# Which chart pattern to stick to?



## bonkerrs (25 September 2014)

I understand entry is only a small part of the complete trading cycle. I understand the exit is very important as is money management. I remember reading somewhere in one of Nick Radge's articles (and elsewhere, most likely here) to be consistent, whatever you decide to do... be consistent with it and stick to it.

This brings me to starting this thread. I would like to concentrate on learning a couple of chart patterns to enter trades. The problem is there are so many chart patterns to follow and learn. So hard to stay focused!

Some advice on this please 
For an entry. I am thinking of focusing on learning head and shoulders, I read this is one of the more reliable pattern signaling a movement in either direction. The other is MACD and 'High and Tight Flags'. H&TF for uptrend.

Looking forward to some words of wisdom!


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## tech/a (26 September 2014)

Google 
Thomas Bulkowski


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## pixel (26 September 2014)

tech/a said:


> Google
> Thomas Bulkowski




+1
I have his site bookmarked: http://thepatternsite.com
and specifically the page on Candlesticks: http://thepatternsite.com/CandlePerformers.html


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## Trembling Hand (26 September 2014)

bonkerrs said:


> For an entry. I am thinking of focusing on learning head and shoulders, I read this is one of the more reliable pattern signaling a movement in either direction. The other is MACD and 'High and Tight Flags'. H&TF for uptrend.




Perfect timing I was only thinking of this yesterday.

There was an active thread here on ASF a few years back about H&S patterns. Here

I ran some stats on the calls 1 month after each poster had made their post. I did keep a spreadsheet but at the moment cannot find it. But from memory there was a massively miserable success rate of 20% and that was when I was generous and took a win at 1:1 risk to reward.

There is something attractive about the H&S pattern for inexperienced traders that  should be investigated further. In fact the "learn a pattern = make money" approach to TA is bankrupt. It simply doesn't work. How in the hell did we get here? How is it that some nice and warm fuzzy sounding patterns invented 50-80 years ago in a vastly different time and probably on a vastly different instrument have come be without question accepted as something that "works"???

We live more and more in a time of proof yet we still fall, collectively, for the fallacy of authority and tradition in things that are so easy to test.

TA doesn't work. *Test it.*


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## tech/a (26 September 2014)

Some meaty stuff hear.
I will devote sometime to a reply---later.

But in general terms I agree with T/H

----That T/A doesn't work I----and some who have proven
it does supply an edge---Dr Bruce Vanstone for one
don't agree.

http://works.bepress.com/bruce_vanstone/

http://www.iaeng.org/publication/WCE2008/WCE2008_pp80-84.pdf

I have currently employed My own Genius to have his company answer many of the questions asked by you/me and many others. He is also a Dr Physics and has computer programming and analytical skills well beyond my capability. 
We are currently putting together a working strategy which will in the end give valuable proof of I'm sure many fallacies that don't work and I'm sure many that do.

Some I will release here.
Others will be available.


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## wayneL (26 September 2014)

TA doesn't work?

Define technical analysis. 

The usual indicator based drivel is, well, it's drivel. Avoid. But can be useful for finding candidates.

Analysis of a derivative of price and decision making on that basis is certainly a loser. Analysis of the primary, ie price (and some claim time), has potential to be successful,  as has been shown by "the successful". 

Not on the basis of prediction however, but *game theory*. Therefore 1:1 probabilities, or slightly worse even, (as in the case of HS patterns highlighted above) are not an insurmountable obstacle to profit.

TA can be made to work, just like any analysis, But I believe there are nuances that only human observation can overcome.... well, for mere non-mathematical genius mortals anyway, a je nais se quois if you like.

It is ideal for those who, like me, cannot grasp the related nuances of valuation and fundamental analysis.


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## Trembling Hand (26 September 2014)

wayneL said:


> TA doesn't work?
> 
> Define technical analysis.




Bonkerrs, like many if not all at some stage, has taken the approach that if he can shoehorn the random actions of the market into a certain pattern he will able to have a certainty or high probability of some outcome. This is the same for any type of TA........ If X = H&S then X + 20 bars will equal Y (substitute H&S for anything, MACD, RSI, Elliot, GAN, S&R and on and on)

Will not work. Completely lacks context and understanding about when and why to risk $. How and what makes money over many trades, 

if the only tool you have is a hammer.........


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## pixel (26 September 2014)

wayneL said:


> TA doesn't work?
> 
> Define technical analysis.
> 
> ...




yes, what Wayne said 
(and tech/a too)
T/A is also more efficient than the study of financials and fundamentals of companies because, generally, I can program a computer to apply the same evaluation algorithm to a wide range of traded instruments, something an individual F/A would find nigh impossible.

