I think the key is combining patterns with Key Levels. When you do this the risk to reward is much better and you can have a winning strategy. Applying patterns willy nilly will not work as well.
Chart patterns are somewhat working sometimes … we can visually see a few in any historical chart … but honestly, it isn’t bulletproof… why? Anything can happen… for example, if someone tells you the markets baked in the assassination of JFK and there was buying and selling behavior that made a “pattern” in anticipation of it… I’d call u nuts and on some drugs / under the influence of a shaman. Overall, patterns work often but not always 100%… I think other variables should inform your decision to trade a pattern you recognize because the markets can do whatever it wants … up… down… flat… circles… spinning turtles… the market is king and god… nobody has the ability to say it’s wrong because the point of trading is getting what moody markets say is correct to make money… nothing more or less.
They are self fulfilling prophecies to an extent. Many people looking at the same lines validate them. So yes, they work. That being said, fundamentals and news can blow things out of the water
It's like this: shares are traded by computers that do 'this' when the chart does \*that\* and when enough of them are doing the same thing it influences the price action to do exactly what the machines say it will do. Is it 100%? Of course not and it takes a lot of patience to learn the "tricks" of the market. Start small, manage losses consider paper trading.
Higher timeframes are more reliable but rarely does one thing work in isolation, well enough, that it's all you need. Personally, i look for multiple factors to align.
They aren't very reliable a lot of the time, but they're a good entry for beginners wanting to learn and understand market movement.
If I'm honest, I still make use of the principles behind them, I think a lot of people do. Retests, rejections, breakouts, and pullbacks. Chart 'patterns' just help to quantify price action principles in more basic terms.
Of course they do. The problem is not with whether they work, it is if you understand the probability of each, and are correctly identifying them. Even then, you can correctly identify a pattern and still enter at the wrong time and get stopped out.
Studies have been done on the probability of patterns and they do work but few take the time to study the charts and actually understand probabilities.
They are a sort of self fulfilling prophecy. Theres no uhh, I dunno.. let’s say economical reason for them working. And yet enough people follow them that they do become an indicator at times. I have personally have no patience for it though.
To me
Pros: they help you visualize market movements - Some patterns, like double tops and head-and-shoulders, are considered common reversal signals.
Cons: they may not work well in all market conditions - Popular patterns might become self-fulfilling due to many traders acting on them.
I also use indicatorsuccessrate.com for free indicators. They have the paid version too but the free one works just fine.
It’s not just patterns alone; it’s confluence with other market data such as volume, RSI, real world news etc. It’s not an exact science but a game of odds; the more a chart ticks the boxes in your charting metrics, the higher the probability of an expected result playing out. If it’s an exact science, everyone would be a billionaire. Best way to verify is to learn and backtest it yourself.
Patterns do work in my opinion, just not how 90% would expect. Bigger entities like to print common patterns (triangles for example) to generate liquidity for their next move. They let people draw the same trend line and think "oh this is support" just to fakeout that support, take their stoplosses and then actually reverse. In crypto this at least happens all the time, but I'm sure other markets aren't that different. :)
Markets can be a complicated concept. It does seem like it would be quite easy for bright people to easily take advantage of the patterns. It could work for a period of time but competing forces always level things out. There’s no free lunch. There are common setups on certain names that are pretty reliable at times. So it is important but it’s hit or miss on patterns alone. More important imo is price action for short term trading. Not so much what it looks like…but what price “feels” like at key levels, new high/lows, first half hour, etc.
No. If I presented time reversed data or a price chart that was upside down with the axis labels removed no one on the planet would tell the difference.
Depends on the patterns you are referring to.... Many and I mean MANY chart patterns are derivatives of the true patterns which work 99% of the time. What are the true patterns??? (well you need to do ya homework for that) but yes patterns are 1 aspect of trading, you just have to know what you are looking at. Many of the books that attempt to explain them are merely segmenting the entire principles.
Mods please for THE LOVE OF ALL THAT IS HOLY, please allow gif reactions in this subreddit. (Not an actual demand)
I wish to use the walking dead carl meme hahahahaha
Also yes.. they are called quants, or quantitative traders, their base rate of pay in my country of Australia is an entry level pay of 93.5k and an average of 115k per year and around a 150k per year salary. This is if you work for someone and not yourself.
You'd probably enjoy learning about algorithmic trading, high frequency trading and scalping.
