# Chart Patterns



## ceasar73 (23 April 2009)

G'day

Chart Patterns..can they work or are they useless??

cheers,

ceasar73.


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## outback (23 April 2009)

Yes.


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## ceasar73 (23 April 2009)

outback said:


> Yes.




yes they work or 
yes they are useless?


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## beamstas (23 April 2009)

ceasar73 said:


> yes they work or
> yes they are useless?




Not sure what you are asking
Chart patterns don't cause the price to move in a certain direction (unless everyone reads the chart the same..  )

But they allow you to try and "stack the deck in your favour"

You still don't know which card you'll get though

Brad


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## ceasar73 (23 April 2009)

beamstas said:


> Not sure what you are asking
> Chart patterns don't cause the price to move in a certain direction (unless everyone reads the chart the same..  )
> 
> But they allow you to try and "stack the deck in your favour"
> ...




"stack the deck in your favour" - this is what I was after...to this is a vote for chart patterns can be useful.

what do you mean by "You still don't know which card you'll get though"??

cheers,

ceasar73


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## MichaelD (23 April 2009)

ceasar73 said:


> Chart Patterns..can they work or are they useless??




Ah what the heck, I feel argumentative today.

Wrong questions.

Correct questions:

Q1. Are chart patterns predictive of future price action?
A1. No, apart from a few very weak and tenuous associations (eg trends tend to persist slightly beyond random). For practical purposes, and not for armchair hindsight analysis, chart patterns are merely random numbers which we as humans interpret into what we think are meaningful patterns.

Q2. Can you trade profitably using chart patterns as part of your trading strategy?
A2. Absolutely. Just ask the 0.1% of posters here who are actually making money at the moment.


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## beamstas (23 April 2009)

MichaelD said:


> Q1. Are chart patterns predictive of future price action?
> A1. No, apart from a few very weak and tenuous associations (eg trends tend to persist slightly beyond random). For practical purposes, and not for armchair hindsight analysis, charts patterns are merely random numbers which we as humans interpret into what we think are meaningful patterns.
> 
> Q2. Can you trade profitably using chart patterns as part of your trading strategy?
> A2. Absolutely. Just ask the 0.1% of posters here who are actually making money at the moment.




This is the worst post i have ever seen in my life.
Ever

Unless you wanna put your money where your mouth is?

Im willing to bet you trade FA
That's why you have lost money in the last year


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## nomore4s (23 April 2009)

MichaelD said:


> Just ask the 0.1% of posters here who are actually making money at the moment.




lol, are you one of those atm MichaelD?

Ceasar, everything works and nothing works.


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## ceasar73 (23 April 2009)

beamstas said:


> Not sure what you are asking
> Chart patterns don't cause the price to move in a certain direction (unless everyone reads the chart the same..  )
> 
> But they allow you to try and "stack the deck in your favour"
> ...






MichaelD said:


> Ah what the heck, I feel argumentative today.
> 
> Wrong questions.
> 
> ...




Love your work MD...do you use them?

cheers,

ceasar73


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## Trembling Hand (23 April 2009)

beamstas said:


> Unless you wanna put your money where your mouth is?
> 
> *Im willing to bet you trade FA*
> That's why you have lost money in the last year




Hope you didn't have too much on that bet. You just got stopped out


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## Cartman (23 April 2009)

Patterns  ---- what patterns !!!  lol ----  they do come in handy at times.


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## Cartman (23 April 2009)

Last one was a 4 hr chart 


This one is a 5 min pattern chart --- same instrument ---- nice arent they


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## nomore4s (23 April 2009)

Trembling Hand said:


> Hope you didn't have too much on that bet. You just got stopped out




lmao, MichaelD is definately not a FA trader, I'd be surprised if he even knows what a balance sheet looks like:. I think you probably misunderstood some of his post.


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## Trembling Hand (23 April 2009)

nomore4s said:


> I'd be surprised if he even knows what a balance sheet looks like:.




Hehe.

probably knows one balance sheet. his own :

My guess from following his random trends


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## skyQuake (23 April 2009)

Here's a chart of the May 06 Correction,

And a chart of what we have now.


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## ceasar73 (23 April 2009)

your point sky?


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## tech/a (23 April 2009)

Trembling Hand said:


> Hope you didn't have too much on that bet. You just got stopped out




Brad.

Michaels been around a long time.
He's no dumby and certainly no beginner.
You "could" learn a lot from him.

I agree in part with Michaels post but still think there is some refining.
Tonight when I have more time.


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## beamstas (23 April 2009)

tech/a said:


> Brad.
> 
> Michaels been around a long time.
> He's no dumby and certainly no beginner.
> ...




Why doesn't anyone around here say what they think then

Why lie just to start an argument

And why give t/a such a bad rap when someone is asking a legitimate question


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## Trembling Hand (23 April 2009)

Cartman said:


> Last one was a 4 hr chart
> 
> 
> This one is a 5 min pattern chart --- same instrument ---- nice arent they




Yes Cartman but they don't actually predict anything do they?

thats the thing with charts. All the others (TA doubters) + many that are using them think they are a "predictive" tool but they are not. They use them as a way to stay in a trade.

Hopefully longer than you stay in your losers.


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## ceasar73 (23 April 2009)

beamstas said:


> Why doesn't anyone around here say what they think then
> 
> Why lie just to start an argument
> 
> And why give t/a such a bad rap when someone is asking a legitimate question




tend to agree with beam's here...


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## ceasar73 (23 April 2009)

still havent got a clue if you guys think they are of use or not??


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## Trembling Hand (23 April 2009)

beamstas said:


> Why doesn't anyone around here say what they think then
> 
> Why lie just to start an argument
> 
> And why give t/a such a bad rap when someone is asking a legitimate question




Brad you are on the wrong track here. MichaelD didn't lie. You just don't understand what he is saying.


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## ceasar73 (23 April 2009)

Trembling Hand said:


> Brad you are on the wrong track here. MichaelD didn't lie. You just don't understand what he is saying.




I didnt get what he was saying either


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## beamstas (23 April 2009)

Trembling Hand said:


> Brad you are on the wrong track here. MichaelD didn't lie. You just don't understand what he is saying.




He said 0.1% of people on here are profitable at the moment. That is a lie.

And how are chart patterns random
Lets take the SPI for example
Resistance right near the JAN Highs
Why?

Because people who bought in january are happy to exit at break even and get out. People who bought in the dip can't wait to take profit and they bail out when the price bounces back from sellers who bought in january. This is what creates resistance. Nothing random about that


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## Trembling Hand (23 April 2009)

Charts do not "predict" anything. they do not tell you that they are going this direction for this long. This is what I mostly believe and what i think he is saying.

I have another view, in part, that i may get to if Tech doesn't cover it.

mean while back to my charts


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## ceasar73 (23 April 2009)

Trembling Hand said:


> Charts do not "predict" anything. they do not tell you that they are going this direction for this long. This is what I mostly believe and what i think he is saying.
> 
> I have another view, in part, that i may get to if Tech doesn't cover it.
> 
> mean while back to my charts




dont tease us TH!!!
give us your view pls..