T/A is a very versatile tool - in the hands of a trained trader. But just as in other areas, if a tradie IS a tool, he won't be able to successfully USE a tool. It takes an apprenticeship to know how. Years of Learning.

I was going to reply to the OP in greater detail outside Trading hours, and to point out the difference between being consistent and being restrictive. For now, let me just say, *simply looking for H&S patterns is not T/A.*


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## pinkboy (26 September 2014)

Straight up - Im not a trader or a technical guru......BUT


As with everything, don't restrict yourself to a single technical analysis.  Learn several, as a H&S takes time to generate itself, where as you could miss out on a trade with a more definitive pattern in another technical form.

Limiting yourself in this manner keeps you out of the game longer.  Diversify.


pinkboy


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## wayneL (26 September 2014)

Trembling Hand said:


> Bonkerrs, like many if not all at some stage, has taken the approach that if he can shoehorn the random actions of the market into a certain pattern he will able to have a certainty or high probability of some outcome. This is the same for any type of TA........ If X = H&S then X + 20 bars will equal Y (substitute H&S for anything, MACD, RSI, Elliot, GAN, S&R and on and on)
> 
> Will not work. Completely lacks context and understanding about when and why to risk $. How and what makes money over many trades,
> 
> if the only tool you have is a hammer.........




So you are extrapolating the unlikelihood of success of using a a single pattern to iterations and styles of analysis?

Hmm Can sort of see your point, however, I think proper use of TA accounts for and benefits from said randomness.... which is what makes it so difficult once the mind is polluted with the standard "education".


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## Wysiwyg (27 September 2014)

pinkboy said:


> Straight up - Im not a trader or a technical guru......BUT
> 
> 
> As with everything, don't restrict yourself to a single technical analysis.  Learn several, as a H&S takes time to generate itself, where as you could miss out on a trade with a more definitive pattern in another technical form.
> ...



Nuh.  Thomas Bulkowski is well known in the chart pattern technical analysis field. *One could easily be mislead that chart patterns give you an edge.* The examples he provides were of "hundreds of perfect trades". In reality, sometimes price moves as the pattern dictates (and right there is the other factor not considered - how far that way) and sometimes price moves the opposite. Include here all fake moves and all of a sudden, in reality, you're on the losers team and getting screwed over.




p.s. price has direction (trend) but this can change at any time.


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## tech/a (27 September 2014)

Wysiwyg said:


> Nuh.  Thomas Bulkowski is well known in the chart pattern technical analysis field. *One could easily be mislead that chart patterns give you an edge.* The examples he provides were of "hundreds of perfect trades". In reality, sometimes price moves as the pattern dictates (and right there is the other factor not considered - how far that way) and sometimes price moves the opposite. Include here all fake moves and all of a sudden, in reality, you're on the losers team and getting screwed over.
> 
> View attachment 59589
> 
> ...




Your selective in interpretation.
Your post "Could easily mislead one that chart patterns don't give you an edge"
What he is saying is that the chance of perfect trades are zero.

If they didn't give an edge why would Bulkowski test 100s of patterns
Have a website which must take hrs to maintain and write many books on the
Topic----not one titled  " Patterns don't give you an edge and I've proven it"

But you do bring up a good point
How long a successful signal moves in a direction.

It's up to the analyst to develop a profitable strategy.

Very difficult with the limitations of conventional software where pattern recognition is 
At best subjective and at worst forward looking in formula so systems testing is nearly
Impossible.
We are taking a different approach using Metlab (m-code) and Python. 
According to the guys I'm working with many questions that don't seem to have definitive answers 
We are going to find lots of answers and no doubt more questions.

Some may find this of interest as our main goal is to develop our own Bot.
https://www.youtube.com/watch?v=vSppCrUNW9w


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## Wysiwyg (27 September 2014)

tech/a said:


> Your selective in interpretation.
> Your post "Could easily mislead one that chart patterns don't give you an edge"
> What he is saying is that the chance of perfect trades are zero.



Yes that is what is quoted in the warning box however I will add some further "quotes" from Mr. Bulkowski so viewers get a better picture of what a successful trader does. After all, that is what we all want to continue or be.



> How do you screen for stocks to trade? http://www.traders.com/Documentation/FEEDbk_docs/2006/09/Interview/interview.html
> 
> First, I'll check the industry relative strength by ranking the 46 industries I follow for performance over the last six months. The order of the top 10 doesn't change much-stocks doing well continue to do well. I want to know what's working and what industries to avoid.
> 
> ...






