Profiting with Chart Patterns book

Seven Chart Pattern Method
I have here a list of steps that I go through as I am looking at chart patterns. It will just 
take you a few seconds to analyze these various aspects of patterns before you trade 
them.
1. Identify one of the seven patterns—We are going to be talking about seven 
patterns that you can find in charts. We will give you information to clearly 
identify each one.
2. Establish a timeframe and a prior move—This has to do with getting the size of 
the pattern properly proportioned, relative to the rest of the chart. We will be 
looking at how you identify what the prior move is so that you can use it.
3. Draw an Eighths reference scale—I invented this tool several years ago. The 
Eighths tool is simply a money management tool that will help you to manage a 
trade to closure, relative to a pattern once you have identified its prior move.
4. Apply the volatility test—You do not want to trade charts that are too volatile. 
This will help you avoid those charts. 
5. Set your initial stop at the pattern base—Once you have drawn the Eighths scale, 
you have the point at which the pattern base is marked and that is where you want 
to set your initial stop.
6. Manage trades by applying trailing stops on the Eighths lines—Once you are in 
the trade, you will apply trailing stops based on the lines in the Eighths tool.

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Chapter 1 Tools of the Trade
Profiting with Chart Patterns
1-2
nirvanasystems.com
Pattern Timeframe
The first step is to identify the pattern timeframe. Here is a chart of EBAY. I have 
marked two Saucer patterns in the chart. You can see that the first Saucer pattern on 
the left, which occurred in July and August of 2015, was a relatively small pattern 
spanning about a month and a half in time. We recognize that and it tells us where to 
go back in the chart to look at the prior timeframe that led up to the pattern. The area 
marked Timeframe A is the zone that the pattern is operating in psychologically.