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## LM (23 April 2009)

From an article I received today. Van Tharp - Judgmental “Heuristics” Or Biases and Developing Your Trading System, Part 2

_I cannot overemphasize enough that trading indicators are merely ways of representing things of interest. Does a significant chart pattern actually mean that buyers are about to dominant sellers, or vice versa, and produce a significant price change? Of course not!  It merely represents the possibility such an event might occur. Thus, any indicators you develop for buying or selling in markets are your way of representing potential trading opportunities. It is not the opportunity per se. _

My take: "convince" yourself the pattern gives rise to higher probability trading opportunities through testing, feedback etc, then they "work"...


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## nomore4s (23 April 2009)

beamstas said:


> And why give t/a such a bad rap when someone is asking a legitimate question




Brad,

MichaelD wasn't giving TA a bad wrap, as far as I know he uses TA (in some form anyway) to trade, you've just totally misunderstood what he is saying.
Michael is a very expirenced trader with a good amount of knowledge, if anything his post provides alot of insight into how & why TA can work if applied correctly. TH's post below is along the same lines.



Trembling Hand said:


> All the others (TA doubters) + many that are using them think they are a "predictive" tool but they are not. They use them as a way to stay in a trade.




IMO, this is where alot of people who don't understand TA get lost, it's not about predicting anything. At best a chart will reveal possibilities, how we trade and then manage those possiblities determines if we are profitable or not over the long term.


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## Cartman (23 April 2009)

Trembling Hand said:


> Yes Cartman but they don't actually predict anything do they?
> 
> thats the thing with charts. All the others (TA doubters) + many that are using them think they are a "predictive" tool but they are not. They use them as a way to stay in a trade.
> 
> Hopefully longer than you stay in your losers.





yeah i realise that TH ---- actually those two charts i posted arent even price charts --- they are what i call cycle/range  charts ---- thats why they look so smooth lol 

patterns" are fine for an *overview* but i couldn't trade off a 4 hr chart to save my life  ----- 

its the *relativity* of what price is doing *in relation* to the cycles  and *the range* which which i look for ----- ie  price anomalies which are *not* backed up/ or in sync with  Momentum


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## nomore4s (23 April 2009)

beamstas said:


> He said 0.1% of people on here are profitable at the moment. That is a lie.




Brad, he didn't lie, that is his opinion - he doesn't know that for sure, it could be right or wrong.


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## tech/a (23 April 2009)

beamstas said:


> Why doesn't anyone around here say what they think then
> 
> Why lie just to start an argument
> 
> And why give t/a such a bad rap when someone is asking a legitimate question




The issue is this you dont know Michael and how he trades.





> Unless you wanna put your money where your mouth is?
> 
> Im willing to bet you trade FA
> That's why you have lost money in the last year




Legitimate questions fine.
Hey I like being Policeman for a while instead of Toxic!


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## beamstas (23 April 2009)

nomore4s said:


> Brad, he didn't lie, that is his opinion - he doesn't know that for sure, it could be right or wrong.




There are more than 25 people on this board who are profitable. 

Next time i read a post, i won't read it for how it is

I'll apply to the post to the poster and his personal trading and personality
I'll work out whether he was stating fact or opinion
I will determine whether the post is sarcastic or a joke
I'll get to know the poster and how they trade

From this i will decipher the true meaning of the post

Brad


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## Ardyne (23 April 2009)

I think theyre extremely useful. I only started making miney since I started using them. The fact is though they are not 100% accurate but they help. 

If you get a breakout down on a rising wedge and enter you have to know the best place to put stops correctly so you survive a pull back but dont lose too much if it moves against you.

To be honest they help more with deciding which trades NOT moreso than which ones to enter.


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## alwaysLearning (23 April 2009)

The past does not equal the future. So therefore looking at a chart's past is never going to allow you to know for sure how future price action will turn out.

BUT, the good thing about support and resistance and patterns etc is that it gives you a framework to see how the current price is responding or behaving at major levels of support and resistance or what ever pattern you are looking at--say a double top.

If you see price strongly break these levels and say you see a reversal pattern develop, it is not that you know that price will definitely reverse and go flying in your desired direction, but rather that it is more likely to go in your direction as opposed to just guessing blindly.

So, for every trade you need to have good reasons to get in and good reasons to get out. Watching the chart and looking at important levels helps you to figure out where to put a stop loss...then you can calculate your risk and how many units to buy or sell. etc etc.

So in summary yes, patterns do work, but from my perspective purely to give the current price some sort of context, so that you can make better decisions.

I'll add my disclaimer that I am still trying to be profitable and I've been learning full time since July last year. I am progressing much better though since I began taking screen shots of every single trade and editing it in 'paint' and writing explanations of why i took the trade and little things that interest me. Going over my past trades helps me heaps in getting into the right frame of mind.


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## IFocus (23 April 2009)

GG, traders / investors only ever use patterns

FA, TA, star patterns all patterns. Even TH use's patterns to trade we all do

Do any of them make money?

Yes of course they all do.....its up to the operator to implement the pattern strategy correctly that creates the profits.


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## IFocus (23 April 2009)

beamstas said:


> *There are more than 25 people on this board who are profitable.*
> 
> Next time i read a post, i won't read it for how it is
> 
> ...




Brad through 2008 I think that's plausible.


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## MichaelD (23 April 2009)

Let me clarify a few things (even though to my mind what I said was perfectly clear).

1. I have been consistently making equity peaks this year and thus consistently making my "wage" from the markets (I take my wages out whenever I reach a new equity peak). The $ value is not enough yet to completely give up my day job at this stage, but I am heading in the correct direction to do so. i.e. I can see where I'm going and I am aware of how I'm going to get there. So long as my systems continue to perform as expected I will reach my goal if they scale up as expected/planned.

i.e. I am consistently profitable at present in the current market conditions.

2. I use technical analysis to enter trades. Perhaps the more correct term is that I ABuse technical analysis to enter trades, but that's an entire thread on its own and I have no interest in giving away any of my edges.

3. I have no interest in fundamentals and very little interest in conventional technical analysis apart from using these as insights into how others think. Suffice it to say that herein lies truly profitable edges.

4. There is no technical pattern nor school of analysis, none at all, that provides ANY meaningful predictive ability whatsoever. Having said that, if by applying a form of analysis you favourably skew risk/reward in your favour, then you are getting value from your analysis (but it's NOT the entry analysis that's making the money). e.g. Resistance/support levels are not predictive, but if you use them to enter trades with favourable risk/reward (quickly admit you're wrong, let your winners run) then you will win in the long run.

The value of forgetting about finding the perfect entry and concentrating instead on trade and money management simply cannot be overemphasized, and it's this which differentiates the profitable from the masses. I have become very adept at taking small losses.

5. I have become passably good at trading my systems through lots and lots of repetition of exactly the same thing. I still need lots more practice. The more I practice, the more boring it gets, and the more consistently profitable it gets. Boring is good.

One thing I can assure you of - I have not looked for a new entry or examined any new patterns for well over a year now. I have entirely spent my time on perfecting what I already do now, with focus on the money management and the exit.

