Why I won't trade patterns

[steve46]

Quote from traderNik:

Steve, I have to say... it's the kinder gentler steve46 we are seeing around here these days

Thanks Nik

Certainly I am a "work in progress" as I think we all are.

Regarding your comment that after the third stop out one might feel as if the fourth would be the turnaround trade....Remember that each trade is an individual event. That string could go on, and on....for anyone interested I suggest googling the subject "gambler's fallacy"...

steve

 

[cd23]

Quote from ProfitTakgFool:

CD23, please do explain. Who doesn't understand what and why is the thread so sad?

The topic is "Why I do not trade patterns"

I certainly understand that you are not welcoming any personal trading input either. That is input which will affect your trading and beliefs about how you trade. Very cool.

You put in the original post a mix of personal beliefs that include a few percentages that you feel apply to why you do not trade patterns.

In trading, there are many many successful methods. This is simply fact. And it is true the trading is one of the places where a person cannot cheat and win.

In the learning process, everything that a person runs across becomes part and parcel of his mind. The memory, derived, majorly, from sensory input, is always growing. With all of this comes a lot of information and experience which winds up permanently fixed in the mind. If this stuff becomes a first recourse for a person when he searches within, it can be very bad news if the stuff does not contribute to that person's efforts.

I feel what I am saying is sane and rational and founded on strong principles.

For any subject, it is very important to deal with reality. Patterns are a reality. So is the science of statistics and the science of probabilities. Applying statistics and probability to patterns is an excellent idea. The literature is repleat with the full range of applications. I judge that this thread is a poor example and it is important to not consider what has been proffered heretofore as something that can be added to the mind and, as a consequence, become a first recourse as a resource. This is a negative judgement on my part and I feel I am being responsible by putting my brief comment into the space as a caution to those who may not be familiar with patterns, statistics and probability.

I agree that the OP's experience can only lead to the conclusion he presents. It is a very very good idea for him to hold the belief that he cannot make money or use patterns in any way, especially under circumstances where descretion is involved. The cause and effect is evident to anyone who is pragmatically knowledgable about patterns, statistics and probability.

Learning failure is a tough situation. Trading is one place where anyone can learn a great deal about himself. Trading is also a place where the traader cannot get away with anything for any appreciable length of time. The mental first recourses a purposefully learning trader acquires will always serve him well. They ultimately comprise either a resourse that makes him an expert or makes him leave the playing field forever. Each purposeful learner is, at any time, heading to higher ground or heading out of the door. Any learning that is done by induction ultimately results in heading out the door.

Only critical thinking leads to success. Building piles of evidence leads a person out of the door.

 

[twofacedjoker]

Thanks for your opinion(s) cd23.

 

[FanOfFridays]

Quote from steve46:

Regarding your comment that after the third stop out one might feel as if the fourth would be the turnaround trade....Remember that each trade is an individual event. That string could go on, and on....for anyone interested I suggest googling the subject "gambler's fallacy"...

Agreed, it is the illusion that the next flip of the coin has to be heads if the past 50 flips have all been tails.

This is why I characterized this method as one that would require absolutely iron discipline.

We've all looked for the indicator that tells us when a market is trending (at least those of us who have tried to develop systems have). There are some that work all right. It seems to me that this type of method would be a candidate for automation, so that the discretionary component could be taken out of it and the system could shut down in trending markets. PTF says that his is a mix of codification and discretion. Again, that's the part that I am very interested in - the codification part.

 

[Trayo]

Quote from cd23:

I judge that this thread is a poor example and it is important to not consider what has been proffered heretofore as something that can be added to the mind and, as a consequence, become a first recourse as a resource. This is a negative judgement on my part and I feel I am being responsible by putting my brief comment into the space as a caution to those who may not be familiar with patterns, statistics and probability.

cd23,
Not sure, but I get the feeling that you have a "beleif of first recourse" that precludes judgement and discretion as a possible primary feature of a successful trader.

If so, then ,maybe that beleif should be re-evaluated if someone is presenting evidence to the contrary.

Lets say PTF uses a trading "system" that is only marginable profitable, or even somewhat unprofitable, over the long run. But he manages to make $ because he has somehow developed the ability to just pass on some of the loosing trades.

That would be quite an edge...

Thanks,
Trayo

 

[cd23]

Quote from Trayo:

Quote from cd23:

I judge that this thread is a poor example and it is important to not consider what has been proffered heretofore as something that can be added to the mind and, as a consequence, become a first recourse as a resource. This is a negative judgement on my part and I feel I am being responsible by putting my brief comment into the space as a caution to those who may not be familiar with patterns, statistics and probability.

cd23,
Not sure, but I get the feeling that you have a "beleif of first recourse" that precludes judgement and discretion as a possible primary feature of a successful trader.

Yes I believe that everyone uses their minds to trade. I believe that a person always summons up what he believes to be the best solution for a given situation. I call that the first recourse. I believe that this first recourse stands in front of every other alternative and it is being used because that person judges it to be best and it is an act of descretion, particularly if and when he has "choice". If he does, he goes to a place of choice.

If so, then ,maybe that beleif should be re-evaluated if someone is presenting evidence to the contrary.

