Dump it Here

Skate · 9 July 2022

peter2 said:
These pull-backs in price form after break-outs and whenever bullish sentiment temporarily pauses inducing weaker holders and profit takers to sell in order to grab their short term gains.

Trading pull-backs
I'm not inferring that @peter2 trades the "Three Line Strike" candlestick pattern but rather I'll try & blur the lines between his method & the number one method using candlestick patterns. The number one candlestick pattern from the video was the "Three Line Strike" Candlestick Pattern.

The colour of the candlestick or price bar is either green or red
I personally don't chart with candlesticks as I prefer the look of a bar chart. Also, it would be prudent for me to mention that the colours of the bars can vary to the relationship of the previous bar or alternatively, whether the opening price is lower than the closing or vice versa. I'll later post a bar chart to demonstrate that trading pull-backs after a temporary pause can be a beneficial way of trading.

But first a little about Technical Analysis
At times it can be confusing when technical analysis (TA) & fundamental analysis (FA) is discussed. They both try to achieve that same result even though the path is different. But as usual, I'll be concentrating on the virtues (TA) as trading this way depends on finding mathematical repeatable patterns.

"Why are you making a series of posts on a pattern you have found no value in?"
It's a reasonable question. Well, the simple answer is that there may be some who are interested & as I've spent so much time evaluating candlestick patterns & it allows me to post some of the findings of my research.

Skate.

Skate · 9 July 2022

The Three Line Strike Candlestick Pattern
For those who watched the YouTube video, I wanted to make a follow-up post about the best Candlestick pattern in the YouTube video which was the "Three Line Strike" candlestick pattern. In the video, the conclusion was (in their opinion) that the continuation three-line strike candlestick pattern was the most powerful of all the patterns.

In the video, it was the "Three Line Strike" Candlestick Pattern
This particular they referenced is known as a "Bearish Three Line Strike Candlestick Pattern". They fail to mention that there is also a "Bullish Three Line Strike Candlestick Pattern" that gives better results as far as my research confirms. But, (IMHO), they both return dismal returns.

The Three Line Strike Candlestick Pattern
Both the "Bullish & Bearish Three Line Strike" patterns are both continuation patterns so let me get that straight out there, so there is no confusion. The bullish formation is composed of a big green candle, 3 up candles, & one down candle erasing the advance made by the prior 3 candles. The bearish formation is composed of a big red candle, 3 down candles, and one up candle erasing the decrease made by the prior 3 candles.

Skate.

Skate · 9 July 2022

What is the Three Line Strike candlestick pattern?
A Three Line Strike candlestick pattern is a continuation of a "group" of candlesticks (price bars) that has three bars in the direction of a trend, followed by a final candle that pulls back to the start point. I've tried my darnedest to take advantage of the three-line strike pattern some years ago & I won't be revisiting that research.

Sometimes it is not fair
In my minds-eyes & logically thinking about it, candlestick patterns should work. They worked for the Japanese traders hundreds of years ago & we have come a long way since. On paper, there is an opportunity to buy within a current trend after a slight pullback that does make money but using candlestick patterns to achieve the same outcome doesn't make money for me. Well, to some degree it does, but in isolation, I've never found a way to profit from any candlestick patterns ever. There are hundreds of such patterns & frankly, my enthusiasm ran out after trying about 30 of them.

I did try the Three Line Strike candlestick pattern if any are wondering
There are many patterns that can determine a trend & candlesticks patterns are another such methods. Candlesticks patterns can even assist traders as @DrBourse pointed out in helping to determine the direction of a trend that's likely to form. I'm first to admit candlestick patterns do help in determining the likely direction of the next candle. But finding long-term patterns that are tradable & likely to persist going forward, nah... I can't go that far.

Skate

Skate · 9 July 2022

Continuation Patterns
We have all seen it. Prices trend in an upward direction, only to pause before pushing higher. This is seen as a continuation pattern & is different from a reversal pattern. Forget the pattern in the video, as I want to concentrate on the Bullish Three-Line Strike candle pattern. I'll give a short summary of both patterns & then post a chart of both patterns together on the same chart.

Three Line Strike Pattern
For a bit of background, the "three line strike" candlestick pattern can be a bullish or bearish pattern. The construction denotes whether it is a pullback or a continuation pattern. They are basically the same patterns of formation but in different directions from each other.

Bullish Three Line Strike Pattern
The first three bars must be "bullish" but the last bar in the group must be bearish. A bullish "three line strike" candlestick pattern is made up of four candles, the first three are strong bullish candles that progressively end higher followed by a final bearish candle. The fourth bar in the pattern disrupts the sentiment allowing positive sentiment to come back for those who believe the upward trend in the price is still intact.

