Pattern Recognition -- Any Good?
- Thread starter MACD
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I don't really consider ADR a pattern. You don't really need a chart other than possibly to refine your entries (and exits).
A person can view something as a "pattern" without a chart...a pattern in data as an example. A more specific example out of several...a pattern in the order flow, market depth, DOM.
Another example, there's social algorithms being used by trading firms to look for "patterns" in tweet although I do understand this thread is about "chart analysis".
wrbtrader
Another example, there's social algorithms being used by trading firms to look for "patterns" in tweet although I do understand this thread is about "chart analysis".
wrbtrader
Exactly. Failures are often more powerful than the original expected scenario.
Very interesting!
I've heard of this guy (Bukowski) but tend to shy away from "T/A" books because they have uniformly been full of crap. Bukowski's looks perhaps better than that.
Regardless, a long wick is a rather strong indication that the price level was unsustainable into the near future -- it's rare that a price hit with a long wick will be hit again anytime soon. And *that* insight implies that a reversal is better-than-50|50 to be expected. ALL the other so-called "patterns" pale in reliability to this simplist reflection: stay away from long wicks.
As well, if you're tuning a chart time-frame to a particular market (to find those frames the majority of market participants are using) -- whether 1 minute, 5 minutes, 15, 60, 24hours.... -- when the longs wicks appear and precede reversals, *that* is a good time-frame to choose.
I think what goes in hand in hand with that is the inevitable uncertainty in trading. No matter what your system, nothing is 100%. That's where most traders fail. Instead admitting defeat, they ride a small loser into a big loser, wiping out any number of profitable trades.
First guy I traded with used nothing but a watch list of active stocks and MACD. He made money MOST of the time. But he was also bull headed. One week he kept shorting YAYOO, and ended up losing around $80,000 cause he had to be right.
If you've read Linda R. or Larry C, they talk about how they only had a handful of really good trades in month. Most of the time, it's waiting and controlling the risk by taking small losses when you are wrong.
Well said. Sometimes it's hard to differentiate between conviction and stubbornness. I've learned to check my ego at the door, and it was probably the highest hurdle to cross. Pattern recognition merely gives me an indication that a move may be underway, at which point I set my risk parameters and enter the trade.