Basically, I think almost 100% upon minimizing my losses. The profits somehow then take care of themselves.

That has been my journey to date. Take from it what you wish. I am not interested in influencing anyone's opinion nor in any sort of macho oneupmanship. I have enough to worry about conquering my own trading demons, much less anyone else's.


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## beamstas (23 April 2009)

MichaelD said:


> Let me clarify a few things (even though to my mind what I said was perfectly clear).
> 
> 1. I have been consistently making equity peaks this year and thus consistently making my "wage" from the markets (I take my wages out whenever I reach a new equity peak). The $ value is not enough yet to completely give up my day job at this stage, but I am heading in the correct direction to do so. i.e. I can see where I'm going and I am aware of how I'm going to get there. So long as my systems continue to perform as expected I will reach my goal if they scale up as expected/planned.
> 
> ...




Great post
Thanks Michael
Cleared alot of things up


Brad


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## tech/a (23 April 2009)

> The value of forgetting about finding the perfect entry and concentrating instead on trade and money management simply cannot be overemphasized, and it's this which differentiates the profitable from the masses. I have become very adept at taking small losses




*BINGO.*


A chart of whatever you wish to display be that Bar or Candlestick is a symbol of crowd behaviour for that time frame.

It represents that snippet in time.
Patterns, particularly recurring patterns are a group of singular crowd behavioural events which *indicate* the likely reaction by the crowd to that group of events. Some see this as an edge,whether it is or not will depend on* BINGO*.

For those of you still bent on patterns and wish to perhaps take advantage of Michaels wisdom these thoughts of mine may help you in your application.
See Chart below.

Last line should read Price action AND volume---within the pattern


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## tech/a (23 April 2009)

There is your answer from me at least GG and its taken 2 points of a similar view to come to it.
Over to your T/H.


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## MRC & Co (23 April 2009)

And here is where I disagree, entries are a masterpiece of trading.  

Patterns represent the big players in THAT particular market, each market has it's own big players and therefor it's own patterns.  

They are the ones defending positions, pushing through levels, deciding how far a breakout will run, deciding when a pullback can take place, it is those you should understand, and why each market, has it's own, unique behaviours.  All in my opinion of course.


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## skyQuake (23 April 2009)

beamstas said:


> Lets take the SPI for example
> Resistance right near the JAN Highs
> Why?
> 
> Because people who bought in january are happy to exit at break even and get out.




There are maybe 5 people who have done that with the SPI as you have described. Maybe a total of 30 contracts.

Funds may have done similar but based their decisions on a lot more/different factors.


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## MS+Tradesim (23 April 2009)

MRC & Co said:


> And here is where I disagree, entries are a masterpiece of trading.  ........ All in my opinion of course.




I'm with you. Entries are an undervalued art. Took me awhile to figure that out.


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## tech/a (23 April 2009)

> And here is where I disagree, entries are a masterpiece of trading.




And where is the disagreement? 

In the chart I have supplied where is the best entry with least risk?

*IT* when you find it,isnt as much of a masterpiece as you would think---is it?

Low risk maximum R/R.


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## MichaelD (23 April 2009)

MRC & Co said:


> And here is where I disagree, entries are a masterpiece of trading.
> 
> Patterns represent the big players in THAT particular market, each market has it's own big players and therefor it's own patterns.




The funny thing is - I agree entirely with this statement.

Figuring out who's moving the market and then positioning myself to try and take advantage of this is key to my two income producing systems.

That, however, will not be found by looking at any conventional patterns, at least not in conventional ways.


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## MRC & Co (23 April 2009)

MichaelD said:


> The funny thing is - I agree entirely with this statement.
> 
> Figuring out who's moving the market and then positioning myself to try and take advantage of this is key to my two income producing systems.
> 
> That, however, will not be found by looking at any conventional patterns, at least not in conventional ways.




Yep, agreed.

Also, same with me Tradeism.

Tech, the best entry depends on what you are trying to do and how much you are prepared to risk to do that............

For me, on your chart, that would be at the bottom of box 2.


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## Bobby (23 April 2009)

MichaelD said:


> That, however, will not be found by looking at any conventional patterns, at least not in conventional ways.




Wow !
About time this was stated , well said MichaelD  .


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## tech/a (23 April 2009)

Dont disagree.
Well not entirely.

While you may well see it *stick out *like a tree on a hill by itself in your DOM reading.
I too see it in my chart.



> at least not in conventional ways




And its not!


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## MRC & Co (23 April 2009)

Bobby said:


> Wow !
> About time this was stated , well said MichaelD  .




Well actually certain chart patterns can be effective, if they appear in your market regularly. 

But entry has to be perfected for yourself, depending on what you are trying to achieve and this also comes down to the relative position of the pattern and the behaviour of the market.  Both are far more important than the actual pattern.

Again, in my opinion again.


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## Bobby (23 April 2009)

MRC & Co said:


> Well actually certain chart patterns can be effective, if they appear in your market regularly.
> 
> But entry has to be perfected for yourself, depending on what you are trying to achieve and this also comes down to the relative position of the pattern and the behaviour of the market.  Both are far more important than the actual pattern.
> 
> Again, in my opinion again.





Hi MRC,
Like to hear more of your perception , especially during those periods you alluded too ..


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## ceasar73 (23 April 2009)

Ive said it once...I'll say it again, this is a great forum!

ceasar73


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## Cartman (23 April 2009)

MRC & Co said:


> And here is where I disagree, entries are a masterpiece of trading.






MS+Tradesim said:


> I'm with you. Entries are an undervalued art. Took me awhile to figure that out.




A bludy-men to both those statements  ----------Good MM is a waste if your entries are crap --- unless you have very deep pockets !! --

Good MM is rewarded with Good entries !!



MichaelD said:


> The funny thing is - I agree entirely with this statement.
> 
> Figuring out who's moving the market and then positioning myself to try and take advantage of this is key to my two income producing systems.
> 
> That, however, will not be found by looking at any conventional patterns, at least not in conventional ways.




G'day Mike (and not trying to pick a blue here),  but I though the crux of your entry system was picking a higher high of the last X amount of days in an uptrend (or vica verca)  ---- I'm pretty sure that is poles apart from Mirc's idea of a low risk entry 

have you changed your style/main entry criteria due to the current economic situation? --- 

as i say, genuine question, and not trying to inflame here


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## tech/a (23 April 2009)

> Both are far more important than the actual pattern.




If both are *far* more important then you'd be trading whatever the "both" is.(Overall trend,time passed since last consolidation--(pattern),speed of price moves--etc).

You would have no need for a Pattern.

*EVERY* trend starts with a pattern---even if that pattern is a prolonged flat period.

*Every* profit comes from a trend--even a single tick is a trend.



> A bludy-men to both those statements ----------Good MM is a waste if your entries are crap --- unless you have very deep pockets !! --
> 
> Good MM is rewarded with Good entries !!




You really *dont* get it!


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## MichaelD (23 April 2009)

tech/a said:


> I too see it in my chart.