Bearish Three Line Strike Pattern
The bearish "three line strike" candlestick pattern is basically the same pattern but in the reverse direction to a bullish one. The first three bars must be "bearish" & the last bar in the group must be bearish but the close is higher than the close for each of the prior 3-bars.

Skate.

Skate · 9 July 2022

The final straw that broke the "camel's back"
Well, that was when I realised neither the bullish nor bearish candlestick patterns worked in isolation. My next line of thinking is, what if I combine the best of both taking advantage of either direction. Well, that didn't go to plan. I coded the idea & using both in unison it was still a disappointment but useful to make a chart for educational purposes.

I've cherry-picked this chart
The chart below explains graphically how both the (a) Bullish Three Line Strike Pattern & (b) the Bearish Three Line Strike Pattern looks on the same chart. Both signals, no matter the methodology made money. It's taken a lot of words to explain how both "Three Line Strike" patterns work, I hope the colour coding explains their uniqueness.

In summary
The are several criteria that make up the three-line strike pattern. This pattern is as rare as hen's teeth & I would die of old age waiting for them to appear as their occurrence is a rarity. I believe this series of posts contains no value "whatsoever" in explaining why I've found no joy in this particular pattern & apologise to those who have taken the time & effort to read this far.

Skate.

DaveTrade · 9 July 2022

Skate said:
The Three Line Strike Candlestick Pattern
For those who watched the YouTube video, I wanted to make a follow-up post about the best Candlestick pattern in the YouTube video which was the "Three Line Strike" candlestick pattern. In the video, the conclusion was (in their opinion) that the continuation three-line strike candlestick pattern was the most powerful of all the patterns.

In the video, it was the "Three Line Strike" Candlestick Pattern
This particular they referenced is known as a "Bearish Three Line Strike Candlestick Pattern". They fail to mention that there is also a "Bullish Three Line Strike Candlestick Pattern" that gives better results as far as my research confirms. But, (IMHO), they both return dismal returns.

The Three Line Strike Candlestick Pattern
Both the "Bullish & Bearish Three Line Strike" patterns are both continuation patterns so let me get that straight out there, so there is no confusion. The bullish formation is composed of a big green candle, 3 up candles, & one down candle erasing the advance made by the prior 3 candles. The bearish formation is composed of a big red candle, 3 down candles, and one up candle erasing the decrease made by the prior 3 candles.

Skate.

@Skate I'm sorry to say that somehow you have confused yourself when looking at this, the 'Three Line Strike' pattern is not a continuation pattern it's a reversal pattern. I have to go to the shops with my wife now but we can talk about it when I get back if you want too. I think when you view the video again that you will see it yourself.

frugal.rock · 9 July 2022

DaveTrade said:
have to go to the shops with my wife now

Please accept my commiserations.

Thought I would dump this here.
Failing not following the general market for a suitable system timing entry/ exit, some might consider the historic data in this chart as a guide for market timing, either way.
A little old school perhaps?

Skate · 9 July 2022

Skate said:
Continuation Patterns
We have all seen it. Prices trend in an upward direction, only to pause before pushing higher. This is seen as a continuation pattern & is different from a reversal pattern. Forget the pattern in the video, as I want to concentrate on the Bullish Three-Line Strike candle pattern. I'll give a short summary of both patterns & then post a chart of both patterns together on the same chart.

DaveTrade said:
@Skate I'm sorry to say that somehow you have confused yourself when looking at this, the 'Three Line Strike' pattern is not a continuation pattern it's a reversal pattern. I have to go to the shops with my wife now but we can talk about it when I get back if you want too. I think when you view the video again that you will see it yourself.

There are times when my terminology can be confusing
@DaveTrade I must admit I don't always get the terminology correct as per the textbook as most of the time I'm shooting from the hip using the terminology that makes sense to me. If it makes sense to me I'm thinking it will make sense to others. In no way do I try to mislead, or confuse others, it's not my intention. If you read enough of my posts I try really hard to speak in terms others would understand.

Continuation patterns & reversal patterns
What I see as one pattern others could view as another. My explanation might be too simplistic but a "continuation pattern" to "me" is a pattern that continues the existing trend whereas "reversal patterns" change the existing trend. As their name suggests a "continuation pattern" is a temporary rest before it continues on its merry way. Reversal patterns, on the other hand, usually reverse "changing the direction" of the existing trend for a "few bars to many" before it decides to reverse & carry on.