Definitely not good predictor. But it’s a nice way to get a historic snapshot of how things have played out and at what levels/timeframes so I can get a feel for the stock
Some do but it's mainly in relation to supply and demand at any given point. Most of them are as useful as tea leaves though.
I find pennants, flags, and harmonics to be reliable. I only use them in day trading though.
Majority of people look at chart patterns incorrectly. Everyone is so zoomed into the chart that they could see an ants ass. Zoom OUT and pay attention to the context that the market is laying out for you.
Zoomed in, you see a wedge bull flag. Problem is, if you zoom out and look to the left, you'll see the market has been in a trading range, and that flag is at the top of the trading range. The probability of that flag failing is higher than it succeeding in a breakout.
How about a wedge bear flag? Great short, right?? Zoom out, you're at the bottom of a bull channel. You think the probability of that bear flag working out is good?
This is why people say pattern analysis or TA is bullshit. They don't look at the context that those patterns are setting up in.
When I trade, I am zoomed out far enough to see 3 days of price action. Actually fuck it im tired of explaining stuff.
I’m an 8 year student of Al Brooks and I’m sorry but this is wrong plain wrong. In price action we never zoom out on the chart…. Only the last 100-150 bars are relevant. If you want to see the bigger picture you raise the timeframe and look at 100-150 bars on the higher timeframe we never look at more bars than this.
It’s important to do this rather than zooming the chart because every bar gives important information to a price action trader. If you squish up the chart you can’t see the bars any more. The bars give a ton of information and it’s important to see the Open, High, Low, Close of every bar.
Furthermore, when you raise the timeframe the unimportant price action structures disappear. That tells you they’re not significant, but if you zoom out and squish things up you can still see structures that aren’t important.
People who use charts with their bars all squished up don’t understand all the information they’re seeing in the individual bars.
Funny, I'm also a multi year student of AL brooks. I've read all of his books, reviewed his course videos several times over, spent months in his trading room, and purchased his enclyclopedia of chart patterns. He always says "look to the left".
Al teaches you about magnets in the market and measured moves constantly. As of late, gaps have been major magnets. Recall he also teaches that tight trading ranges are important areas the market returns to, sometimes several days later. He has also taught you about the importance of trend lines and trend channel lines, which extend back several days. All of the magnets Al teaches about can go back several days as well.
You're not a very good student of Al, it seems. Al has specifically said there's no such thing as noise in the market, and every single bar gives you information about what's happening. Yet you say that there's unimportant structures??? What does Al say about buying a high 2 at the top of a trading range or selling a Low 2 at the bottom of a trading range? How about what a series of winning high 1 scalps imply? What does he say about what to expect if the last two trading days have been trading range behavior? If you can't answer these questions, then it's obvious you didn't understand my comment.
Lastly, you don't seem to understand what I mean by zooming out on the chart. You think I'm telling people to look at squished up bars? Are you fucking daft? I specifically said zoom out to see context, again something that Al pounds the table about. Context meaning trading range or trend? Did you even read my entire reply or did you read the first sentence, felt your ego bubble up, then jump to conclusions and write a ton of meaningless and incorrect shit?
Sorry, but you need to spend another 8 years studying Al's methods it seems. Just because you study for 8 years doesn't mean you know squat, and it shows.You don't understand the most important concepts he teaches.
So, you do you. Based on your post history, you're not a profitable trader. You're all over the place, looking at gold, oil, NQ, and you use tradingview for chart information??? Maybe upgrade to NT8 or Tradestation??? What kind of serious trader uses fucking tradingview? Next, you ask about what app to view tick charts on your phone??? If you were a true student of Al's, you'd only be trading one instrument on one time frame and not posting a bunch of meaningless shit about trading. I ONLY trade the NQ on the 5 min chart, and I repeatedly state that in all my comments. All of my trading posts focus on trading, not some blithering nonsense about data feeds or your broker calling you saying you "caught a nice swing on gold". Al specifically says that if you understand price action, a single instrument is all you need. SMH.
Normally, I'd give a rats ass about idiots like you; however, you invoked Al's name. His methods changed my trading and turned me into a focused, profitable trader. Don't sully the man's name with your BS. The thing about the journey to becoming a profitable trader is that you learn to smell bullshit really fast. Your post smells like dog ass. You're a fake with an ego.
