Chart patterns of today vs yesteryear...
- Thread starter lilduckling
- Start date
my opinion is that chart patterns are here to stay and will not go away because they will always reflect human behaviour in the markets ...
... the devil is in the timeframes ...
... computers in the hands of all traders, big and small, allow everyone to trade in each their favourite different timeframes yet without disallowing them to harbour profit expectations in timeframes so often out of line with their own chart-reading timeframes that they start believing big brother is always trying to do them in ...
... i've been guilty of that myself except that instead of believing in big brother's conspiracy, i kept asking myself why i kept doing myself in
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suspend all opinions and beliefs;
just trade the windsock with loss/profit expectations in the same chartreading timeframe
Chart patterns is just another trading method suffering from hindsight. A very important element of a successful trading strategy based on chart patterns is "confirmation". By the time a chart pattern is confirmed though often but not always, most of the initial momentum has dried up and one is left fighting volatility.
Then, there is often some "cheating" involved in chart pattern analysis. When a chart pattern like a double bottom fails, it is labeled as a "continuation pattern".
Subjectivity is the enemy. I prefer SMA crossovers because they are objective. When a method involves subjective analysis, fear & greed become part of any final conclusions derived from it.
Ron
All of which is irrelevant to the original exchange. I read the book shortly after it was first published. So what? Whatever hypotheses one formulates or conclusions one draws depend on how one defines the "pattern" in the first place. Therefore, Bulkowski's figures are entirely dependent on his definitions.
Of course, if you're interested only in arguing and/or providing aphorisms, I may as well give it up right here.
LC
...responding to the first posting, I agree:
with all the information which is today available to all market participants, perhaps the item "patterns" have to be defined in another new way, to profit of it in a trading system.
In my opinion the traditional western and eastern (candlestick patterns) formations have the same problems as traditional TA indicators and oszillators: the (re)action of the trading systems come to often to late.
So i think about short-terms patterns in an non-visible approach, because only few (1-2, max 3 EOD OHLC) data is used to find such a pattern construct, which cannot be seen (visible) on a chart, but be calculated in a kind of a short-term, accelerated pattern signal indicator in your system etc...
I'm playing around with this "kiss" method and it seems that this brings better results of my systems than the traditional TA methods.
bye,
zentrader
www.zentrader.de
with all the information which is today available to all market participants, perhaps the item "patterns" have to be defined in another new way, to profit of it in a trading system.
In my opinion the traditional western and eastern (candlestick patterns) formations have the same problems as traditional TA indicators and oszillators: the (re)action of the trading systems come to often to late.
So i think about short-terms patterns in an non-visible approach, because only few (1-2, max 3 EOD OHLC) data is used to find such a pattern construct, which cannot be seen (visible) on a chart, but be calculated in a kind of a short-term, accelerated pattern signal indicator in your system etc...
I'm playing around with this "kiss" method and it seems that this brings better results of my systems than the traditional TA methods.
bye,
zentrader
www.zentrader.de
I think we can debate about the effectiveness of chart patterns until we turn blue in face.
I think we can all agree though that 1 very simple pattern, not even really a pattern, is useful to watch...........the deadly wedge pattern. Trade inside and watch your equity draw down, except for maybe the most nimble scalper at heart.
The wedge is the one pattern I watch for most because I can't beat it, atleast not until the confirmed breakout.
Now with a wedge forming, some see a triangle of sorts or a flag or this or that......,but I just keep it basic and protect against wedges.
I think we can all agree though that 1 very simple pattern, not even really a pattern, is useful to watch...........the deadly wedge pattern. Trade inside and watch your equity draw down, except for maybe the most nimble scalper at heart.
The wedge is the one pattern I watch for most because I can't beat it, atleast not until the confirmed breakout.
Now with a wedge forming, some see a triangle of sorts or a flag or this or that......,but I just keep it basic and protect against wedges.
thought provoking responses to a detail that is defined by the beholder.
I think too that one of the biggest flaws to patterns is the constant weaving of time frames. I.E. a bullish pattern "failing" because the next higher time frame was bearish. Problem with this is that time frames are indefinite.... and you are left with the same dilemma of interpretation of time to "fit" a pattern.
I think too that one of the biggest flaws to patterns is the constant weaving of time frames. I.E. a bullish pattern "failing" because the next higher time frame was bearish. Problem with this is that time frames are indefinite.... and you are left with the same dilemma of interpretation of time to "fit" a pattern.