> If they didn't give an edge why would Bulkowski test 100s of patterns
> Have a website which must take hrs to maintain and write many books on the
> Topic----not one titled  " Patterns don't give you an edge and I've proven it"



His many books are educational and could add confidence to readers that trading is something that they will be successful at. Why all readers aren't successful I don't know. The patterns do repeat but there are many other factors in trading beyond a single security pattern appearing on a chart.  



> It's up to the analyst to develop a profitable strategy.



So we read over and over again. Why are there not ten million successful Tech Trader disciples walking the planet?


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## burglar (27 September 2014)

Wysiwyg said:


> ... Why are there not ten million successful Tech Trader disciples walking the planet?




'Cos 9 million potentially successful 'Tech Trader disciples' are in fact "sceptics".


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## pinkboy (27 September 2014)

Instead of getting all techincal, read my post for what it says.

All I said was dont limit yourself to a single trading pattern, instead, learn several so you can learn more about trading technical analysis.  A head & shoulder might form less frequently, where as ascending triangles and waves etc will present more opportunities more often if you learn more technical patterns than a single one.


pinkboy


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## tech/a (27 September 2014)

burglar said:


> 'Cos 9 million potentially successful 'Tech Trader disciples' are in fact "sceptics".




(1) It was designed as a long only trading system by someone with no training or programming a experience.to see I a coplete dunce could develop a profitable system.
It out performed the designers expectations 

(2) everyone thinks they can develop a better wheel.

(3) I doubt more than a few 1000 people know of it's existence.

(4) I know of 3 who do use it with some minor tweaks for their SMSF 1 losing year 2009


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## burglar (27 September 2014)

tech/a said:


> ... It outperformed the designers expectations ...




You make it sound like I am not on your side!
(Truth be known, I am still not in a hurry to be on one side or t'other.)

Ever since *this* post of yours, I have known that you know something that the rest of us don't.



tech/a said:


> Maybe you're Worst Pick Ever was a sold too early story, you know, the Motza that got away.
> 
> Im sure there are
> But For what its worth this is my Resources portfolio.
> Maybe you'll notice something of interest


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## tech/a (28 September 2014)

burglar said:


> You make it sound like I am not on your side!
> (Truth be known, I am still not in a hurry to be on one side or t'other.)
> 
> Ever since *this* post of yours, I have known that you know something that the rest of us don't.




I was just adding to your comment.


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## ThingyMajiggy (28 September 2014)

Okay so TA doesn't work, FA doesn't work. Time for some elaboration for those wondering, what does then? Because TA and FA are all most people know.


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## IFocus (28 September 2014)

ThingyMajiggy said:


> Okay so TA doesn't work, FA doesn't work. Time for some elaboration for those wondering, what does then? Because TA and FA are all most people know.





Fact is everything works, everyone trades patterns FA / TA / voodoo, its just everyone doesn't recognize what they do is a pattern.  

Its the application of the method that fails the trader.

Watch the posting here BTW  and see the patterns.


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## tech/a (28 September 2014)

IFocus said:


> Fact is everything works, everyone trades patterns FA / TA / voodoo, its just everyone doesn't recognize what they do is a pattern.
> 
> *Its the application of the method that fails the trader.*
> 
> Watch the posting here BTW  and see the patterns.




Absolutely right.

But it's not only the application of one singular trade but the *application of your trading business* overtime which will determine profit or loss, drawdown or ruin.


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## pixel (28 September 2014)

burglar said:


> 'Cos 9 million potentially successful 'Tech Trader disciples' are in fact "sceptics".




... and for the remaining 1 Million, the usual 80:20 rule applies, i.e. 80% struggle to break even, 20% may make a living, and of those 20%, only a small minority excel. That's about the same ratio as in every one of life's endeavours, be it plumbers, car mechanics, programmers, lawyers, politicians,  ...


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## peter2 (28 September 2014)

FA checklists and TA patterns provide an objective analysis that make us feel good about starting a trade. That's it. 

Our psychological bias makes us think they are high probability events that will provide the positive edge that we need to profit. The reality is that all patterns do not have an edge. Of course we disbelieve the facts and continue to look for the "Holy Grail" pattern (beginners' cycle).

The best patterns for each of us fit our beliefs about market behaviour. In my case the best patterns (for me) in bullish markets involve a break-out entry (Darvas boxes, ascending triangles etc), in uncertain market trends I prefer pullback patterns like the EW abc pattern or a fib ambush at support. In all cases I prefer to trade with the trend of a time frame that is larger than the one that forms the pattern. 

I prefer patterns that show an entry trigger and a logical place for an initial stop loss. I use these levels to define the risk of the trade so I can allocate risk capital appropriate for my risk tolerance. 