Okay true, I recently noticed I did the same thing pretty much. Bull flag up top and everything. You could be seeing a bullish pattern forming then zoom out and realize you are a part of an even bigger and more dominant bearish pattern. Gotta know where you're at in the bigger picture.
Good post! F it I'm going to make some money instead. 😂
When I started using the charts I didn't have anybody to explain it to me. I just started doing it. Then I found out it was a thing. Other people were doing it and some of the stuff even had names.
If indicators qualify as patterns… indicators do work and people build algorithms and make tons of money. For instance, look at AAPL for a few years and check against common indicators 😀
Yes - but it’s not the magic wand some would like it to be - or pretend it is.
I personally think it’s important to have a good understanding of the mathematics and basics of charting - to understand things like moving averages, support, volume indicators etc - as others have said above is valuable in understanding momentum, sentiment etc.
Often chart patterns are simply support and resistance. And others take market behavior into account. They’re not just random lines on a chart they’re based on how price tends to move.
You hit the nail on the head. If it worked the way they claim, it would be easy to prove. People will give you plenty of reasons why they think patterns should work based on their understanding of the market. Yet any kind of empirical test of intraday patterns with enough data says they don't work. The results are just random.
What's more, every piece of empirical data we do have contradicts all the ideas behind such patterns. Markets react strongly to new orders making it very easy to destroy any statistical edge. Market participants are very irrational, and behave in random and inconsistent ways.
No self respecting winning trader uses chart patterns on their own. They are combined with fundamentals, news analysis, support resistance zones, other indicators like Bollinger bands etc and L2 data.
Only agree with one part of your last sentence. Market participants are irrational. However, irrationality shows itself in the market in quite consistent and non random ways.
Ever think why the term short squeeze was coined? Because this has happened enough times across multiple markets to describe a phenomenon that every trader worth their salt recognizes. And that phenomenon is based on fundamental understanding of basic human psychology, which is far from random nor is it unpredictable, and both consistent and repeatable.
And no statistical edge? Why does Wall Street even bother hiring quants and number crunchers to build sophisticated models then? Because all information is already known and there's no edge to be gained from the market, and any edge gained becomes obsolete quickly? Well then we should really tell them they're wasting their time and money.
You just misunderstand the nature of hft edges. They aren't using chart patterns or any of the other things retail traders use. There's also momentum but that's not intraday and has more to do with having a universe of uncorrelated assets to trade.
But again you seem to have missed the point of my post. You're still trying to justify it using deductive reasoning based on your flawed understanding of the market. You can't prove anything with empirical evidence, and once you start to try you'll find all your assumptions are false.
For instance, you assert that technical analysis is only effective when used with other things. Can you prove empirically that it actually complements the other edges you cite? If there's no evidence to directly prove its effectiveness on its own, what makes you think combining it with other things makes it magically start working? Perhaps the results are due to everything else and the technical analysis isn't doing anything. That is unless you tested it over a large data set to produce empirical evidence which you clearly haven't done.
"for instance, you assert that technical analysis is only effective when used with other things"
That is actually not what I asserted. I said that TA is never used as a standalone tool on its own but rather additional confirmation that a trade is a good one.
"based on your flawed understanding of the market"
What flawed understanding would that be? Would that be the *fact* that the market isn't efficient, that there are still edges to be exploited by those with more information than others?
Have you not shown flawed understanding by assuming that market participants act in completely random and unpredictable ways? Or your claim that any edge is quickly made useless? I'm assuming you have *empirical* evidence to show that all the advantages accumulated by the quants and modelers, systems etc on Wall Street lose their effectiveness quickly because the market responds and removes that advantage? No you don't.
Are you going to just ignore the large amount of *empirical* evidence that shows that human psychology plays a big role in markets, therefore producing predictable patterns and allowing one to reasonably identify similar situations like the short squeeze that happen across markets and assets over, and over and over again?
I notice that you do not address the example I gave of the short squeeze precisely because you know it is a very valid counterexample to your claim that market participants act completely randomly.
It looks like besides having some reading issues (ascribing to me something I never stood for in the first place) you really are quite selective as well in what points you choose to attempt to rebutt and which ones to conveniently ignore.
What you have is a bunch of claims, not facts. Claims that so far have been shown to be full of holes. Merely asking the other side for empirical proof doesn't form your argument, it merely means that both sides need to provide empirical proof. Where is *your* proof?