As is often stated trading is a "work in process" for most people. The belief that there is always a "first recourse" in the mind for a person who is activitly trading is a belief that I have gleened over many years (I have been trading for 50 years, for example). I did the gleening from the research of others. I believe that people make their exits from trading largely as a consequence of not being able to put new knowledge in place. Obviously no one removes (deletes) any knowledge from the mind. A person does not just replace one thing with another. What people do do , however, is place new knowledge "in front" of lesser useful knowledge. They actually biuld pathways to this new knowledge they wish to use by making the pathway lead to this new knowledge as the presently used "first recourse".

You can watch this going on in ET all of the time. for instance one of the most popular persons doing this all of the time is increasenow. All he does is ask questions and then he finds out for himself that the last answers are the "best". these best answers become his first recourse.

For most people the first recourse is learned failure. Learned failure becomes a quite broad bulwark or front line of first recourses. As time passes the mind keeps filling with such a sprectrum that it is no longer possible for a person to get enough new knowledge "in front of" all that is there in the mind. A new first recourse is not possible to succeed in getting set up.

I only refer to successful learning as "purposeful" learning. Experimenting, unfortunately, often leads to learning repeated failure. That is the case with the OP as he applies patterns, statistics and probability while "experiencing" the markets.

Here is a new comment on patterns. See what it would take to get the comment to be a first recourse in a trader's mind with respect to the pattern called a pennant.

Pennants come to ends. A pennant ends because there is a breakout of the pennant pattern. See if this can be interposed as a first recourse. If it can, then the solution to this belief can now be interposed as well.

Because of these factors, always use bracket entries to enter on the pennant breakout. The technique of using a specific entry is not difficult to use. I feel that a person discovering patterns can make use of solutions for trading patterns. I also feel that it is possible to most easily use one solution for a wide variety of patterns.

How does a person put a "new first recourse" in front of the currently used non solution first recourse. The OP's first recourse, he taught us. It is: DO NOT TRADE PATTERNS. You may be stuck (a negative judgement I am presenting to you) in the same place the OP is. Both of you get to not make any money when patterns exist or shortly after patterns end.

My views on patterns are well known. And I am posting in a thread where not trading patterns is being taught and substantiated in some very sad ways. I do not believe that not trading patterns is a very good first recourse. The OP has asked that everyone refrain from giving him advice or differing knowledge on his trading approach. here I stepped over the line to make all patterns profitable by letting the market take the trader into a successful trade no matter how the pattern ends. It is just TA.

Lets say PTF uses a trading "system" that is only marginable profitable, or even somewhat unprofitable, over the long run. But he manages to make $ because he has somehow developed the ability to just pass on some of the loosing trades.

I do not have the facts on the OP's equity curve. It must be comprised of profit and loss segments. Eliminating some of the loss segments is not too important compared to learning to trade. You comment is correct as far as it goes. For people reading threads to learn to trade, there are always peole who comment on cutting losses. Not trading is certainly a way of cutting losses.

That would be quite an edge...

There is no way that what you suggest puts any money in a person's account. I am not an edge trader, since I do not feel that edges should be first recourses in trading. Not trading patterns is not an edge. I stay in the market at all times because I have a broad first recourse that says: money can only be made when price is changing and a person has to be in the market to make money. Thus I am in the market all of the time and as price changes I am making money. See crayola 101 and crayola 102.

Thanks,
Trayo

 

[Trayo]

"Not trading patterns is not an edge. "

I agree, that is no edge. But that is not what I was referring to.

The ability to use discretion to pass, or stand aside, on entries that look like losers would indeed be a remarkable edge .

 

[forex-forex]

I just started trading the YM mini dow intraday and am experimenting with this:

Since you can never - or rarely - pick the top or bottom then the "trend is your friend". If the trend is up BUY with a tight trailing stop, if the trend is down SELL with a tight trailing stop. I would think this is very common and most traders have tried this method, but setting the trailing stop would be the tricky part. So far I have manually closed all positions and am thinking of maybe a 15 or 20 point trailing stop.

 

[Joab]

I think the main problem here is that most people don't know WHAT they are trading.

The index's are primarily used as hedges not profit generators.

Second, the index's are a collection of mass psychology and therefor far more unspecific.

These 2 reasons alone are sufficient enough for chart patterns to require far more filtering to be useful on them.

I always laugh when people that tell me they only trade 2-3 futs contracts rather then 4000 stocks.

IF trading is about finding the best opportunity/edge then the probabilities of finding "the best" edge will naturally be with the most choice.

In closing, very few widely accepted edges will work on Index futures because of WHAT they are.



steve46 - it's nice to see you contributing from a positive perspective.

 

[ProfitTakgFool]

This is exactly what I don't do. If you look for a trend you are a follower (no disrespect here), not a leader. If you really want to fire up your trading account you have to be <b>ahead</b> of the curve, not <b>behind</b> it. I will post an example of this in a little while. You can pick a top and a bottom if you know how and you manage risk wisely. "The trend is your friend" means you follow others in the hope that even more "others" will buy after you. This is NOT a good strategy. You need to buy BEFORE others do because this almost assures there will be buyers behind you.

Quote from forex-forex:

I just started trading the YM mini dow intraday and am experimenting with this:

Since you can never - or rarely - pick the top or bottom then the "trend is your friend". If the trend is up BUY with a tight trailing stop, if the trend is down SELL with a tight trailing stop. I would think this is very common and most traders have tried this method, but setting the trailing stop would be the tricky part. So far I have manually closed all positions and am thinking of maybe a 15 or 20 point trailing stop.