Hate to disillusion you, Tech, but there is NO statistical significance in the patterns you are showing.

I'd suggest that you are putting the case that the tails are suggesting that lower prices are being "rejected" - i.e. that buyers are willing to soak up all that the sellers have to offer and then some, but if you actually code up these patterns and test them - there is no statistical significance to be found there.

50% go up, 50% go down and there's no particular correlation with fat tail outsized returns.

Been there, tested that.

Of course, by no means does the above preclude trading such patterns profitably, but it ain't the pattern that makes the profit.


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## MichaelD (23 April 2009)

Cartman said:


> G'day Mike (and not trying to pick a blue here),  but I though the crux of your entry system was picking a higher high of the last X amount of days in an uptrend (or vica verca)  ---- I'm pretty sure that is poles apart from Mirc's idea of a low risk entry




My long term trend following does this, but that is a long time frame capital building system. The other systems I trade are for income generation and work in totally different time frames and exploit different edges.

One thing consistent across all systems is to get out as quickly and as painlessly as possible if the market disagrees with me.


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## MS+Tradesim (23 April 2009)

MichaelD said:


> there is no statistical significance to be found there.




Out of curiosity, what do you define as statistically significant?


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## tech/a (23 April 2009)

MichaelD said:


> Hate to disillusion you, Tech, but there is NO statistical significance in the patterns you are showing.
> 
> I'd suggest that you are putting the case that the tails are suggesting that lower prices are being "rejected" - i.e. that buyers are willing to soak up all that the sellers have to offer and then some, but if you actually code up these patterns and test them - there is no statistical significance to be found there.
> 
> ...




Michael.

Sorry to dis illusion you with the illusion that its the tails I'm interested in.
I stated its not conventional and its not.

The pattern tells a story,which is a player in the setup *NOT* the entry. The entry is triggered by "The Unconventional"
Which is way off beam with conventional thinking.

Thats as far as I go with this as its MINE MINE!!!
Guess away.


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## MRC & Co (23 April 2009)

tech/a said:


> If both are *far* more important then you'd be trading whatever the "both" is.(Overall trend,time passed since last consolidation--(pattern),speed of price moves--etc).
> 
> You would have no need for a Pattern.
> 
> ...




It's the entire lot together, patterns, levels, trend structure (which I guess you could class as a pattern in itself, I am talking of 'traditional patterns such as H&S, triangles etc).  

Your buying low volume pullbacks in an uptrend.  I wouldn't take your first box entries without viewing the prior action.  I would be more selective and only take the second box pullbacks which touch the previous swing high (buying off a level, based on trend structure).


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## Cartman (23 April 2009)

tech/a said:


> You really *dont* get it!





i think i get a lot more stuff than you might realise Tech !! 


ps i assume Tech that Mirc and MS also dont get it as well ??



MichaelD said:


> My long term trend following does this, but that is a long time frame capital building system. The other systems I trade are for income generation and work in totally different time frames and exploit different edges.
> 
> One thing consistent across all systems is to get out as quickly and as painlessly as possible if the market disagrees with me.





Fair enuff ---  just curious about that, cause taking a breakout high is obviously a lot different to backing yourself on a failing retrace .... Cheers.


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## tech/a (23 April 2009)

Would you prefer 

Warmer warmer---colder colder---type replies until you get it.

Its UNCONVENTIONAL what makes you think you can see it in THAT chart?


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## beamstas (23 April 2009)

MichaelD said:


> Hate to disillusion you, Tech, but there is NO statistical significance in the patterns you are showing.
> 
> I'd suggest that you are putting the case that the tails are suggesting that lower prices are being "rejected" - i.e. that buyers are willing to soak up all that the sellers have to offer and then some, but if you actually code up these patterns and test them - there is no statistical significance to be found there.
> 
> ...




Michael. Im going to comment on this, you most likely know this anyway but it might add something to the thread

When you see those patterns, you said it youself, 50% go up, 50% go down. So what do we learn? Don't buy _yet_.

You wait until the odds are in your favour. To do this you only buy the 50% of trades that go up.

How do you do this?

Wait until the price breaks out of the consolodation. That's a sure way to get the 50% of the prices going up.

Nothing is 100%. The only way you are going to know what the price is going to do tomorrow is to go and take a poll of every person in the world who is going to place a trade tomorrow. This is not practical so we do the best we can. Instead of polling tomorrows traders we poll todays traders using resistance/support, having a look at volume and trying to come to some sort of conclusion about what is happening to the price of a stock and why

Like i said earlier, all you can do is attempt to stack the odds in your favour.

It is in my opinion that this can be done by using technical analysis. 

If the market were purely random then why are some traders better than others? How can they seem to make so much profit while you are still putt putting away? Because they understand why the price does what it does, *NOT* how to overlay and read an indicator off a chart

Cheers
brad


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## johnnyg (23 April 2009)

tech/a said:


> Michael.
> 
> Sorry to dis illusion you with the illusion that its the tails I'm interested in.
> I stated its not conventional and its not.
> ...




Something to do with low volume squat bars?


----------



## weird (23 April 2009)

MichaelD said:


> Hate to disillusion you, Tech, but there is NO statistical significance in the patterns you are showing.
> 
> I'd suggest that you are putting the case that the tails are suggesting that lower prices are being "rejected" - i.e. that buyers are willing to soak up all that the sellers have to offer and then some, but if you actually code up these patterns and test them - there is no statistical significance to be found there.
> 
> ...




Never understood the 50% rule of being right or wrong ... if no exit has been defined ... where is the logic if no exit has been defined (forget brokerage).

Been there, tested that ... I don't think anyone can exhaust all possibilities. We live in our own small worlds, me included.

Perhaps we can skew the win rate to 90% if using wide stops ? Wait, until a reality margin call or until we call it quits.

I have more to add, but this thread is going off track. I believe entry is important, but also exits and money management is just as important as MD has pointed out, but also disagree concerning the importance of entries.

Pattern trading is a valid entry method, and some patterns are perhaps statistically better than others ... even with a 33% win ratio but most importantly includes MM ... having the stamina to trade them is a different matter.


----------



## MRC & Co (23 April 2009)

Bobby said:


> Hi MRC,
> Like to hear more of your perception , especially during those periods you alluded too ..




For example, relative position of the pattern.  Your better off buying a double bottom that hits a previous swing high or level, than a double bottom in the middle of nowhere.

Behaviour of your market, you don't trade a breakout on the SPI (you either trade the false break or wait for the pullback), on certain FOREX pairs or other trending markets, you can hit the top or bottom of the move.  You do it on the SPI, you better have wide stops, conviction, and be right (poor entry) or you will be crucified.

Also agree with much of your post Weird, a lot of smart, practical, trading fellas around here, good for the brain!


----------



## alwaysLearning (23 April 2009)

tech/a said:


> *BINGO.*
> 
> 
> A chart of whatever you wish to display be that Bar or Candlestick is a symbol of crowd behaviour for that time frame.
> ...




Thanks tech that does help  Man, lots of good things to read this week on this forum!

Gives me an idea of how might be able to better categorise some patterns i've been looking at.