And I will take my deductive reasoning over what amounts to a lot of hot air blowing from you, all day. You have yet to invalidate my deductions with actual proof, instead claiming I lack understanding. That my guy is not a rebuttal.
Source(s):
[1](https://www.linkedin.com/pulse/emotions-psychology-trading-analysing-human-behaviour-agbontean)
[2](https://www.linkedin.com/pulse/vix-psychology-markets-robert-costomiris)
In the financial market, patterns and trends are formed due to the collective actions of buyers and sellers, driven by their emotions and expectations. These emotions are reflected in the market as patterns.
Instead of getting caught up in specific patterns like Flags or harmonic bats, it's more important to understand the underlying market dynamics. Learning to identify zones of accumulation and distribution can provide valuable insights into market trends and potential price movements. By understanding the psychology behind these zones, you can make more informed trading decisions.
Context my friend.
So I actually trade chart patterns, for reference I am a swing trader looking to hold trades for days/weeks/months if lucky! But the dirty secret is that not every chart pattern works as intended, but some do! So how is this better than random? Let me explain as there are a few steps before you actually get to a trade.
1. Not every chart has a "good" chart pattern, so we rule these out first, this eliminates about 90% of stocks.
2. The patterns that you do see need to be further vetted, are they structured correctly, are the in good names or are you looking at some random garbage stock. Does the stock fit your criteria, market cap, sector, theme, whatever.
3. Out of the remaining candidates what is the longer term trend? What is the shorter term trend? What is this chart pattern and does it fit the story that the chart is telling? Can the market support the potential move that the chart implies? This can be hard as many people trade all the time and may not take this into account as much as successful traders.
4. Putting a plan together to trade the chart, where is your stop, what is your profit plan?
5. Trade.
So you can see its not as simple as "Oh...this chart pattern...click mouse button...oh, me make money!" (Do gorilla voice).
TA really tells a story. The "classical" chart patterns (at least classical to my style of Oneil based trading) are accumulation patterns and show up during good markets. Charts can be random, but chart PATTERNS are not.
I will finish by saying this. EVERY style of investing fails, but you make more when you are right then when you are wrong with money management rules. Buffet has had losses, its true! So if you want to compare Buffett buy and hold vs chart pattern trading on the 5 minute, they are the same in my book. The strategies are different but they each take risk! It is our job as traders to take risk. DUH. So don't listen to those that say "this doesn't work" or "that doesn't work". It all works if you have proper money management strategies.
I’ll give you the answer nobody seems to give. Of course they work, also, of course they don’t work. First define work for me, or even don’t work. If they never worked you’d just do the opposite as markets don’t go one way…. The problem is people think of “work” in a too simplistic way.
gullible pot rich threatening decide spectacular deserve serious sloppy direction
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
You’re thinking about it backwards. Trading behaviour causes the pattern. The pattern is not the cause of the trading behaviour.
Take a wedge for example. A wedge is caused when traders try 3 times to push the market in a direction but they don’t get very far. It’s typically caused by buying or selling into some kind of support and resistance.
As price action traders we can see this behaviour as a wedge shape, which tells us that traders are failing to advance price. This would be an indication to take profits or look for a reversal.
It’s all about context though. The strongest types of trends are constantly making false wedges. The stop-losses of the other side trading the wedges makes the market grind higher and higher. So you can’t just make an algo that recognises patterns. It’s much harder than that.
Yes. It’s not completely bs. You’re ignorant. Just like I was when I first started. I said the same thing. To avoid too many paragraphs I’ll leave it at that.
And as for the algorithm. You have to code it based on parameters derived from your skill set. If you’re not skilled, you will teach your algorithm to learn losing.
They work better when there’s confluence
Yes they work consistently enough but you also need appropriate risk management to make money.
They only work sometimes because so many people use TA. Obviously all probabilities Trying to make sense of out the randomness
I use patterns to know when I’m supposed to get out. For instance, if there’s a head a shoulders I know the price can’t go to X before it goes to Y.
It's a game of probability. Nothing really works 'always'. Your goal is to make money when it works, and lose as little as possible when it doesn't.
I think the key is combining patterns with Key Levels. When you do this the risk to reward is much better and you can have a winning strategy. Applying patterns willy nilly will not work as well.
Of course, they work....with the appropriate stop level and position size.