To your initial question "Which chart pattern to stick to ?". That is something for you to decide. I started with the Darvas box pattern, luckily in a bull market, but I traded this one pattern through the bull market and into the GFC bear market. I have traded 1000's of Darvas boxes, both in sim and for real. I learned what I have to do to be profitable by trading this one pattern.

I'm not recommending this pattern for you, but I urge you to select one pattern that provides plenty of opportunities and stick with it. Create scans to find them in the markets you trade, back test them with a variety of management techniques, create checklists to identify perfect patterns. Trade them in sim and for real and learn what you must do in order to be profitable. If this sounds like a lot of work, yes it is.


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## burglar (28 September 2014)

tech/a said:


> I was just adding to your comment.




Sorry, I misunderstood your intent, and I worded my post poorly.


The world's greatest chess champion may have been a code breaker in the war and never found time to play.
The world's greatest footballer may play soccer.


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## burglar (28 September 2014)

pixel said:


> ... lawyers, politicians,  ...




Don't get me started on lawyers!


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## bonkerrs (28 September 2014)

Thanks for the replies. I have been reading (with much interest) the replies so far.


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## subterfuge (29 September 2014)

Trembling Hand said:


> TA doesn't work. *Test it.*




I thought you said you used charts to trade? (I Must have mistaken you for someone else)

So if you don't use technical analysis, I take it you trade fundamentals?


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## tech/a (29 September 2014)

subterfuge said:


> I thought you said you used charts to trade? (I Must have mistaken you for someone else)
> 
> So if you don't use technical analysis, I take it you trade fundamentals?




I don't really know How T/H Trades but understand his analogy that its like Spotting your mother in a crowd.
You can identify her instantly yet others have no idea she is there!


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## cynic (29 September 2014)

It seems the possibility of Technical Analysis sans charting has escaped the attention of some members.

It also seems that some have misconceptions regarding the extensive realm of possible trading modalities. 

To opine that such a vast realm is confined to a mere two subsets (i.e. T/A and F/A only) and to further assert the mutual exclusivity of those subsets, suggests an absence of understanding of the true nature and function of financial markets.


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## ThingyMajiggy (29 September 2014)

cynic said:


> It seems the possibility of Technical Analysis sans charting has escaped the attention of some members.
> 
> It also seems that some have misconceptions regarding the extensive realm of possible trading modalities.
> 
> To opine that such a vast realm is confined to a mere two subsets (i.e. T/A and F/A only) and to further assert the mutual exclusivity of those subsets, suggests an absence of understanding of the true nature and function of financial markets.




So again, as no one answered me last time, what else is there? If TA and FA don't work, what does? Also I doubt it matters about the application if there is no statistical edge in what you're looking for?


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## wayneL (29 September 2014)

cynic said:


> It seems the possibility of Technical Analysis sans charting has escaped the attention of some members.
> 
> It also seems that some have misconceptions regarding the extensive realm of possible trading modalities.
> 
> To opine that such a vast realm is confined to a mere two subsets (i.e. T/A and F/A only) and to further assert the mutual exclusivity of those subsets, suggests an absence of understanding of the true nature and function of financial markets.




Quantitative Analysis?


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## cynic (29 September 2014)

wayneL said:


> Quantitative Analysis?




That's one possibility.

A few others that I know of are lunar (a.k.a. lunatic) analysis, intuitive analysis and let's not forget my personal favourite, namely cynical analysis (no charts, company reports or historical data are required for the correct performance of C/A).


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## Trembling Hand (29 September 2014)

peter2 said:


> FA checklists and TA patterns provide an objective analysis that make us feel good about starting a trade. That's it.
> 
> Our psychological bias makes us think they are high probability events that will provide the positive edge that we need to profit. The reality is that all patterns do not have an edge. Of course we disbelieve the facts and continue to look for the "Holy Grail" pattern (beginners' cycle).
> 
> The best patterns for each of us fit our beliefs about market behaviour.






tech/a said:


> I don't really know How T/H Trades but understand his analogy that its like Spotting your mother in a crowd.
> You can identify her instantly yet others have no idea she is there!





subterfuge said:


> I thought you said you used charts to trade? (I Must have mistaken you for someone else)
> 
> So if you don't use technical analysis, I take it you trade fundamentals?



Actually I trade with 25 charts on my screens, don't know a thing of the fundamentals of the companies I trade ( in fact I trade an Index and have done literally 1,000s of trades and don't even know what companies make up that index)

Looking at systems that 'work' you can say "see here is a TA system that is profitable over 1000 trades. That's proof that it can work". But it seems to me when you look at what is generating the profit its not actually the TA signal in a pure sense. It's being exposed to risk when its favourable to do so. That is why lots of systems have equity curve triggers or index filters. Lots of systems have win rates below 50%. They are just capturing the tendency for financial instruments to trend. They are not getting any great insight into the markets next move and/or the length of the next move.