----------



## johenmo (24 April 2009)

This thread has a *wide* range of views for a learner & just reinforces there is no one way of trading.  

Humans are creatures of habit.  So this has to impact on trading (likely subconsciously for most) & this is where I see patterns occurring & being of use.  But only to reduce risk by trying to tip the probability being 'right" of a move one way or another in.  Anyone who thinks they predict the future is crazy.  Too many influences.

Yet again, the thing that came out was quitting losses quickly (MM).

I look at a pattern type (say a symm Triangle) and sometimes it goes up & sometimes down.  Isn't the way it moves a response to the "stimulus" surrounding the stock? (good/bad news, sector performance/perception, etc)?


----------



## tech/a (24 April 2009)

Michael is a systems trader and I to trade systems although not currently.

What your not thinking about in the 50/50 scenario is there will be times when you have 75% wins and times when you have 25% losses.

If your wins are 2R and your losses 1R or less.
*BINGO.*

As systems traders and developers we are constantly looking at Reward to Risk.
As a discretionary trader we should also remember the above and be striving for the same.

*T/H what were you going to add?*


----------



## Trembling Hand (24 April 2009)

tech/a said:


> *T/H what were you going to add?*




I think patterns in charts are used to confirm our biases and enable us to act.

Its a big subject and haven't much time at the moment but I think its perceived that TA is used like this,

1. Find a pattern.
2. deduct from that pattern is bullish
3. Act on that pattern

My thinking is more along the lines of implicit knowledge.

1. Through repeat exposure you develop implicit knowledge of how your fellow traders act.
2a. receive info from price action & "other sources".
2b. become bullish
3. find a pattern that fits such views
4. trade it.

The rally from 3200 is a classic example. I made note to you that wasn't it funny that the guys that actually trade the markets have been long from then. They chose to weigh over sold more than lower lows, lower highs. Why? TA theorist where looking for shorts. TA practitioners were LONG. I believe they consciously or subconsciously decided they have seen this game before, to much negativity, over sold Blah blah, and *found the pattern that enabled them to act *to get long while ignoring the same valid patterns telling them we are going lower,

Experience, knowledge whatever enabled them to pick the "right" pattern.


----------



## MS+Tradesim (24 April 2009)

What do people mean by 'patterns'?

I think the majority interpret it in reference to traditional TA ideas like triangles, H&S, wedges, etc.

Yet, a pattern is any event or process that repeats over a given period. For example, it could be a pattern for a stock to close higher than its lows 90% of the time. Or it could be a pattern that a certain index or sector in Australia will do the opposite of last night's DJIA. Or maybe a sell-off is a re-occurring event every time XYZ stock comes close to a round number. Or a new high on low volume in ABC is normally followed by a large retracement....etc.

IMO, it's a basic necessity to objectively determine the edge a particular pattern has. Don't just use it because everyone else does or because widely read TA books tout it. Screening charts with the eyes is not, IMO, a great way to deploy patterns. Our biases will cause us to skip over the false positives and accentuate the times it clearly works, no matter how few. This is one reason why testing (backwards and forwards) is important. It allows you to quantify the edge (or lack thereof) of a particular idea. 

Despite the fact that I've posted some traditional TA pattern ideas in those threads, I don't actually trade those patterns _per se_. But they can be used as guides to what *other* people are thinking. I'm looking in the chart for confirmation of my own idea and knowing how a lot of people use traditional patterns allows me to find my own entries and exits. There is nuance here. Some people believe a pattern/predicts causes an outcome. This is a common misconception from beginners and FA-only guys. A pattern can't cause/predict anything. It is a summarised representation of crowd behaviour on a chart which is a representation of a market, not the actual market itself. I think the majority of experienced traders understand this and use traditional patterns to see what the herd is thinking. 

For me, the valuable patterns are the ones I quantify myself and are not found in books or websites. They are discovered.


----------



## MichaelD (24 April 2009)

beamstas said:


> When you see those patterns, you said it youself, 50% go up, 50% go down. So what do we learn? Don't buy _yet_.
> 
> You wait until the odds are in your favour. To do this you only buy the 50% of trades that go up.
> 
> ...




Nope, that's a sure way of buying something at a HIGHER price that subsequently has a 50% chance of going up or down.



beamstas said:


> If the market were purely random then why are some traders better than others? How can they seem to make so much profit while you are still putt putting away? Because they understand why the price does what it does, *NOT* how to overlay and read an indicator off a chart.




A fine question indeed.



weird said:


> Perhaps we can skew the win rate to 90% if using wide stops ? Wait, until a reality margin call or until we call it quits.




That's easy - set a profit target of 1 tick and use a wide stop loss or no stop loss. 90% win rate. Popular with black box spruikers. Unfortunately pretty likely to be fatal to trading capital.



Trembling Hand said:


> 1. Through repeat exposure you develop implicit knowledge of how your fellow traders act.






MS+Tradesim said:


> Despite the fact that I've posted some traditional TA pattern ideas in those threads, I don't actually trade those patterns _per se_. But they can be used as guides to what *other* people are thinking. I'm looking in the chart for confirmation of my own idea and knowing how a lot of people use traditional patterns allows me to find my own entries and exits.




And there you have the answer. Charts are random. People are not.


----------



## tech/a (24 April 2009)

M/S&T

When I first started to type I used to look at every key infact I'd search for it.

It would take me a day to type a page.
Now I do it without thinking and can get pretty fast.

Same with reading a chart.
But you must always return to BINGO


----------



## motorway (24 April 2009)

markets are random

markets move like coin toss 50/50
from any point in time move up or down

in any time period

Looking at wrong things

Market not random 
markets do not move 50/50 ( in terms of size of moves )


The STEP SIZES are different

That is why random first definition
non random under second definition

Don't trade time 
trade moves

Time ticks

moves trend


statistics back up

markets trend based on moves
not proportion of up  or down days
this is close to 50/50

But who cares about that ?

motorway


----------



## Trembling Hand (24 April 2009)

beamstas said:


> Wait until the price breaks out of the consolodation. That's a sure way to get the 50% of the prices going up.



I'm not so sure about that. especially when you take into count that you have to have a stop somewhere and still a positive R:R.

you got any stats?


----------



## kam75 (24 April 2009)

ceasar73 said:


> G'day
> 
> Chart Patterns..can they work or are they useless??
> 
> ...




For some traders yes, for other no.  You need to learn how to recognize real patterns from the rest of the crap thats there and learn how to trade them.  Its an art.  Takes years.  And its hard work.  You'll eat a lot of **** along the way too.  But if you learn to manage your risk, it can be profitable.  I've made hundreds of thousands of dollars over the years trading chart patterns.
regards


----------



## ceasar73 (24 April 2009)

kam75 said:


> For some traders yes, for other no.  You need to learn how to recognize real patterns from the rest of the crap thats there and learn how to trade them.  Its an art.  Takes years.  And its hard work.  You'll eat a lot of **** along the way too.  But if you learn to manage your risk, it can be profitable.  I've made hundreds of thousands of dollars over the years trading chart patterns.
> regards




Kam thanks.
Can you recomend a book on chart patterns?
cheers,
ceasar73


----------



## Mr J (24 April 2009)

MS+Tradesim said:


> What do people mean by 'patterns'?