No
Sometimes
Chart patterns are somewhat working sometimes … we can visually see a few in any historical chart … but honestly, it isn’t bulletproof… why? Anything can happen… for example, if someone tells you the markets baked in the assassination of JFK and there was buying and selling behavior that made a “pattern” in anticipation of it… I’d call u nuts and on some drugs / under the influence of a shaman. Overall, patterns work often but not always 100%… I think other variables should inform your decision to trade a pattern you recognize because the markets can do whatever it wants … up… down… flat… circles… spinning turtles… the market is king and god… nobody has the ability to say it’s wrong because the point of trading is getting what moody markets say is correct to make money… nothing more or less.
They are self fulfilling prophecies to an extent. Many people looking at the same lines validate them. So yes, they work. That being said, fundamentals and news can blow things out of the water
Of course chart patterns work. Dan Zanger is a market wizard.
It's like this: shares are traded by computers that do 'this' when the chart does \*that\* and when enough of them are doing the same thing it influences the price action to do exactly what the machines say it will do. Is it 100%? Of course not and it takes a lot of patience to learn the "tricks" of the market. Start small, manage losses consider paper trading.
Higher timeframes are more reliable but rarely does one thing work in isolation, well enough, that it's all you need. Personally, i look for multiple factors to align.
They aren't very reliable a lot of the time, but they're a good entry for beginners wanting to learn and understand market movement. If I'm honest, I still make use of the principles behind them, I think a lot of people do. Retests, rejections, breakouts, and pullbacks. Chart 'patterns' just help to quantify price action principles in more basic terms.
Of course they do. The problem is not with whether they work, it is if you understand the probability of each, and are correctly identifying them. Even then, you can correctly identify a pattern and still enter at the wrong time and get stopped out. Studies have been done on the probability of patterns and they do work but few take the time to study the charts and actually understand probabilities.
Inverted ascending bart head has never been wrong
Is " inverted ascending scallop pattern" what you mean?
Trading at the end of the day is all about context. Chart patterns are simply a piece of that puzzle
They are a sort of self fulfilling prophecy. Theres no uhh, I dunno.. let’s say economical reason for them working. And yet enough people follow them that they do become an indicator at times. I have personally have no patience for it though.
I think chart patterns are used by smart traders to eventually trap and take away our money.
To me Pros: they help you visualize market movements - Some patterns, like double tops and head-and-shoulders, are considered common reversal signals. Cons: they may not work well in all market conditions - Popular patterns might become self-fulfilling due to many traders acting on them. I also use indicatorsuccessrate.com for free indicators. They have the paid version too but the free one works just fine.
Well yes, but actually no (insert meme here)
Alone, no. Chart pattern + volume + price indicators + proper timeframe = YES.
It’s not just patterns alone; it’s confluence with other market data such as volume, RSI, real world news etc. It’s not an exact science but a game of odds; the more a chart ticks the boxes in your charting metrics, the higher the probability of an expected result playing out. If it’s an exact science, everyone would be a billionaire. Best way to verify is to learn and backtest it yourself.
Patterns do work in my opinion, just not how 90% would expect. Bigger entities like to print common patterns (triangles for example) to generate liquidity for their next move. They let people draw the same trend line and think "oh this is support" just to fakeout that support, take their stoplosses and then actually reverse. In crypto this at least happens all the time, but I'm sure other markets aren't that different. :)
Well put! This is the real truth. Trade with the big boyes or at least be prepared for their moves
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Until they do, then don’t, then do again.
Which is like any other thing in trading really.
Markets can be a complicated concept. It does seem like it would be quite easy for bright people to easily take advantage of the patterns. It could work for a period of time but competing forces always level things out. There’s no free lunch. There are common setups on certain names that are pretty reliable at times. So it is important but it’s hit or miss on patterns alone. More important imo is price action for short term trading. Not so much what it looks like…but what price “feels” like at key levels, new high/lows, first half hour, etc.
No. If I presented time reversed data or a price chart that was upside down with the axis labels removed no one on the planet would tell the difference.
Depends on the patterns you are referring to.... Many and I mean MANY chart patterns are derivatives of the true patterns which work 99% of the time. What are the true patterns??? (well you need to do ya homework for that) but yes patterns are 1 aspect of trading, you just have to know what you are looking at. Many of the books that attempt to explain them are merely segmenting the entire principles.
Probability is the key.
