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In love with patterns

  • #21
  • Aug 15, 2009 12:51pm Aug 15, 2009 12:51pm
Quoting spekitox
.............."
Problem: patterns come and patterns go, like habits of the market. I've not seen bullish G-s recently.
Dude, nice work, very nice. I like the magic...

Please let us know next time you see another elusive G factor forming on screen.
  • #22
  • Aug 17, 2009 2:27pm Aug 17, 2009 2:27pm
Here is a pattern scretched out early this morning in the EUR/USD.

I wanted to catch the pattern that would mark the bottom of this 18 hour decline in the EUR/USD.

Right now it is looking very good.
Attached Image(s) (click to enlarge)
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  • #23
  • Aug 20, 2009 8:24am Aug 20, 2009 8:24am
Good to see, others too see some patterns in this alleged "random walk" called price action.

Here is one that I seen couple of times intraday, M15 and upwards. Actually played this recent one on the short side with a small position.

Has no name (yet)...

Context: uptrend / rise (1) followed by sideways movement (2) with resistance clearly visible (big wicks under the line). Resistance breaks (3) but price does not skyrocket, instead sits on the line (4). Resistance becomes support, or is it a wonder of random walk?, ha-ha
A low risk short entry near the top of the 2nd range (5). Exact stop level / condition (M15 close above red line?) still in development.

This GBPCHF chart is a very clean one, the others of this kind I saw were noisier.

As I remember these needed a "kick" before they broke. The kick is usually news, as was the case here on GBPCHF. What was in the news, almost irrelevant. It was only necessary for the liquidity.

Be careful, look back many charts and use small positions when trading out of the box patterns. No holy grail or hidden secret here. Only blood, toil tears and sweat.
Attached Image (click to enlarge)
Click to Enlarge Name: chart0819gch1.jpg Size: 60 KB
forget about tomorrow, just steal away into the night
  • #24
  • Aug 20, 2009 9:55am Aug 20, 2009 9:55am
I appreciate your openmindness and creativity to discover new patterns other than those classic ones like head&shoulder or flags! Nice thread.

I wonder if anyone here looks for pattern in tick chart?
  • #25
  • Aug 20, 2009 10:37am Aug 20, 2009 10:37am
Hi 5%er, interesting ... if you spot this kind of PA on different pairs, or different TFs, please save the screenshots. I don't think we can reliably generalize the information on a sole chart to describe a pattern.

Quoting 5%er
Here is a pattern scretched out early this morning in the EUR/USD.

I wanted to catch the pattern that would mark the bottom of this 18 hour decline in the EUR/USD.

Right now it is looking very good.
forget about tomorrow, just steal away into the night
  • #26
  • Aug 20, 2009 10:40am Aug 20, 2009 10:40am
Quoting gbppip
"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't...
My argument is whether the number of samples experimenter has taken are enough for the rat as well. According to gambler's fallacy after a particular number of rounds the house considers the gambler a looser...but the gambler doubles his bet for the next round in anticipation that the probability of him winning this time has increased. He requires more rounds than the house to prove himself. So what if the rat thinks the same way and keeps on going right thinking because of random placing the probability of getting food in right has increased now. I think the probability of mouse going either way is still 1/2.
The only way to get smarter is by playing a smarter opponent.
  • #27
  • Aug 20, 2009 10:41am Aug 20, 2009 10:41am
Sometimes I look at oanda 5sec charts but no tick chart. I use M15 and upwards, sometimes M1 or M5 to see more detail, around important levels. There are some cool low TF traders, check Tony here.

Quoting dreamtrader
I appreciate your openmindness and creativity to discover new patterns other than those classic ones like head&shoulder or flags! Nice thread.

