better about that technique. As I think about my first six months in the markets, it was like I only had half of a playbook. In this kind of market, I was obviously on the wrong side more than the right side.

[Houssam]

Hi there Tigerman allow me to answer this...
if you are talking about how to enter a trade due to a chart pattern like double top or head and shoulders.....etc then the answer to this would be giving an example on one of them let's talk about the double top i have posted a drawing that demonstrate the process down below
you can see the two tops clearly and the end of the second top touching a support line when the market reaches this suppoet line this should be your entry signal in the drawing below is almost how you can see a double top pattern and how you can enter it ...

as for your question on how people excpect a double top before they happen
this doesn't go like this but this is what happen first they notice a retrace after a good long run(uptrend) drawing below:

then another long run happens to almost the same level of the first top and then they excpect another retrace :
and if the retrace hppens then you can clearly see the double top as the first pic i posted this is i guess the only way to excpect a double top and i'm talking from kind of aabout 9 monthes experience in the market
i hope i answered your question clearly if this isn't what you meant please let me know
and welcome to the community
Houssam...

[Tigerman11]

APWR - SharpCharts from StockCharts.com

Is this an example of a double top? If so do these patterns show themselves multiple times in the history of the chart? The reason why I ask this is because I know about this company from a fundamental perspective and feel they have a strong future, but the top was 31.80's twice and it hasn't returned since.

[Houssam]

Hi there Tigerman i really don't know much about stocks but i can assure you that this is the most basic form of the double top and how they form and as if they show them selves multiple times well i guess it depends on how strong or weak the market is going.... hope that helps
Houssam...

[Jerry]

Hello Tigerman,..
couldnt help but mention something here...I have traded stocks in the past...and think it is important to note....fundamentally, you may be onto a good company..(I dont know)...but these fundamentals are subject to rumors, reports, news, market makers, etc..that can affect the price....fundamentals will tell you "what" to buy....
If you will enhance your trading with "technical analysis" at the same time...it will tell you "when" to enter and exit based on your personal strategy...I get many , many stock tips....but when I check the "info" with the technical chart simulteanously, usually convinces me for the final yes or no whether I get in or not....
This site is an excellent teacher for technical analysis....
good luck

Jerry

[Tigerman11]

Hi guys, I noticed that both of you said that you do not trade stocks anymore. What are you trading then? Currency markets, Commodities? Options? I am interested in learning how to do all of that eventually, but I need to grasp one thing first.

[Houssam]

Hi there Tigerman....
actually we are both trading forex or as you said currency markets..
i'm focusing primarily on the eur/usd pair (you can find a good discussion here David's EUR/USD Chart's of The Day Discussion Thread )
and Jerry is trading primarily the usd/jpy pair (you can also find a good disscusion of this pair here USD/JPY - Trading Analysis and Discussion )
hope thats help...
Houssam...