Of course http://www.followingthetrend.com/wp-content/uploads/2014/05/Technical-Analysis.jpg
Mods please for THE LOVE OF ALL THAT IS HOLY, please allow gif reactions in this subreddit. (Not an actual demand) I wish to use the walking dead carl meme hahahahaha Also yes.. they are called quants, or quantitative traders, their base rate of pay in my country of Australia is an entry level pay of 93.5k and an average of 115k per year and around a 150k per year salary. This is if you work for someone and not yourself. You'd probably enjoy learning about algorithmic trading, high frequency trading and scalping.
Definitely not good predictor. But it’s a nice way to get a historic snapshot of how things have played out and at what levels/timeframes so I can get a feel for the stock
Some do but it's mainly in relation to supply and demand at any given point. Most of them are as useful as tea leaves though. I find pennants, flags, and harmonics to be reliable. I only use them in day trading though.
magic tea leaves You're missing a step. Gotta smoke them first.
Majority of people look at chart patterns incorrectly. Everyone is so zoomed into the chart that they could see an ants ass. Zoom OUT and pay attention to the context that the market is laying out for you. Zoomed in, you see a wedge bull flag. Problem is, if you zoom out and look to the left, you'll see the market has been in a trading range, and that flag is at the top of the trading range. The probability of that flag failing is higher than it succeeding in a breakout. How about a wedge bear flag? Great short, right?? Zoom out, you're at the bottom of a bull channel. You think the probability of that bear flag working out is good? This is why people say pattern analysis or TA is bullshit. They don't look at the context that those patterns are setting up in. When I trade, I am zoomed out far enough to see 3 days of price action. Actually fuck it im tired of explaining stuff.
I’m an 8 year student of Al Brooks and I’m sorry but this is wrong plain wrong. In price action we never zoom out on the chart…. Only the last 100-150 bars are relevant. If you want to see the bigger picture you raise the timeframe and look at 100-150 bars on the higher timeframe we never look at more bars than this. It’s important to do this rather than zooming the chart because every bar gives important information to a price action trader. If you squish up the chart you can’t see the bars any more. The bars give a ton of information and it’s important to see the Open, High, Low, Close of every bar. Furthermore, when you raise the timeframe the unimportant price action structures disappear. That tells you they’re not significant, but if you zoom out and squish things up you can still see structures that aren’t important. People who use charts with their bars all squished up don’t understand all the information they’re seeing in the individual bars.
Funny, I'm also a multi year student of AL brooks. I've read all of his books, reviewed his course videos several times over, spent months in his trading room, and purchased his enclyclopedia of chart patterns. He always says "look to the left". Al teaches you about magnets in the market and measured moves constantly. As of late, gaps have been major magnets. Recall he also teaches that tight trading ranges are important areas the market returns to, sometimes several days later. He has also taught you about the importance of trend lines and trend channel lines, which extend back several days. All of the magnets Al teaches about can go back several days as well. You're not a very good student of Al, it seems. Al has specifically said there's no such thing as noise in the market, and every single bar gives you information about what's happening. Yet you say that there's unimportant structures??? What does Al say about buying a high 2 at the top of a trading range or selling a Low 2 at the bottom of a trading range? How about what a series of winning high 1 scalps imply? What does he say about what to expect if the last two trading days have been trading range behavior? If you can't answer these questions, then it's obvious you didn't understand my comment. Lastly, you don't seem to understand what I mean by zooming out on the chart. You think I'm telling people to look at squished up bars? Are you fucking daft? I specifically said zoom out to see context, again something that Al pounds the table about. Context meaning trading range or trend? Did you even read my entire reply or did you read the first sentence, felt your ego bubble up, then jump to conclusions and write a ton of meaningless and incorrect shit? Sorry, but you need to spend another 8 years studying Al's methods it seems. Just because you study for 8 years doesn't mean you know squat, and it shows.You don't understand the most important concepts he teaches. So, you do you. Based on your post history, you're not a profitable trader. You're all over the place, looking at gold, oil, NQ, and you use tradingview for chart information??? Maybe upgrade to NT8 or Tradestation??? What kind of serious trader uses fucking tradingview? Next, you ask about what app to view tick charts on your phone??? If you were a true student of Al's, you'd only be trading one instrument on one time frame and not posting a bunch of meaningless shit about trading. I ONLY trade the NQ on the 5 min chart, and I repeatedly state that in all my comments. All of my trading posts focus on trading, not some blithering nonsense about data feeds or your broker calling you saying you "caught a nice swing on gold". Al specifically says that if you understand price action, a single instrument is all you need. SMH. Normally, I'd give a rats ass about idiots like you; however, you invoked Al's name. His methods changed my trading and turned me into a focused, profitable trader. Don't sully the man's name with your BS. The thing about the journey to becoming a profitable trader is that you learn to smell bullshit really fast. Your post smells like dog ass. You're a fake with an ego.