I wonder if anyone here looks for pattern in tick chart?
forget about tomorrow, just steal away into the night
  • #28
  • Aug 20, 2009 10:45am Aug 20, 2009 10:45am
Quoting spekitox
*** Important: Please read post #8 too, will save you and me some time. ***
If chart patterns are not your thing, feel free to browse around other threads, just don't start convincing me that PA is random walk, patterns do not exist etc.
There is no one who does not trade patterns....let it be fundies or technies and there is nothing wrong in trading patterns till you know how to manage your risk (I see your stop loss)..
The only way to get smarter is by playing a smarter opponent.
  • #29
  • Aug 20, 2009 11:36am Aug 20, 2009 11:36am
Quoting dreamtrader
I appreciate your openmindness and creativity to discover new patterns other than those classic ones like head&shoulder or flags! Nice thread.

I wonder if anyone here looks for pattern in tick chart?
patterns are less reliable in tick charts, but trendlines work pretty well. you can only capture really short scalps though. but it works.
  • #30
  • Edited 1:15pm Aug 20, 2009 12:45pm | Edited 1:15pm
Interesting question, whether a statistical property of PA is a "pattern" or not. I think it's not. So if someone's trading a breakout system like "put a buy stop 5 pips above yesterdays high" it can be profitable but imho not a pattern, just statistics. Not that it would be any better or worse than chart patterns, just a different thing.

Edit: if a strat can be traded easily without a chart, like daily breakout systems, it's not patterns I think.

Quoting NewFX
There is no one who does not trade patterns....let it be fundies or technies and there is nothing wrong in trading patterns till you know how to manage your risk (I see your stop loss)..
forget about tomorrow, just steal away into the night
  • #31
  • Aug 20, 2009 1:57pm Aug 20, 2009 1:57pm
Quoting spekitox
Interesting question, whether a statistical property of PA is a "pattern" or not. I think it's not. So if someone's trading a breakout system like "put a buy stop 5 pips above yesterdays high" it can be profitable but imho not a pattern, just statistics. Not that it would be any better or worse than chart patterns, just a different thing.

Edit: if a strat can be traded easily without a chart, like daily breakout systems, it's not patterns I think.
By definition:
Each pattern describes a problem which occurs over and over again in our
environment, and then describes the core of the solution to that problem,
in such a way that you can use this solution a million times over, without
ever doing it the same way twice.

I read "The daily breakout method". In these kind of methods people open their broker panel/charts during London (big market) open and look out for momentum. In whichever way the market flows they go with it. But my point is how do they know this kind of activity exists. Isn't it a pattern in itself that the currency or instruments moves with differentiable momentum on market open or close.

Gbpip mentioned theory proposed by Eugene Fama. His efficient market theory describes markets as efficient machines whose price reflect all information available at that point in time, so the next step is totally random. Still event of breakouts occur so repeatedly that people use them for their benefits. Maybe this is not as symmetric but in some abstract manner it has some considerable probability of completing successfully.
The only way to get smarter is by playing a smarter opponent.
  • #32
  • Aug 23, 2009 8:20am Aug 23, 2009 8:20am
NewFX, thanks for the def. I like them, I really do, I just forget them too soon.

Two samples of the over and under pattern (link to BRV's original description somewhere on the 1st page). Actually GC and EG are correlated these days so this is the same flow of money from different perspectives. I should watch these O&U patterns more closely.
Attached Image(s) (click to enlarge)
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forget about tomorrow, just steal away into the night
  • #33
  • Aug 24, 2009 3:48pm Aug 24, 2009 3:48pm
Nothing real to contribute, just saw an article in science with
a few interesting parallels to chart patterns.
  • #34
  • Aug 26, 2009 12:42pm Aug 26, 2009 12:42pm
Here is a picture of the aniticipated trading pattern in the EUR/USD. This is based on an astrological interpretation.

We will see if this works out.
Attached Image (click to enlarge)
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  • #35
  • Aug 26, 2009 12:57pm Aug 26, 2009 12:57pm
My outlook on pattern trading is this.

If nobody took the pattern trade signal, and every avoided taking the trade (I'm talking 100% of personal traders) then I'm positive the market would not react the same way as it does.