With discretionary traders as far as market reading skills I think what they are doing is far more implicit than some silly TA patterns viewed *after *the event. Sure they may be 'reading' a chart but they, I would very much doubt, are seeing a pattern the same as the last 100 trades they took. They are simply recognising a market phase that is favourable as far as risk to reward. You can say but that is TA. I say from experience you are leaning into the trade in your head long before you can see the pattern show in the chart. You then use a chart to manage your bias. Ie if it goes here I was wrong, if it goes here I was right and am taking profit.

Its you ability to learn and use info to colour your bias that makes you a successful trader. Not waiting for a H&S pattern to show. Once your bias is leaning the right way you will find some pattern in the chart to risk dollars on an uncertain outcome.


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## cynic (29 September 2014)

ThingyMajiggy said:


> Okay so TA doesn't work, FA doesn't work. Time for some elaboration for those wondering, what does then? Because TA and FA are all most people know.






ThingyMajiggy said:


> So again, as no one answered me last time, what else is there? If TA and FA don't work, what does? Also I doubt it matters about the application if there is no statistical edge in what you're looking for?




My apologies for overlooking your earlier posts Thingy.

The questions regarding efficacy of particular analysis styles is one to which I prefer not to proffer a definitive answer, primarily on account of it being a rather subjective and controversial topic.

I've known some traders that have been extremely proficient in the profitable application of F/A. Likewise for T/A.

I've also known some that have repeatedly failed to profit despite their devotion to one or another mode of analysis.

Generally, those suffering chronic losses exhibited the same behaviours, namely, a failure to fully appreciate the scope and limitations of their chosen modality. I've observed many traders placing unrealistically high expectations on what their analysis can actually deliver!!!


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## tradezy (29 September 2014)

Trembling Hand said:


> Its you ability to learn and use info to colour your bias that makes you a successful trader. Not waiting for a H&S pattern to show. Once your bias is leaning the right way you will find some pattern in the chart to risk dollars on an uncertain outcome.




Hi Trembling Hand,

I would like to ask how you form your "bias" to go either long or short for the instrument you are trading.

With thanks,

Tradezy


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## tech/a (29 September 2014)

tradezy said:


> Hi Trembling Hand,
> 
> I would like to ask how you form your "bias" to go either long or short for the instrument you are trading.
> 
> ...




Do you know what his mother looks like?


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## Trembling Hand (30 September 2014)

tradezy said:


> Hi Trembling Hand,
> 
> I would like to ask how you form your "bias" to go either long or short for the instrument you are trading.
> 
> ...




I'm not sure if this is a serious question after what I have already added?


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## tradezy (30 September 2014)

Hi Trembling Hand,

I'm trying to work out how to develop directional bias on the index (XJO) in a "structured" way.  

To work out my bias I have been looking at daily candlesticks (1 year timeframe). I work out which way the market is moving based on the current trend. I then switch to a 5 minute candlesticks (1 week timeframe).

Do you start on a higher timeframe then switch to a lower timeframe?

Or do you stay on one timeframe to determine bias? Or do you do something else entirely?

Any insights would be appreciated.

Tradezy


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## Trembling Hand (1 October 2014)

tradezy said:


> Or do you do something else entirely?



Errr I would have to say something entirely different..



tradezy said:


> To work out my bias I have been looking at daily candlesticks (1 year timeframe). I work out which way the market is moving based on the current trend. I then switch to a 5 minute candlesticks (1 week timeframe).




Although I do believe you have to be creative to find an edge today. I would be surprised if there is any correlation between a daily trend and one you find on a 5 minute chart. From my testing when the daily/weekly time frame is strongly trending it comes from over night gaps. The times frames below that are actually statistically showing an edge in the reverse direction.

How did you come about that approach?


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## tradezy (1 October 2014)

Hi Trembling Hand,

I'll start by saying that I don't have much of a clue when it comes to discretionary trading. Discretionary trading is like a mystery to me.

In answer to your question, I guess you could say I derived my discretionary approach by watching Youtube videos. 

I came across videos where people say that they like to start off with a daily charts to see the big picture first, then drop down to lower time frames e.g. 4hours, 1hour, 30mins.

I noticed many of them end up trading the 5minute charts if it is moving in the direction of bias established on the daily chart.I just assumed pretty much everyone did it this way!