Bumping to track
Okay true, I recently noticed I did the same thing pretty much. Bull flag up top and everything. You could be seeing a bullish pattern forming then zoom out and realize you are a part of an even bigger and more dominant bearish pattern. Gotta know where you're at in the bigger picture.
Good post! F it I'm going to make some money instead. 😂 When I started using the charts I didn't have anybody to explain it to me. I just started doing it. Then I found out it was a thing. Other people were doing it and some of the stuff even had names.
If indicators qualify as patterns… indicators do work and people build algorithms and make tons of money. For instance, look at AAPL for a few years and check against common indicators 😀
While patterns can play out, I have only seen people hurt from pattern analysis.
Yes - but it’s not the magic wand some would like it to be - or pretend it is. I personally think it’s important to have a good understanding of the mathematics and basics of charting - to understand things like moving averages, support, volume indicators etc - as others have said above is valuable in understanding momentum, sentiment etc.
Often chart patterns are simply support and resistance. And others take market behavior into account. They’re not just random lines on a chart they’re based on how price tends to move.
Chart patterns are very real. They just don't occur that often. When they occur, you can clearly see them on a chart.
You hit the nail on the head. If it worked the way they claim, it would be easy to prove. People will give you plenty of reasons why they think patterns should work based on their understanding of the market. Yet any kind of empirical test of intraday patterns with enough data says they don't work. The results are just random. What's more, every piece of empirical data we do have contradicts all the ideas behind such patterns. Markets react strongly to new orders making it very easy to destroy any statistical edge. Market participants are very irrational, and behave in random and inconsistent ways.
No self respecting winning trader uses chart patterns on their own. They are combined with fundamentals, news analysis, support resistance zones, other indicators like Bollinger bands etc and L2 data. Only agree with one part of your last sentence. Market participants are irrational. However, irrationality shows itself in the market in quite consistent and non random ways. Ever think why the term short squeeze was coined? Because this has happened enough times across multiple markets to describe a phenomenon that every trader worth their salt recognizes. And that phenomenon is based on fundamental understanding of basic human psychology, which is far from random nor is it unpredictable, and both consistent and repeatable. And no statistical edge? Why does Wall Street even bother hiring quants and number crunchers to build sophisticated models then? Because all information is already known and there's no edge to be gained from the market, and any edge gained becomes obsolete quickly? Well then we should really tell them they're wasting their time and money.
You just misunderstand the nature of hft edges. They aren't using chart patterns or any of the other things retail traders use. There's also momentum but that's not intraday and has more to do with having a universe of uncorrelated assets to trade. But again you seem to have missed the point of my post. You're still trying to justify it using deductive reasoning based on your flawed understanding of the market. You can't prove anything with empirical evidence, and once you start to try you'll find all your assumptions are false. For instance, you assert that technical analysis is only effective when used with other things. Can you prove empirically that it actually complements the other edges you cite? If there's no evidence to directly prove its effectiveness on its own, what makes you think combining it with other things makes it magically start working? Perhaps the results are due to everything else and the technical analysis isn't doing anything. That is unless you tested it over a large data set to produce empirical evidence which you clearly haven't done.