For example (sell order), if 80% (80,000 people, assuming there are only 100,000 of us) of personal traders each took out 1 standard lot at this point, the market would all of a sudden have an additional 8,000,000,000 of available funds, making the price of the currency lower (supply and demand, it's all about supply and demand, the less there is available, the more it's worth, the more there is available, the less it's worth) which in turn finishes the formation of the profitable pattern.

Same example (sell order) is 0% (o people, assuming there are only 100,000 of us) of personal traders took out 1 standard lot at this point, that would give the market 0 extra dollars to work with, when considering the market is heavily influenced by availability of currency, the market would go neither up nor down.

My point on patterns is this, we will never truly know if it's the mass amounts of personal traders that make a pattern trade possible, or if it is in fact the big time market makers that finalize the patterns movements. We will never know unless all of us stop trading for an amount of time to verify this.
  • #36
  • Aug 26, 2009 3:29pm Aug 26, 2009 3:29pm
ha-pattern, thanks for the link. A little bit of reading can't do any harm. Now I know Einstein was truly a workaholic. He actually worked himself to death. Jesus, I knew there was something bad about physics. I like biology a lot more... you know, the birds and the bees...

5%er, I'm not sure we're on the same bus. What I'm trying here is to collect forex charts with visual similarities. I'm not anticipating continuation based on anything else but past charts. If you have some charts that look similar in some way, they are welcome.

Pharoah, a good question if I care why a pattern works or not. In some way yes, it's good to be aware if professionals are around or not. Good points in the VSA thread. But from another viewpoint, it's irrelevant why a pattern works, as long as there is profit in it, right?
forget about tomorrow, just steal away into the night
  • #37
  • Sep 2, 2009 4:20am Sep 2, 2009 4:20am
Been a busy boy leately, but here are a couple of BRV's buckets I spotted recently. EU is almost a year old (hey, we can't scroll the chart forward, but scrolling back is almost as good for learning), and with AU I had the pleasure of playing a short from the red line, took a couple of dozen pips.

I have a couple of charts with false / short lived breakouts, just need some time to think it over...

Happy patternspotting for those interested.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: chart0901aum30.jpg Size: 53 KB
forget about tomorrow, just steal away into the night
  • #38
  • Sep 2, 2009 5:21am Sep 2, 2009 5:21am
Could you kind explain the "bucket trade" mechanism, I had checked BRV's blog video but found it a bit vague to understand.

Thx
  • #39
  • Sep 2, 2009 5:55am Sep 2, 2009 5:55am
The 'bucket' play as I understand it is quite similar to Sam Seiden's method of identifying areas where price has previously displayed imbalances in supply and demand and speculating that there will be clusters of limit orders which will see price continue in the direction of the previous impulsive move from that area. If the theory holds true, then price will encounter these orders at the base of the congestion before price originally broke down.

Perhaps not the best example as price reacted particularly strongly (so far) but it does demonstrate the theory well enough.
Attached Image (click to enlarge)
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  • #40
  • Sep 2, 2009 6:50am Sep 2, 2009 6:50am
Zkf, you may want to find the "No brainer trades" thread here, there's a PDF and also charts attached. I know, there's a lot of info there.

I attached a couple of buckets, they are visual U shapes.
You need to practice a bit, to see "how" price approaches the base so you can play it safely. For example if price marches upwards with big hourly candles, it might no be safe to stand in the way.

edit: buck1.jpg: the 2nd arrow is the bucket itself, the 3rd arrow shows a buying opportunity when price visits the bucket the next time. The 1st arrow is just a confluence, a recent turning point that looks good for the bucket trade.

Here is another one, it hit the base during news:
http://www.forexfactory.com/showpost...&postcount=176

birdt, yes this is very close to Sam Seiden's "selling into supply" concept, but a bucket can have but does not need a flat base (like on the GU m5 chart), we can play spikes as well (like the GU H1 chart). To put it simple: if it's a nice visual shape, it's a bucket, otherwise it's "selling into supply / buying at demand" shown by consolidation areas.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: buck3.jpg Size: 62 KB
Click to Enlarge Name: buck2.gif Size: 26 KB
forget about tomorrow, just steal away into the night
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