If I may
To quote Thomas Bulkowski where he refers to the Bearish Three-Line Strike Candle Pattern as a "bearish continuation" pattern, his testing shows that it acts as a bullish reversal pattern. Admittedly, it's even confusing for me, I had to read that passage a few times to get my head around it

The quote is found here

Bearish Three-Line Strike

Article describes the bearish three-line strike candlestick pattern, including performance statistics and rankings. Written by internationally known author and trader Thomas Bulkowski.

thepatternsite.com

Let me summarise
To my understanding, a continuation pattern is normally found in the middle of a trend, when the price takes a small pause building up the strength for the next leg up. Whereas reversal patterns tend to take a lot longer before the next leg up. I'm sure if my interpretation is wildly off the mark I am sure you or another will correct the situation with a more concise description.

What is a Three Line Strike Pattern?
"You can use candlestick patterns to help you determine a trend, that is likely to persist. After prices trend in a specific direction, prices will pause before refreshing higher. This is considered a continuation pattern and differs from a pattern that would signal a reversal.

# The three-line strike pattern is considered a continuation pattern".

The above quote can be found here

https://www.warriortrading.com/three-line-strike/

Skate.

DaveTrade · 9 July 2022

rnr · 9 July 2022

Skate said:
There are times when my terminology can be confusing
@DaveTrade I must admit I don't always get the terminology correct as per the textbook as most of the time I'm shooting from the hip using the terminology that makes sense to me. If it makes sense to me I'm thinking it will make sense to others. In no way do I try to mislead, or confuse others, it's not my intention. If you read enough of my posts I try really hard to speak in terms others would understand.

Continuation patterns & reversal patterns
What I see as one pattern others could view as another. My explanation might be too simplistic but a "continuation pattern" to "me" is a pattern that continues the existing trend whereas "reversal patterns" change the existing trend. As their name suggests a "continuation pattern" is a temporary rest before it continues on its merry way. Reversal patterns, on the other hand, usually reverse "changing the direction" of the existing trend for a "few bars to many" before it decides to reverse & carry on.

If I may
To quote Thomas Bulkowski where he refers to the Bearish Three-Line Strike Candle Pattern as a "bearish continuation" pattern, his testing shows that it acts as a bullish reversal pattern. Admittedly, it's even confusing for me, I had to read that passage a few times to get my head around it

The quote is found here

Bearish Three-Line Strike

Article describes the bearish three-line strike candlestick pattern, including performance statistics and rankings. Written by internationally known author and trader Thomas Bulkowski.

thepatternsite.com

Let me summarise
To my understanding, a continuation pattern is normally found in the middle of a trend, when the price takes a small pause building up the strength for the next leg up. Whereas reversal patterns tend to take a lot longer before the next leg up. I'm sure if my interpretation is wildly off the mark I am sure you or another will correct the situation with a more concise description.

View attachment 143901

What is a Three Line Strike Pattern?
"You can use candlestick patterns to help you determine a trend, that is likely to persist. After prices trend in a specific direction, prices will pause before refreshing higher. This is considered a continuation pattern and differs from a pattern that would signal a reversal.

# The three-line strike pattern is considered a continuation pattern".

The above quote can be found here

https://www.warriortrading.com/three-line-strike/

Skate.

Hi @Skate,

The problem is that "warrior trading" describes one of the patterns and then uses the opposite pattern as an example.

Cheers Rob

Skate · 9 July 2022

DaveTrade said:
View attachment 143905

I’m unsure
Was my explanation & reasoning for the terminology that I used acceptable?

@DaveTrade i also referenced Thomas (from the same website) where he was correcting his terminology of continuation verses reversal.

To quote Thomas Bulkowski
The Bearish Three-Line Strike Candle Pattern as a "bearish continuation" pattern, but testing shows that it acts as a “bullish reversal pattern”.

Maybe it would be helpful
If you could explain my error so others aren’t confused.

Skate.

Skate · 9 July 2022

rnr said:
Hi @Skate,

The problem is that "warrior trading" describes one of the patterns and then uses the opposite pattern as an example.

Cheers Rob

Hi Rob

I referenced “Warrior Trading” because they had used similar terminology as I did in my series of posts today. I have tried to explain what I believe to be the terminology as I understand it. In my defence I was going from memory.

Skate.

DaveTrade · 9 July 2022

Skate said:
I’m unsure
Was my explanation & reasoning for the terminology that I used acceptable?

@DaveTrade i also referenced Thomas (from the same website) where he was correcting his terminology of continuation verses reversal.

To quote Thomas Bulkowski
The Bearish Three-Line Strike Candle Pattern as a "bearish continuation" pattern, but testing shows that it acts as a “bullish reversal pattern”.

Maybe it would be helpful
If you could explain my error so others aren’t confused.

