Are patterns legit?

[Cellphones2]

If patterns were legit, why hasn't someone developed a program to insert the pattern, then it searches all stocks, and alerts you whenever a stock is about to hit that pattern?

Sorry new to trading. Have money to invest. Please help

 

[trdes]

This is no special advice, I think its what most people here would tell you. Make sure you do a lot of research and are prepared prior to putting any money on the line.

Also, investing is not the same as trading. If you're looking for patterns that's likely more akin to trading, which is not easy at all investing is more akin to macro events, companies financials and etc.

If someone has a program like that and is automated, they aren't likely going to share it publicly on a forum. It could potentially erode there advantage over time, if enough people trade that pattern. How long would it take is debatable, but would definitely eventually happen given enough time and spreading of the information.

 

[Cellphones2]

This is no special advice, I think its what most people here would tell you. Make sure you do a lot of research and are prepared prior to putting any money on the line.

Also, investing is not the same as trading. If you're looking for patterns that's likely more akin to trading, which is not easy at all investing is more akin to macro events, companies financials and etc.

If someone has a program like that and is automated, they aren't likely going to share it publicly on a forum. It could potentially erode there advantage over time, if enough people trade that pattern. How long would it take is debatable, but would definitely eventually happen given enough time and spreading of the information.

I mean, i know enough about software..

it won't be hard to create a software like that...

 

[W.J. Feathermaker III]

If patterns were legit, why hasn't someone developed a program to insert the pattern, then it searches all stocks, and alerts you whenever a stock is about to hit that pattern?

Sorry new to trading. Have money to invest. Please help

There have been scanners that do/did exactly that, but it's been many years since I've even looked at that sort of thing. The "pre-algo" days with cleaner PA probably showed better results for many of the sort of patterns that you are probably familiar with. I notice that the more popular patterns nowadays are Gartley's, Bat's, etc, etc...a ton of public charts that use these patterns (Larry Pesavento wrote about most of them 20 years ago).

 

[trdes]

I mean, i know enough about software..

it won't be hard to create a software like that...

Yes, I agree, at least I imagine it's not overly complicated for someone who knows about coding and software to make the program, but that isn't the hard part, the hard part is you have to be able to effectively parse the data from the chaos of what appears to be random to others and "chop" and be able to see the actual pattern and ideally additionally be able to identify perimeters that can help you eliminate some of the periods where the pattern fails or less effective.


If you can also do that, than you'll likely be rich in short order, but this is the goal of many of the best minds, so not exactly easy.

 

[tommcginnis]

If patterns were legit, why hasn't someone developed a program to insert the pattern, then it searches all stocks, and alerts you whenever a stock is about to hit that pattern?

Sorry new to trading. Have money to invest. Please help

"Patterns" are, in fact, a fiction -- there is nothing special about them -- 50day SMAs do not "bounce off" 200day SMAs, etc etc. BUT, there is also the very definite, very empirical, rudely robust idea of herd behavior, or more mathematically,
https://en.wikipedia.org/wiki/Quorum_sensing
and with this, when enough people chant the myth, their very chanting MAKES it true.

No, there is no such thing as a Cup&Saucer Pattern, whereby ANY economic phenomenon you care to name, will drive buyers to buy for more or less, or
impel sellers to sell for less or for more.... No. BUT!! If you see some yutz prattling on about THE COMING CUP&SAUCER IN [name_your_favorite_commodity] -- well, who knows what will happen!?!

If it goes one way, they'll say, "See?? A confirming pattern!! We HAD a cup&saucer!"
and if it goes the other way, they'll say, "Oh! A cautionary tale! Glad you were tuned into this show to see it happen!"

But predictive POWER?!?!? Rarely.
1) have candlestick periods that, LIKE THE ORIGINALS 4 CENTURIES AGO, actually meant something. (E.g, "overnight" -- where a break between candles had meaning.)
2) this is different among various tradables, but look for market turns with long wicks -- it means the market couldn't hold the price to that extreme, and it turned. There can be long wicks in the middle of a trend, but try different time periods for a single underlying, and you find one with the major turns holding big wicks -- that's a good one, with candlesticks that would bare some ROBUST OBSERVATIONS over time.

blah blah, blah-blah-blah......
(It takes about 5 minutes of gazing to tell whether a technical graph passes the Coin Flip Test of being right at least half of the time. I'd go with 80% or better, before I put money on it.)

 

[trdes]

"Patterns" are, in fact, a fiction -- there is nothing special about them -- 50day SMAs do not "bounce off" 200day SMAs, etc etc. BUT, there is also the very definite, very empirical, rudely robust idea of herd behavior, or more mathematically,
https://en.wikipedia.org/wiki/Quorum_sensing
and with this, when enough people chant the myth, their very chanting MAKES it true.

No, there is no such thing as a Cup&Saucer Pattern, whereby ANY economic phenomenon you care to name, will drive buys to buy for more or less, impel sellers to sell for less or for more.... No. BUT!! If you see some yutz prattling on about THE COMING CUP&SAUCER IN [name_your_favorite_commodity] -- well, who knows what will happen!?!

If it goes one way, they'll say, "See?? A confirming pattern!! We HAD a cup&saucer!"
and if it goes the other way, they'll say, "Oh! A cautionary tale! Glad you were tuned into this show to see it happen!"

But predictive POWER?!?!? Rarely.
1) have candlestick periods that, LIKE THE ORIGINALS 4 CENTURIES AGO, actually meant something. (E.g, "overnight" -- where a break between candles had meaning.)
2) this is different among various tradables, but look for market turns with long wicks -- it means the market couldn't hold the price to that extreme, and it turned. There can be long wicks in the middle of a trend, but when try different time periods for a single underlying, and you find one with the major turns holding big wicks -- that's a good one, with candlesticks that would bare some ROBUST OBSERVATIONS over time.

blah blah, blah-blah-blah......
(It takes about 5 minutes of gazing to tell whether a technical graph passes the Coin Flip Test of being right at least half of the time. I'd go with 80% or better, before I put money on it.)

Oh, looks like I got confused. I didn't realize he was speaking of Candle Patterns. I thought he was speaking of market patterns in a different nature.

 

[kent]

IMHO Whatever be the patterns, or candlestick formation, all are the result of the price behavior which is result of the individual trader or institutional trader's belief or reasoning a particular instrument will go up or down. It is very hard to predict human behavior so is the instrument's price action. Best thing would be an algorithm which can optimize trading based on the pattern related signals. I would guess it is not impossible but it requires lots of study and good computing power to code that.

 

[galvinlee888]

If patterns were legit, why hasn't someone developed a program to insert the pattern, then it searches all stocks, and alerts you whenever a stock is about to hit that pattern?

Sorry new to trading. Have money to invest. Please help

You already have the right answer, why still ask?

 

[southall]

Trend following patterns work best when the market is trending.

Reversal patterns work best when the market is choppy.

Patterns are just an entry heuristics, a valid reason to take a speculative position when seen, if the market follows through and validates the pattern you let your profits run. Otherwise take a small loss.

I have found that patterns that occur very often have lower profit expectation than patterns that occur rarely.