My thoughts as well. Everyone trades some sort of pattern, as we're all looking for entries that produce an expected result (in terms of probabilities, not certainty).


----------



## kam75 (24 April 2009)

ceasar73 said:


> Kam thanks.
> Can you recomend a book on chart patterns?
> cheers,
> ceasar73




'How Charts Can Help You in the Stock Market' - William Jiler
'Exploding the Myths' - Frank Watkins

If you like to study, you may get yourself 'Technical Analysis of Stock Trends' - Robert Edwards,John Magee ...the bible of technical analysis.

I have a lot on my blog on patterns too.


----------



## ceasar73 (9 May 2009)

kam75 said:


> 'How Charts Can Help You in the Stock Market' - William Jiler
> 'Exploding the Myths' - Frank Watkins
> 
> If you like to study, you may get yourself 'Technical Analysis of Stock Trends' - Robert Edwards,John Magee ...the bible of technical analysis.
> ...




Kam - checked out your blog...nice one dude!


----------



## Wysiwyg (12 May 2018)

Mr J said:


> My thoughts as well. *Everyone trades some sort of pattern, as we're all looking for entries that produce an expected result (in terms of probabilities, not certainty)*.



Worth bumping.


----------



## tech/a (12 May 2018)

The question is what is it that your looking for in a chart pattern.

What does a chart pattern tell you.
What constitutes a pattern
We all know standard patterns
But what about patterns hardly ever if ever
Talked about.

Can patterns be traded alone!
How long are they valid
When are they considered to have failed.
Are time frames important.

There are all sorts of chart patterns
Point and figure
Steidlmayer ( Market Profile )
Candle stick
Renko
Time and Volume Patterns
And many more

Wysiwyg is right a great topic
One which AI first started.


----------



## Joules MM1 (12 May 2018)

tech/a said:


> The question is what is it that your looking for in a chart pattern.
> 
> 
> What constitutes a pattern
> ...




indeed, the next questions are what phase is that pattern in, what is the context and size, how does it relate to when and where it has printed, was there a similar one in a similar phase for that instrument that can be used as an analogue, what are the boundaries, what is the activity at the boundary that confirms the pattern (that is the transaction and/or what part of the transaction) or confirms an exit is required

not your daddy's market


----------



## Joules MM1 (12 May 2018)

tech/a said:


> What constitutes a pattern




once this question is broken down and correctly/appropriately answered for the trader technique, then, the value of any pattern idea can be seen......however, this is crucial, the technique of trade must be proven prior to pattern search because technique is prior-to patterns

i think most traders eventually find that most patterns (if not all) fall away from there point of view yet remain a sense of confidence behind, post the technique application

in general most patterns will only serve as a footprint of observation, unless, and this only serves my opinion, if that pattern size, shape and context is inferior in size to the trade size or range being used at that time, in other words, if a trade time frame is larger than the time frame used for observation of smaller patterns that might fit a trend (for example) then that is different in that it is building evidence for the trader to stay or may signal to scale either way it, again, may provide context of a structure whether in an endogenous trend drive or in a large range within a consolidation


----------



## tech/a (12 May 2018)

Hang on this is supposed to be easy!


----------



## Joules MM1 (12 May 2018)

most traders think of patterns in an aggressive manner, they are looking to use those patterns as an edge

a blunt edge, maybe, but, think on this; 2 things, most pro traders are looking for levels that directly apply to price entry or exit and there is not a pattern that has not already been seen by someone

so if price levels relate directly to price how far away is the relationship of a pattern to price?

if someone has already seen the pattern many times before you have, then, how do you know that that pattern boundary is not being used against you, again, if technique surrounding the pattern is superior to the pattern idea itself then the technique does not need a pattern

ideas


----------



## Joules MM1 (12 May 2018)

tech/a said:


> Hang on this is supposed to be easy!




got some bad news for you:

when Joe installed the coffee machine i hid it from you.....and drank. every. last. drop


----------



## tech/a (12 May 2018)

That’s fine I don’t drink coffee.

I’d do like reading charts


----------



## Joules MM1 (12 May 2018)

what other "patterns" might confirm chart patterns, or, can we say a series of trade units (in this instance days) that produce a pattern, not like a wedge n such but like a discernible pattern and is similar to what we generically call patterns

can we say in this series of representational patterns:
that we see o/s money flows within the 13 week due to falling AUD against the USD (mostly) for undervalued yielding large cap aussie stocks combined with reflexive retail/managed money exiting in the nearterm thru the 21 day money flow lens

would we see a pattern of units as a divergence (longs only)

in some way this type of patterning, of repetition, has benefit, if only to say 'it aint obvious' that i'm right
and in this instance maybe this would be fair to say short term money is exiting by the patterns represented and the risk part is the longer term money is still piling in, keeping in mind that any decline within these two instruments on rising USD against the AUD only makes the value look that much more enticing .....this highlights, if nothing else, that context and relative size have value




a typical pattern seeker in the larger time frame would be looking for an inverted  right shoulder, a bullish idea......so this highlights a big big problem with pattern recognition: time
which equals: elevated risk

so let's say we go with the inverted head n shoulders idea, it's a long time to wait for the play to print, we dont even know if the idea will pan out...tic toc tic toc....the pattern begins to play out, but how deep, how do we know the pattern is confirmed, tic toc tic toc, oh, looks like the pattern is confirmed, how far away is the uncle point where we say uh-oh mashed that one and we are forced to exit, how wide is that price risk getting?

by the time a trader has spotted a pattern, confirmed the pattern and taken action, by that exercise, the trader has created risk, that is, the risk is wider than by using an orthodox trade technique because time usually continues to shift risk as the pattern unfurls...... the longer you take on deciding to tackle that 190cm full forward the more time he/she has of sizing you up and dropping one shoulder while side-stepping off the other foot

ideas (some parts of your daddys market never change)


----------



## Wysiwyg (12 May 2018)

tech/a said:


> Hang on this is supposed to be easy!



It should be kept simple. Identify a pattern, select an entry point/s, manage the position/select an exit point. Best way to show is do a right hand edge of chart example.


----------



## tech/a (12 May 2018)

Go ahead make your chart


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## Wysiwyg (12 May 2018)

Okay. So LVT is the code and it is a software company that is lightly traded.

Pattern = Symmetrical Triangle (pause in up trend)
Buy price = 41.5cents or better Open price Monday 14th May
Number of shares = 20000
Brokerage = $9.50
Stop Loss = 39 cents ($519)
Move Stop Loss = 44 cents when/if breakout up occurs
Take Profit =  Sell 10000 close price less than 2* ATR(30) trailing stop & 10000 with 3* ATR(30) trailing stop (next day) or Sell all on a vigour bar of greater than 20% (next day)


----------



## CanOz (12 May 2018)

I prefer a consolidation pattern close to the highs or low, that one retraced a bit much for my liking...


