Quote from MACD:
Jack,
Is this "matrix" some software that you developed or is it an off the shelf program? In timing of patterns and swings we use something similar to measure "cycles". For most traders that are new to patterns this would slow down their "learning curve" and perhaps complicate what we see as a simple process. Not sure I am really addressing what you are doing but sounds interesting. We time "pace" by the number of bars in a swing but this too causes unnecessary confusion at the beginning of someone that is approaching pattern recognition. It is very important for a trader to keep things extremely simple at the onset to avoid confusion and frustration.
I trade 2 types of patterns: Type 1 may be called the classical patterns which include triangles, head and shoulders, etc.
The second group of patterns are in my opinion the BEST ones to trade as they appear often on all time frames and are "High Probability Trades." There are 12 patterns in this group. All are clear with good rules that state there perameters. It becomes quite simple for a trader to recognize the pattern -- measure the risk and predict the entry and exit -- stops and targets are also readily determined. I hope that "al c." who started this thread is going to show these patterns and give examples which will clarify his pattern trading style. He has also suggested above that he would post Real Time Calls showing his selections. This would help greatly to make the point that Patterns do really work.
Good Luck, Jack, with your approach and I would love to hear more about it. Sounds like it has some relationship to point and figure systems but can't really understand what you are doing. Perhaps you would not mind posting a chart or screen shot of your trading setup.
Thanks to you in advance,
MACD
Thanks for your comments. I will try to get an attachment for You. The computer I am posting from didn't have what you want on it.
I think I could describe the primary value that it has in the meantime until I locate a floppy or file.
There are subsets of patterns that relate to different paces. Paces are different for me as they primarily relate money velocity and volatility.
What seems to happen is that all paces have sequences of patterns that lead to money making oppotunities. The most common opportunity is the BO (Breakout) of either volume or price or both.
The principle that is so dominant (and trulymost helpful) is that the migration of the operating point of the market is smooth. There is no jumping around.
To trace these paths also leads to different cells where the BO occurs. I have three BO locations.
Today on ES you get to see at a slow pace a four step migration.
The cell pattern names we are travelling are Congestion; Convergence, and Centering. The Centering will proceed to the adjacent BO cell.
I know to trade against whipsaw in congestion and the fractal level (these are listed to name the rows of the matrix) dictates the cycle frquency of the "slalom" I do opposite of those getting whipsawed. as convergence pattern comes into play I have to sideline when the timing gets to be a "noise" function.
If the centering becomes a FTP instead of symmetric or FBP, I have guidance for bracketing and regard for failure to BO.
As you say beginners cannot handle this stuff because of the rate of learning required etc. Often not undestanding is okay. But just being knowledgeable about stuff on the horizon helps.
I can definitely suggest to you that it is screamingly helpful to know what is not possible at any given time is extremely important. The fact that every cell location has a limited number of adjacent cells and that they are in to sets (one or two dimension changes required to enter), really puts you in a place of increased confidence for anticpatory purposes.
I have just the beginnings of a journal going, I will try to amplify on this topic in the future.
strangely, if a peson is looking for an excape hatch to get the heck out of the marcro analysis mire statistics creates, this is a very fertile place to go to.
