Patterns that don't work anymore

It "sometimes" shows a change in momentum; it also "sometimes" does not. It is up to the trader to guess what it is showing at any particular time. I have seen so many charts that were either trending strongly up or down, while MACD was trending strongly in the other direction.

If momentum is what you want to measure, try rate-of-change.
 
Quote from skeptic123:



Jordan,

I truely believe you have a totally distorted view of patterns and indicators, no wonder you did not get an answer you liked.

The purpose of paterns and indicators is in trying to anticipate the future while you seem to be using them to explain the past.

It is totally useless (though accurate) to say that a triangle or flag represents indecision. Of course it does, so what? How does it help? What good does it do? It is just like saying if the price went up there were more buyers then sellers, if the price does not change supply is equal to demand. Absolutely correct but totally useless statements.

The value (or perceived value) of patterns is in predicting that triangles more often than not break out in the direction of the existing trend. They work of fail in context of anticipating the future, it is absolutely meaningless to evaluate them based on how they explain the past and this is what you seem to be doing.
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This quote is a beauty.

No one has yet provided an example of a specific pattern or indicator that does not do what it was designed to do or represent. It has nothing to do with what I like or dislike. Facts are facts.

I am unsure where you are getting your second sentence and your last sentence so that will remain unchallenged.

You agree that triangles and flags represent indecision. Thank you. They represent what they are deemed to represent in other words. So they continue to work. I am not saying that you or anyone else can use them profitably. But they continue to represent what they have always represented.

Btw I use pattern breaks very successfully, if you cannot, that is on you. But I would way rather jump in when a new decision has been made whether or not it is the same as preceded the pattern or different. Either way there is fresh motivation. Check out www.chartpatterns.com for current ideas on how these patterns continue to be used successfully.
 
Quote from ScaleOut:

It "sometimes" shows a change in momentum; it also "sometimes" does not. It is up to the trader to guess what it is showing at any particular time. I have seen so many charts that were either trending strongly up or down, while MACD was trending strongly in the other direction.
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Whoa ScaleOut... when you see that you should be getting ready to pounce on that baby. You seem to be missing one of the best uses of the MACD... divergence. And I don't mean the "D" in MACD. That is a different reference. You have all the materials, I'd go back and look again at divergence and then check out the charts. Btw, if you have any interest in selling that material, I would be happy to discuss it with you.

A trader can make a fine living trading divergence only.
 
Jordan, I'm not missing a thing in respect to MACD. It does not generate profits on a mechanical basis.

U130747 -- Ditto to you.
 
Okay then ScaleOut. Thank you for agreeing that indicators and patterns used mechanically do not make money. Of course that is not the question. I think Bert might use a small tweak to filter out false signals.

I also think you are missing the whole boat with the MACD by suggesting the ROC if I want a momentum indicator. The MACD is a momentum indicator. You are grossly in error if you think that prices continuing in one direction means momentum is continuing unabated. The ROC also demonstrates this phenomenon. And it too reveals divergence.
 
Quote from Jordan:



You agree that triangles and flags represent indecision. Thank you. They represent what they are deemed to represent in other words. So they continue to work. I am not saying that you or anyone else can use them profitably. But they continue to represent what they have always represented.
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Jorgan,

Are you saying that even if nobody can use them profitably they are still working. Excuse me... We are in this business with one objective only - to make a profit. If a pattern/indicator cannot be used to help achieve that objective - it does not work whatever it may represent.

Why would anybody even care what they represent if they cannot be used profitably?
 
U130747 has now resorted to name calling because I don't agree with him. Lots of babies on this board just like him.

I offered a challenge. If it works for you, put up or shut up, but I don't expect you to be forthcoming because:

MACD DOES NOT PRODUCE CONSISTENT PROFITS ON A MECHANICAL BASIS.

It may help the 95% to 98% of losers in this business to "think" they are riding momentum, but they are only fooling themselves.

MACD has been tested over all reasonable parameters. None held up long term.
 
I truly understand what you are saying Skeptic. What good is useless information to our intended goals in trading?

But is consolidation and congestion, other terms for indecision, useless information? I don't think so. Can you just trade a break in that direction and close your eyes and take a profit later? No.

Does that mean that the triangle or flag did not accurately show you a point of indecision? No. It did. The pattern of indecision appeared at a period of indecision.

The NR4/ID/HVR thing by Connors and Raschke is nothing more than another way of defining congestion, ie, indecision. Was it the narowest range of the last 4 days, and an inside day, and in a period of low volatility? Yes. Then the method did it's job. It notified you that this event had occured prior to the next day. Tony Crabel discusses the same concept. So do Alan Farley and Oliver Valez.

Whether or not a trader is able to employ this information for profit is on the trader. But the pattern appeared when it should have. And that is the issue.
 
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