Is there another way to develop bias besides looking at the chart? Is it by looking at market depth imbalances?
Can you point me in the right direction?:1zhelp:

With thanks,

Tradezy


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## Trembling Hand (2 October 2014)

tradezy said:


> In answer to your question, I guess you could say I derived my discretionary approach by watching Youtube videos.
> 
> I came across videos where people say that they like to start off with a daily charts to see the big picture first, then drop down to lower time frames e.g. 4hours, 1hour, 30mins.
> 
> I noticed many of them end up trading the 5minute charts if it is moving in the direction of bias established on the daily chart.I just assumed pretty much everyone did it this way!




So you tested nothing. You spent no time objectively observing the market. You just assumed that because its on YouTube it works?



> Can you point me in the right direction?




This is back to my original point. TA doesn't work, charts don't work. Either commit to learning how markets move and develop your own unique approach that makes sense to you or give up. There is me pointing you in two different and opposite directions, anywhere in-between the two is a waste of time.


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## tech/a (2 October 2014)

What he's saying is either
Test extensively any patterns you perceive as
Giving you an edge to display that they actually do.
Then provided the market your trading doesn't appreciably
Alter to the time in which you tested it --- you'll have 
Confidence in trading that or those patterns

OR

Observe enough charts to instinctly recognize what price
Is doing.
I trade the DAX I can clearly see when it's smashing through resistance
Or support or that small micro pattern in a continuation or volume is smashing in
Pulling it up from it's current fall or rise.

WhenI'm discretionary trading if it's not crystal
Clear as my intuition is yelling get on this--I wont trade it.

Anyway back to the beach
I like Byron Bay.


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## barney (2 October 2014)

tech/a said:


> WhenI'm discretionary trading if it's not crystal
> Clear as my intuition is yelling get on this--I wont trade it.





Genuine question here Tech ...... not so much for my own clarification, but to hopefully add value to the thread, .... When your discretionary trading is "crystal clear" and yelling at you to either buy or sell, how much wider do you run your initial stop (ie. wiggle room because you know you are on a good thing)


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## tech/a (2 October 2014)

barney said:


> Genuine question here Tech ...... not so much for my own clarification, but to hopefully add value to the thread, .... When your discretionary trading is "crystal clear" and yelling at you to either buy or sell, how much wider do you run your initial stop (ie. wiggle room because you know you are on a good thing)




I don't have one if it comes back on me I'll click out.
5 or so ticks is plenty.
If you watch a DAX session and it takes off you'll see what I mean.

I'll only watch the first hr or so when I'm in my home office.
Only trading when I am lucky enough to see it --- feel it building.
If in the time I'm at the computer nothing happens I'll leave it for the night.
I miss lots because I'm not watching.
Have better things to do.


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## barney (2 October 2014)

tech/a said:


> I don't have one if it comes back on me I'll click out.
> 5 or so ticks is plenty.
> If you watch a DAX session and it takes off you'll see what I mean.





Yeah I trade the DAX regularly, but only with paltry positions sizes to suit my level of confidence

5 Ticks is a very small window of risk given the gyrations of the DAX .... If you are trading discretionary, do you recall the furthest you have let it run against you when you are convinced you are on the right side of the trade? 

The reason I ask this is I was on the wrong side of it tonight but held on to turn a losing trade into a winning trade  ... Basically my Entry was crap (as usual), but my analysis said it would turn  ... Fortunately it did

Just as a side issue ... Entries are the basis of good trading in my humble opinion  ... without good entries on a regular basis, we are doomed to become ordinary traders .... curious on others thoughts on that


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## VSntchr (2 October 2014)

barney said:


> Just as a side issue ... Entries are the basis of good trading in my humble opinion  ... without good entries on a regular basis, we are doomed to become ordinary traders .... curious on others thoughts on that




Agree with you. Although crappy entries do force you to think on your feet and innovate your trading. They also might hone your EXIT skills...not that I am in any way suggesting that poor entries are the way to go !!!


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## Trembling Hand (2 October 2014)

tech/a said:


> I'll only watch the first hr or so when I'm in my home office.
> Only trading when I am lucky enough to see it --- feel it building.
> If in the time I'm at the computer nothing happens I'll leave it for the night.




This is what the newly minted TA enthusiast is missing. After 1000s of runs you have the ability to read a market and know with a high likelihood of what opportunity is presented. Either taking risk or passing well before any chart pattern sets up.

The newb with his very low level of skill just _wants_ to see something. What they end up seeing is patterns that has no edge but give them an excuse to do something.......... 