----------



## CanOz (12 May 2018)

I love how the market consolidates and traps participants....then extends and cleans them out...then does it all over again....great patterns in all time frames.


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## CanOz (12 May 2018)

More patterns on a very fast time frame, basically every tick. You can see a pattern of absorption into resting bids just before a news announcement....


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## Wysiwyg (12 May 2018)

CanOz said:


> More patterns on a very fast time frame, basically every tick. You can see a pattern of absorption into resting bids just before a news announcement....



Is that BookMap through NinjaTrader with the use of a DOM ladder?


----------



## CanOz (13 May 2018)

Wysiwyg said:


> Is that BookMap through NinjaTrader with the use of a DOM ladder?




It’s Auction Vista from the Jigsaw Dom.


----------



## tech/a (13 May 2018)

CanOz said:


> I prefer a consolidation pattern close to the highs or low




There is a great deal I agree with in both Can Oz and Joules postings.
Both go back a long way in chart analysis.

We all develop our own way of recognizing what we believe to be opportunity.
I look for
Squares and diagonals.
Volume pattern
The best setups are very clear

Here is one playing out now.


----------



## Wysiwyg (14 May 2018)

Wysiwyg said:


> Okay. So LVT is the code and it is a software company that is lightly traded.
> 
> Pattern = Symmetrical Triangle (pause in up trend)
> Buy price = 41.5cents or better Open price Monday 14th May
> ...



41.5cents is available so the position is now open.


----------



## tech/a (14 May 2018)

tech/a said:


> There is a great deal I agree with in both Can Oz and Joules postings.
> Both go back a long way in chart analysis.
> 
> We all develop our own way of recognizing what we believe to be opportunity.
> ...




Just on these small caps.
Volume is thin and should be considered.
Having said that when they go volume can follow.
I ALWAYS have a buy price outside and above the pattern
Patterns can and do collapse and when they do---NEXT!
Or in a case *like* LVT at a bottom of the range.

LVT by the way is to me not a pattern Id entertain as a trade.
We are all different and see different things.


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## Wysiwyg (15 May 2018)

CanOz said:


> I prefer a consolidation pattern close to the highs or low, that one retraced a bit much for my liking...



You're right CanOz.


----------



## CanOz (15 May 2018)

why, what happened?


----------



## Wysiwyg (15 May 2018)

On that stock the stop loss went under recent support so trade is over. Yes a more in trend example would be better.


----------



## Joules MM1 (15 May 2018)

shall come back to this (shape and target(s))  and do a follow-up of the earlier post for xjo


----------



## Joules MM1 (18 May 2018)

Joules MM1 said:


> what other "patterns" might confirm chart patterns, or, can we say a series of trade units (in this instance days) that produce a pattern, not like a wedge n such but like a discernible pattern and is similar to what we generically call patterns
> 
> can we say in this series of representational patterns:
> that we see o/s money flows within the 13 week due to falling AUD against the USD (mostly) for undervalued yielding large cap aussie stocks combined with reflexive retail/managed money exiting in the nearterm thru the 21 day money flow lens
> ...




follow-up ....this asks the question about what defines a pattern as a single idea versus that you look with your eyes but you see with your brain, the patterns are a series of repetitions within price and none of them are equal in measure yet may have equality in targets and/or intent
of course, i am only expressing my ideas on how the cat gets and got skinned and likely to get skinned a second time!

same gig diff view:




the next challenge is not to see the patterns but to interpret confirmation for actions as we break down the time scale for entries n exits ......anyone who says you cannot do something may not have full broken down the process with which theyre judging how you see rather than just how they themself may "look" and given that all risk is equal to all people at all times within the market/price then it is the design of the trader that makes the difference .....not the print


----------



## rnr (8 May 2019)

@aus_trader 
I thought, for future reference, it might be more appropriate to post a link in this thread rather than the ING thread.
The Pattern Site 
The descriptions and research done in relation to the numerous chart patterns is extensive, to say the least.
The info on this site is invaluable.


----------



## aus_trader (8 May 2019)

rnr said:


> @aus_trader
> I thought, for future reference, it might be more appropriate to post a link in this thread rather than the ING thread.
> The Pattern Site
> The descriptions and research done in relation to the numerous chart patterns is extensive, to say the least.
> The info on this site is invaluable.



I wasn't posting a specific chart pattern, it was general discussion about how the stock was in an uptrend while paying regular dividends.
The Pattern Site is interesting and has so many patterns that I didn't even know exited. Good reference I suppose.


----------



## rnr (8 May 2019)

aus_trader said:


> *I wasn't posting a specific chart pattern, it was general discussion about how the stock was in an uptrend while paying regular dividends.*
> The Pattern Site is interesting and has so many patterns that I didn't even know exited. Good reference I suppose.




Yes I totally get that as it was Ann who posted the chart. I'm assuming that Ann will answer your questions in relation to the pattern mentioned, however I thought it may be beneficial to have a link for future reference.

Cheers,
Rob


----------



## Bernfeld (4 December 2019)

In general, this works, but if it is used only in its pure form, without the use of additional filters and indicators, then the profitability will be close to zero.


----------



## aus_trader (4 December 2019)

Bernfeld said:


> In general, this works, but if it is used only in its pure form, without the use of additional filters and indicators, then the profitability will be close to zero.



What additional filters and indicators are you referring to ? Is it all technical or do you use some stock valuation or other fundamental ratios etc ?


----------



## Bernfeld (4 December 2019)

aus_trader said:


> What additional filters and indicators are you referring to ? Is it all technical or do you use some stock valuation or other fundamental ratios etc ?



I use my own developed automated system. This EA scans 3 types of patterns: chart, candlestick, harmonic. Each pattern in my system has a certain weight and probability. It works as a point system. If the indicator value exceeds a certain value, this is a trading signal. The profitability of the trading system is 5-6% per year (an indicator for two years of use).


----------



## tech/a (4 December 2019)

Bernfeld said:


> In general, this works, but if it is used only in its pure form, without the use of additional filters and indicators, then the profitability will be close to zero.




I don’t know about that.
I use patterns without filters all the time 
Profitability is a long way off zero.



Bernfeld said:


> I use my own developed automated system. This EA scans 3 types of patterns: chart, candlestick, harmonic. Each pattern in my system has a certain weight and probability. It works as a point system. If the indicator value exceeds a certain value, this is a trading signal. The profitability of the trading system is 5-6% per year (an indicator for two years of use).




5-6% however is a lot closer to zero.


----------



## Bernfeld (4 December 2019)

tech/a said:


> I don’t know about that.
> I use patterns without filters all the time
> Profitability is a long way off zero.
> 
> ...




I agree. I understand that this is close to zero. But now I'm just happy that this is a stable result with a small profit. I am working on increasing profitability, constantly optimizing the strategy. So far, successes are modest.


----------



## tech/a (4 December 2019)

I presume your optimising indicators?

Why


----------



## barney (4 December 2019)

Bernfeld said:


> I use my own developed automated system.  The profitability of the trading system is 5-6% per year (an indicator for two years of use).