Skate.

I'm just going on the picture showing how it works and the statement that it was 84% successful as a reversal pattern, but the way it is talked about in the text is really confusing.

frugal.rock · 9 July 2022

The market's behave like horses.

The "Retired Crazy Horse Strategy"
treats the markets like a horse... Sometimes that horse don't wanna play ball, sometimes it lets you off easy and other times it bucks you off, bronco style.
A trot is easier to control than a gallop...

To watch the link, put a h in front of the ttps://

ttps://youtu.be/L3dC3Z8pf5U

Not so tired but retired nonetheless...

Skate · 11 July 2022

Trading is frustrating (musings while waiting for the markets to open)
Until a few weeks ago, I never had the desire to read Twitter feeds as "quick quips" didn't really make much sense to me & they still don't. I also don't get the game of Golf. Hit a ball, look for it & hit it again. Even on TV, why do they have to show a replay (in slow motion BTW) of a ball dribbling into a hole, nope, I just don't get it. It's also been said, Golf is a game that you can never conquer. So, there are similarities between Golf & Trading.

Losers quit when they fail. Winners fail until they succeed
Always striving to do better is personally frustrating. My progress over the years is moving at a snail's pace. I'm a believer, that good is not good enough when better is expected. Also, being a perfectionist is unhelpful in this game of trading. I've found perseverance to be the only key to success.

Di on Twitter: "Losers quit when they fail. Winners fail until they succeed. New week, New chapter, happy Monday to all? #ASX Edges UP? https://t.co/XnUuG6FLmO" / Twitter

Skate.

qldfrog · 11 July 2022

Skate said:
Also, being a perfectionist is unhelpful in this game of trading

so true, and really going against what i initially thought;
Stick to a plan , a system as simple as you can do..the more layers not the better

Skate · 11 July 2022

qldfrog said:
so true, and really going against what i initially thought;
Stick to a plan , a system as simple as you can do..the more layers not the better

I'm planning to trade "The Lipstick Strategy"
A 20-week breakout system is such a simple idea but lends itself to many false signals. Qualifying those signals made great strides in having this strategy perform. After deciding to invest a few bucks, I've set aside time to improve, & enhance the concept even more. @Newt recently remarked, "the market finds that one little vulnerability, you think won't happen" that got me thinking.

As "The Lipstick Strategy" is a direct spinoff of "The Chartist" Weekend Trend Trader (WTT)
I've made it a mission to find those vulnerabilities first hand & put in place protections against them. The basic idea is sound but with every strategy, it can be improved to some degree. I'm sure we all have a momentum filter in place that measures short-term momentum. The short-term moment plays a large part in my "StaleStop" exit as the first sniff of a change in momentum it's a sign for me to exit.

Long-term Momentum
The "Lipstick on a Pig" strategy a (WTT) spinoff lacks a long-term momentum indicator to go hand in glove with a short-term momentum indicator. If both indicate momentum the signals are deemed to be stronger. Using this additional long-term momentum indicator & playing it off the short-term momentum indicator has allowed for improvements.

Skate.

Skate · 11 July 2022

I've found perseverance to be the only key to success
When my money is going to be on the line, I prefer the odds to be stacked in my favour. The last 6-months haven't been kind & it's the perfect example to make "displaying the results" using a long-term momentum indicator.

"Skate's Lipstick on a Pig Momentum Strategy"
Backtest period is very short (only 6 months) from "1st January to today" as an example. Unfortunately, there is no way around the issue of "giving back" a chunk of open profits trading this style of system.

Restraining from trading when there is no positive momentum
Extended periods of doing nothing, just might be the secret to the success of trading this strategy.

Skate.

Joe90 · 11 July 2022

Skate said:
Trading is frustrating (musings while waiting for the markets to open)
Until a few weeks ago, I never had the desire to read Twitter feeds as "quick quips" didn't really make much sense to me & they still don't. I also don't get the game of Golf. Hit a ball, look for it & hit it again. Even on TV, why do they have to show a replay (in slow motion BTW) of a ball dribbling into a hole, nope, I just don't get it. It's also been said, Golf is a game that you can never conquer. So, there are similarities between Golf & Trading.

Losers quit when they fail. Winners fail until they succeed
Always striving to do better is personally frustrating. My progress over the years is moving at a snail's pace. I'm a believer, that good is not good enough when better is expected. Also, being a perfectionist is unhelpful in this game of trading. I've found perseverance to be the only key to success.

There is golf (the game that most weekend hackers play), then there is this other game...

Sir Burr · 13 July 2022

soren_lorensen said:
nick doesn't give much away

....but likes to show his cherries

Dump it Here

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