Head and shoulder anyone? :behead:


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## Wysiwyg (3 October 2014)

barney said:


> Just as a side issue ... Entries are the basis of good trading in my humble opinion  ... without good entries on a regular basis, we are doomed to become ordinary traders .... curious on others thoughts on that



Good entries are only so after the fact. Our money, from stop loss forward, is at the mercy of the market once that ticket is bought. Look at those breakout trend trading strategies. Often the price will retrace back to or below the breakout. Sometimes never to make a new high for some time hence the lower percentage accuracy or "good entry". In my opinion good entries after the fact are feel goods and some feeling of control over price movement but this is far from the case. Insider trading will provide for a good entry or exit as the case may be but for us honest toilers, your guess is as good as mine. The fact is not so much a good entry but using experience and/or statistics to close at a price which, over time, leaves you with an increasing account balance.


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## subterfuge (3 October 2014)

I often hear people who claim to make consistent money daytrading, say that charts are useless, as is everything else that the retail crowd are aware of (time+sales/DOM/etc etc etc)
You need an actual 'edge' to make money trading and you don't get an edge by using the same stuff as everyone elses


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## avion (3 October 2014)

subterfuge, where are you based, you are replying at 2:30am... my patterns all look a bit more fuzzy at that hour, tried it once or twice :goodnight:sleeping:


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## tech/a (3 October 2014)

Trembling Hand said:


> This is what the newly minted TA enthusiast is missing. After 1000s of runs you have the ability to read a market and know with a high likelihood of what opportunity is presented. Either taking risk or passing well before any chart pattern sets up.
> The newb with his very low level of skill just _wants_ to see something. What they end up seeing is patterns that has no edge but give them an excuse to do something..........
> Head and shoulder anyone? :behead:



This is true and when you've done it yourself you can associate well.



subterfuge said:


> I often hear people who claim to make consistent money daytrading, say that charts are useless, as is everything else that the retail crowd are aware of (time+sales/DOM/etc etc etc)
> You need an actual 'edge' to make money trading and you don't get an edge by using the same stuff as everyone elses




I'd re phrase it a little
You don't get an edge using the same stuff the same way as everyone else.


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## Triathlete (16 November 2014)

bonkerrs said:


> I understand entry is only a small part of the complete trading cycle. I understand the exit is very important as is money management. I remember reading somewhere in one of Nick Radge's articles (and elsewhere, most likely here) to be consistent, whatever you decide to do... be consistent with it and stick to it.
> 
> This brings me to starting this thread. I would like to concentrate on learning a couple of chart patterns to enter trades. The problem is there are so many chart patterns to follow and learn. So hard to stay focused!
> 
> ...




If you are wanting to become a skilled T/A then the basic patterns you require to know in my opinion are:

1. Double top
2. Triple top-very bearish signal
3. Double bottom
4. Triple bottom - very bullish signal
5. Accumulation pattern
6. Distribution pattern
7. Continuation pattern
8. Rising flag pattern
9. Falling flag pattern
10 Rectangle pattern
11.Reversal patterns - as you have mentioned, Head and shoulder ( top of the market ) or an Inverted Head and  shoulders ( bottom of the market) although these take many weeks , months and in some instances even years to form.
If you are looking for techniques to get into and out of the market..it is far easier to use a combination of:

1. Trend lines - 2 closes above or below the trend  line depending on whether you want to take a long or short trade.
2. Dow theory- mainly used for short term trading or to use this in combination with trendlines to lower your risk.
3. Gann swing -provides an easy guide  to the strength and direction of the market-never trade against the trend!!
Of course their are other techniques and some T/A use price and time analysis to confirm there  trades so that the probabilities of having a successful trade is more in their favour then the markets. 
In this game we need the probabilities in our favour so using all our knowledge will help us achieve that.

Becoming a skilled T/A takes many years of practice and analysing charts and not something that happens overnight!!

All the best!


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## tech/a (16 November 2014)

> If you are wanting to become a skilled T/A then the basic patterns you require to know in my opinion are:
> 
> 1. Double top
> 2. Triple top-very bearish signal
> ...




How have you come to this conclusion. I note you are into a course module 3 or 4
So how is it that believe these are a requirement?



> If you are looking for techniques to get into and out of the market..it is far easier to use a combination of:
> 
> 1. Trend lines - 2 closes above or below the trend  line depending on whether you want to take a long or short trade.



Common course rhetoric with no proven substance.



> 2. Dow theory- mainly used for short term trading or to use this in combination with trendlines to lower your risk.




You need to revisit DOW THEORY.



> 3. Gann swing -provides an easy guide  to the strength and direction of the market-never trade against the trend!!




Could you show me a REAL-TIME example of this? Sounds classy but in reality again is hind-site rhetoric.
The stuff basic courses with no substance (Practical application) are filled with.



> Of course their are other techniques and some T/A use price and time analysis to confirm there  trades so that the probabilities of having a successful trade is more in their favour then the markets.
> In this game we need the probabilities in our favour so using all our knowledge will help us achieve that.