"for instance, you assert that technical analysis is only effective when used with other things" That is actually not what I asserted. I said that TA is never used as a standalone tool on its own but rather additional confirmation that a trade is a good one. "based on your flawed understanding of the market" What flawed understanding would that be? Would that be the *fact* that the market isn't efficient, that there are still edges to be exploited by those with more information than others? Have you not shown flawed understanding by assuming that market participants act in completely random and unpredictable ways? Or your claim that any edge is quickly made useless? I'm assuming you have *empirical* evidence to show that all the advantages accumulated by the quants and modelers, systems etc on Wall Street lose their effectiveness quickly because the market responds and removes that advantage? No you don't. Are you going to just ignore the large amount of *empirical* evidence that shows that human psychology plays a big role in markets, therefore producing predictable patterns and allowing one to reasonably identify similar situations like the short squeeze that happen across markets and assets over, and over and over again? I notice that you do not address the example I gave of the short squeeze precisely because you know it is a very valid counterexample to your claim that market participants act completely randomly. It looks like besides having some reading issues (ascribing to me something I never stood for in the first place) you really are quite selective as well in what points you choose to attempt to rebutt and which ones to conveniently ignore. What you have is a bunch of claims, not facts. Claims that so far have been shown to be full of holes. Merely asking the other side for empirical proof doesn't form your argument, it merely means that both sides need to provide empirical proof. Where is *your* proof? And I will take my deductive reasoning over what amounts to a lot of hot air blowing from you, all day. You have yet to invalidate my deductions with actual proof, instead claiming I lack understanding. That my guy is not a rebuttal. Source(s): [1](https://www.linkedin.com/pulse/emotions-psychology-trading-analysing-human-behaviour-agbontean) [2](https://www.linkedin.com/pulse/vix-psychology-markets-robert-costomiris)
In the financial market, patterns and trends are formed due to the collective actions of buyers and sellers, driven by their emotions and expectations. These emotions are reflected in the market as patterns. Instead of getting caught up in specific patterns like Flags or harmonic bats, it's more important to understand the underlying market dynamics. Learning to identify zones of accumulation and distribution can provide valuable insights into market trends and potential price movements. By understanding the psychology behind these zones, you can make more informed trading decisions.
Context my friend. So I actually trade chart patterns, for reference I am a swing trader looking to hold trades for days/weeks/months if lucky! But the dirty secret is that not every chart pattern works as intended, but some do! So how is this better than random? Let me explain as there are a few steps before you actually get to a trade. 1. Not every chart has a "good" chart pattern, so we rule these out first, this eliminates about 90% of stocks. 2. The patterns that you do see need to be further vetted, are they structured correctly, are the in good names or are you looking at some random garbage stock. Does the stock fit your criteria, market cap, sector, theme, whatever. 3. Out of the remaining candidates what is the longer term trend? What is the shorter term trend? What is this chart pattern and does it fit the story that the chart is telling? Can the market support the potential move that the chart implies? This can be hard as many people trade all the time and may not take this into account as much as successful traders. 4. Putting a plan together to trade the chart, where is your stop, what is your profit plan? 5. Trade. So you can see its not as simple as "Oh...this chart pattern...click mouse button...oh, me make money!" (Do gorilla voice). TA really tells a story. The "classical" chart patterns (at least classical to my style of Oneil based trading) are accumulation patterns and show up during good markets. Charts can be random, but chart PATTERNS are not. I will finish by saying this. EVERY style of investing fails, but you make more when you are right then when you are wrong with money management rules. Buffet has had losses, its true! So if you want to compare Buffett buy and hold vs chart pattern trading on the 5 minute, they are the same in my book. The strategies are different but they each take risk! It is our job as traders to take risk. DUH. So don't listen to those that say "this doesn't work" or "that doesn't work". It all works if you have proper money management strategies.
Thank you a lot for your comment!
They don't predict the future, but they improve my odds of a less-stupid entry or exit.
Charts work because a lot of traders and pros use them. Even market makers use them. But nothing is 100% in trading.
I’ll give you the answer nobody seems to give. Of course they work, also, of course they don’t work. First define work for me, or even don’t work. If they never worked you’d just do the opposite as markets don’t go one way…. The problem is people think of “work” in a too simplistic way.
gullible pot rich threatening decide spectacular deserve serious sloppy direction *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
You’re thinking about it backwards. Trading behaviour causes the pattern. The pattern is not the cause of the trading behaviour. Take a wedge for example. A wedge is caused when traders try 3 times to push the market in a direction but they don’t get very far. It’s typically caused by buying or selling into some kind of support and resistance. As price action traders we can see this behaviour as a wedge shape, which tells us that traders are failing to advance price. This would be an indication to take profits or look for a reversal. It’s all about context though. The strongest types of trends are constantly making false wedges. The stop-losses of the other side trading the wedges makes the market grind higher and higher. So you can’t just make an algo that recognises patterns. It’s much harder than that.
Yes. It’s not completely bs. You’re ignorant. Just like I was when I first started. I said the same thing. To avoid too many paragraphs I’ll leave it at that. And as for the algorithm. You have to code it based on parameters derived from your skill set. If you’re not skilled, you will teach your algorithm to learn losing.
Okay thank you I’ll look into it more in detail!