Firstly, welcome to ASF @Bernfeld … Always good to see some new blood/input on the site, especially in regard to Technical analysis which is a topic many of us are interested in. 

Please carry on posting your views etc 

ps I read back through this thread and found some interesting info from some previous ASF posters who no longer post ..... 

Some of the information in the "archives" of ASF can be very enlightening


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## aus_trader (5 December 2019)

Bernfeld said:


> I use my own developed automated system. This EA scans 3 types of patterns: chart, candlestick, harmonic. Each pattern in my system has a certain weight and probability. It works as a point system. If the indicator value exceeds a certain value, this is a trading signal. The profitability of the trading system is 5-6% per year (an indicator for two years of use).



OK, so it's pattern based system with indicators for additional confirmation. At least it's making a profit consistently each year. That's better than most traders who lose money each year until they have no more trading capital left and they have to save up funds and start all over again.

As barney said, welcome and continue discussing your system and other interests and don't be shy to ask questions as well, I am sure ASF members will be happy to help.


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## tech/a (5 December 2019)

Bernfeld said:


> I use my own developed automated system. This EA scans 3 types of patterns: chart, candlestick, harmonic. Each pattern in my system has a certain weight and probability. It works as a point system. If the indicator value exceeds a certain value, this is a trading signal. The profitability of the trading system is 5-6% per year (an indicator for two years of use).




Im interested in what you code the chart patterns with?
Meaning which language.

EG something simple--how would you code a triangle pattern or a blow off top.
Or a support with our without volume.

If you don't use any of these could you post a simple example of what you do use?


----------



## tech/a (6 December 2019)

Pity this didn't keep going.
Scanning for patterns is near impossible let alone coding them to be used in a system.
To have someone who is doing that posting here is great.
I cant understand why when a few questions pertinent to the topic are asked
there is silence?


----------



## Bernfeld (6 December 2019)

tech/a said:


> I presume your optimising indicators?
> Why



In order to automate the strategy using patterns, you need a complex mathematical model for calculating patterns. This is especially true for graphic patterns, since visually they look like a certain shaped figure, but in a detailed examination, the volumes and combinations of candles are always different. Therefore, I always perform optimization of calculations in order to improve the accuracy of the signals.


----------



## Bernfeld (6 December 2019)

tech/a said:


> Im interested in what you code the chart patterns with?
> Meaning which language.
> 
> EG something simple--how would you code a triangle pattern or a blow off top.
> ...




I myself do not write code, I am not a programmer. I work with a professional software development company.
MQL4 language, MetaTrader platform.

It will be difficult for me to explain in English. Briefly, in a nutshell, this happens as follows:
I analyzed about 1000 triangles with all OHLC data, the length and width of the triangles, and determined certain proportions. These proportions (they are not strict, but have certain ranges of values to be flexible) are introduced into the code of an automated trading system. When I talk about continuous optimization, I mean that I constantly adjust these parameters and ranges of values. This is done in order to reduce the ranges and improve the accuracy of the pattern.


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## Bernfeld (6 December 2019)

tech/a said:


> Pity this didn't keep going.
> Scanning for patterns is near impossible let alone coding them to be used in a system.
> To have someone who is doing that posting here is great.
> I cant understand why when a few questions pertinent to the topic are asked
> there is silence?




Why do you think so? You can encode just incredible details (at least for me). It very much depends on the qualifications of the programmer.
Here is an example of 1 component of my strategy (harmonic pattern)


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## aus_trader (7 December 2019)

Bernfeld said:


> Why do you think so? You can encode just incredible details (at least for me). It very much depends on the qualifications of the programmer.
> Here is an example of 1 component of my strategy (harmonic pattern)



I have also seen some of the patterns used by traders such as triangles and harmonic patterns such as bats, butterflies, gartley etc. But it's a bit subjective I find especially with harmonic patterns and it could go against you quite a bit before heading in the right direction. So setting the stop loss can be quite challenging.


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## tech/a (7 December 2019)

Hmmm

I'm afraid I've never seen any harmonic trading methods that can be used for profitable trading going forward on the right side of the page.
You can make them "fit" in hind site but using them to trade --- You'll be the first.
To code them even with "C " or python with so much subjectivity again highly unlikely 
If there was enough data I guess with advanced coding knowledge you could instigate machine learning as we have in some of our methods. (still a work in progress) but very interesting to say the least.
Well over my pay grade---that's why I pay them!


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## barney (7 December 2019)

I suspect it's possible that harmonic Forex "patterns" might be a bit more reliable/repeatable but that is only based on my own eyeballing. 

Again just my own opinion, but each "instrument" will likely have its own "regular patterns" (whether Stock, Forex or Futs) … and perhaps optimisation can be concentrated on each given instrument?

It's very doubtful that one size fits all so to speak … but history tends to repeat when we are dealing with human behaviour (trading or whatever). 

I can't even code my mobile phone so totally out of my league but an interesting topic.


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## frugal.rock (7 December 2019)

Great topic, love it. Will have to read through the whole thread one day.
My .
Charting, a picture of a dataset, simplified. 
Useful as an indicator? Yes, to me it is. As far as patterns go, I only use general trend lines, from intraday trends through to 10 year trends, price against volume traded.
A pattern of an average. As far as other patterns, (head and shoulders, batwings, crouching tigers... is there any limitations to creativity?!) they were all formed by a particular set of circumstances. The trick, as I see it, is the ability to quantify each of these circumstances (variables).
These variables, I consider to be virtually unlimited. Examples: trump tweets, weather/climate, trading volume, sentiment, outlook, liquidity, profitability, potential profitability etc etc.
I have been working on a 'system' to categorise some variables into mains and subs as well as trying to quantify them (ie; a value or a value index with a weighting to be applied for each variable, to come up with something useful?).
Having a bit of trouble quantifying sentiment  to name one of a few,
any ideas anyone?
Basic excel spreadsheets for me!
My idea overall is to use historical day trade data, analysing said data against the variables ultimately to give an outcome of signal to buy, hold or sell but broken down into degrees /range, of high and low of signals. 
Will get there one day, a work in long progress! If ever finished, will then ask someone to code it for me.
F.Rock


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## barney (7 December 2019)

frugal.rock said:


> Having a bit of trouble quantifying sentiment  to name one of a few, any ideas anyone?




It can be ambiguous that's for sure …. The earlier you try and call sentiment, the more likely you will get it wrong as well of course.

I quite often post up "early" calls on Stocks , mainly because making a call publicly opens you up to scrutiny if the call proves incorrect …..  and scrutiny tends to heighten your attention to detail, so its a good way to learn for me personally. 

On the topic of quantifying sentiment …. The relationship of Volume to Price over Time is likely the Holy Grail of trading if you can isolate recurring patterns with a high strike rate.  

There are obviously no 100% strike rates to be found, but that's where money management comes in to limit losses. 

Interestingly enough, if a pattern with a high strike rate fails … the ensuing pattern following the failure often becomes a high strike rate pattern in the opposite direction for X amount of time

If the above made any sense, then like me, you are likely doomed to a life of frustration looking for the elusive Holy Grail


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