How then do YOU determine this.
Again a REAL-TIME example would be helpful.



> Becoming a skilled T/A takes many years of practice and analysing charts and not something that happens overnight!!




With you at Module 3 again how do you know that which you have written?



> *Tech/a I'd re phrase it a little
> You don't get an edge using the same stuff the same way as everyone else.*


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## Triathlete (16 November 2014)

tech/a said:


> How have you come to this conclusion. I note you are into a course module 3 or 4
> So how is it that believe these are a requirement?
> 
> 
> ...




Hi Tech A,
              I am actually into module 8 ( whether that is good or not in your opinion) so I also have basic understanding on Elliot wave principles and as you also know nothing in trading is 100% we can only go back and test your trading strategy on   charts to see if it is working out for us and if you believe in your strategy going forward than take the trade so hopefully you achieve what we have set out to achieve which is to be profitable traders. I actually like checking my charts with Elliott wave as the principles of that concept and if I am correct and ( you can correct me if I am wrong) that a wave 3 is the safest wave to trade on?... as I like to learn from others with much more experience than I. 
I am actually finding your responses to some other posts quite informative so I am building my knowledge all the time from this forum. Thanks.


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## tech/a (16 November 2014)

So you've tested your statements?
Testing looking back on charts is useless.
Forward testing is best.
I doubt you've done either.


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## tech/a (16 November 2014)

Let me get to the point.
My bluntness appears personal---not meant to be.

There are more questions than answers.

(1) How and at what point can you identify a Pattern/Trend line/Wave 3 in Elliott.
(2) How do you trade it and at what point do you make that decision to Buy/Sell or Hold..
(3) At what point in your trade do you KNOW your wrong/right?
(4) How long does a pattern signal stay valid. Is it still valid while your in a trade in a week/month---?
(5) Is trading a pattern in isolation best.
(6) Why are the patterns mentioned above better than others---why are they even mentioned?
(7) Is there a better time frame?
(8) How can I find a definitive answer to the OP's question---rather than a generalized list.
(9) Why trade patterns at all?
(10) If not patterns what?

I have my own answers to these questions but am interested in others if they have an opinion.

If your doing a course or you've traded technically long enough you should have an idea.


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## Porper (16 November 2014)

Triathlete said:


> If you are wanting to become a skilled T/A then the basic patterns you require to know in my opinion are:
> 
> 1. Double top
> 2. Triple top-very bearish signal
> ...




If you really want to go down this alley... continuation, reversal patterns and moving averages etc. then all this information is free on hundreds of websites. Same goes for Elliott Wave. There are books galore on all this stuff. Why would anybody waste thousands of dollars on a mickey mouse course to learn what is readily available...and in a lot of cases more in depth. For Elliott just go to Elliott Wave International, there are free courses that explain the theory in depth. Robert Miner (Dynamic Trader) is another good one.


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## Triathlete (16 November 2014)

tech/a said:


> Let me get to the point.
> My bluntness appears personal---not meant to be.
> 
> There are more questions than answers.
> ...




Hi Tech A,
               I do not take your statement personal as I know we all have our different views. What I was actually trying to do was mention what I  had learnt and for those that may be new to trading was to go out and look up these patterns , Trendline entries/exits ,Dow theory, Gann swing, Elliot wave etc as they may never heard of these theories and so on through books and websites where there is plenty of information that people can find and to see if using these principles would help there trading.
Even after learning these principles if we have two people trying to trade they would most probably come up with two different scenarios. That is all I was trying to do.


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## dlineinvestor (16 November 2014)

lol ....
seems bonkers is a stirrer one post and he has all the heavy weights typing it out.
each to his own, what ever works just use it.
Who cares what other's say !
"bonkers you out there ... lol
"now let me just re tweak the settings in my macd, rsi, sma and SS,
 for tomorrow"
:shoot:


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## CanOz (16 November 2014)

I don't think TA is rubbish, but its only a tool to provide some context. Its just price action, history to be exact. Learn all you can while watching one or limited markets as much as you can...Screen time.

Then use it to frame your ideas about the market and what it could do next. You'll know you are onto something when it occurs more than half the time. After that, manage risk...Try gathering stats on your performance applied to what you think to be an edge... 

CanOz


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## Boggo (17 November 2014)

T/A doesn't work, nah, all those meteorologists out there predict the weather and temperature using fundamental analysis after they have read the latest climate change opinion of some tree hugger in Lismore who has a taxpayer funded arts degree.

Has anyone got a piccy of someone who relies solely on fundamentals sitting in front of their tv waiting for the weather to come on 

Use funnymentals to eliminate the no hopers and T/A to make money from the remainder - simples.

(click to expand)


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