Pattern trading - Is the best way to catch Bottorms and Tops!

shivashimoga · Apr 11, 2008

Hi,

My name is shiva. I am from India I trade indian market. trade with technicals. I strongly believe that you do wonders with pattern trading provided you are a postion trader.
According to me, market movers and shakers not FII's, MF,s or Big investors. the real movers and shakers of the markets I call them SMART INVESTORS, the SMART INVESTORS could be FII's,MF's or a simple you and me too!

in market SMART INVESTORS are only 1%, 97% investors loose!!! 2% break-even and 1% are making 97% investors money they are SMART INVESTORS!

more discussion

shivashimoga · Apr 22, 2008

Here I have some tips on any pattern. I have notices that, every pattern must complete 5 waves. 1,2a,2b&2c,3,4a,4b&4c,5. you may be wordering what is this. let me explain, any pattern, either it is broading wedges, or flags, will complete 5 ways in that, either 2nd wave or 4th wave complete double bottom or double top according to the pattern. for more informaiton I will write later,

if you have any comments pl. share.

Trader333 · Apr 22, 2008

1,2a,2b&2c,3,4a,4b&4c,5. you may be wordering what is this. let me explain

Sounds like Elliot Wave theory to me ?

Paul

shivashimoga · Apr 22, 2008

Trader333 said:
Sounds like Elliot Wave theory to me ?

Paul

Yes. you are right, enven in elliot wave @ 4th wave to 5th wave or 2nd wave to 3rd wave, market consolidate with any patterns. means patterns creates @ this stage. in 2nd wave to enter @ 3rd wave. if you are trading with patterns you entered very early and as all of us know 3rd wave is very long wave and you catches most of the wave. because once the pattern breaks out only you buy right. similarly in 4th to 5th wave is also create pattern and 5th wave is very implusive, here also you get good move. as the pattern always complet with 5 waves, in the 2-3 wave side and 4to 5th you get confirmed buying signal or visa-versa

sidg219 · Apr 27, 2008

Catching tops and bottoms

As a small trader it is fatal to try to catch tops and bottoms with a small margin account. Only those with millions of dollars in funds like fund managers can catch tops and bottoms as the have deep pockets and no leverage. For a small trader like me, the only wat to trade is by trading trends (off bounces and breakouts) and range trading in well established trading channels.

Splitlink · Apr 27, 2008

sidg219 said:
As a small trader it is fatal to try to catch tops and bottoms with a small margin account. Only those with millions of dollars in funds like fund managers can catch tops and bottoms as the have deep pockets and no leverage. For a small trader like me, the only wat to trade is by trading trends (off bounces and breakouts) and range trading in well established trading channels.

I think that you are right, although I concede that there are lots out there who are good at spotting tops and bottoms. I believe that getting in, as soon as possible, after the trend has started is the best way not to get stopped out.

tomorton · Apr 27, 2008

Spotting tops and bottoms is easy on a historic chart but much more difficult in real time. Many have said that a top (or bottom) is a process, not an event. In real time, repeated tests of the extreme can draw you in again and again, until much of your capital has been wasted on false breakouts that never follow through. Likewise Elliott Waves - easy to see on a 2007 price chart, very difficult to call on a chart ending 25 April 2008.

nine · Apr 27, 2008

But a great tool for prophets ... and the bizarre thing is that when they are wrong in real time they rewrite history for their acolytes. I always worry a little about posters who feel the need to capitalize everything.

Splitlink · Apr 27, 2008

tomorton said:
Spotting tops and bottoms is easy on a historic chart but much more difficult in real time. Many have said that a top (or bottom) is a process, not an event. In real time, repeated tests of the extreme can draw you in again and again, until much of your capital has been wasted on false breakouts that never follow through. Likewise Elliott Waves - easy to see on a 2007 price chart, very difficult to call on a chart ending 25 April 2008.

Yes, indeed! Hindsight is a great convincer that what has happened in the past will happen in the future.

rathcoole_exile · Apr 27, 2008

Splitlink said:
Yes, indeed! Hindsight is a great convincer that what has happened in the past will happen in the future.

hind sight or hindi sight ? :clap: :clap:

rathcoole_exile · Apr 27, 2008

tringle breakout.png 22-04-2008 03:28 PM

Shiva, what on Earth has your chart got to do with catching "Tops & Bottoms" ?
There are a couple of breakouts from consolidation, be that Flags, Pennants whatever. But I think your title may be misleading for newbies

grantx · Apr 27, 2008

Or hindu sight?

Grant.

shivashimoga · Apr 29, 2008

Only in pattern trading you will catchs top and bottoms. infact in any trading process the best way to catchs intial tops not necessarly it is the peaks! Catching tops and bottoms not peaks is what I want to say. In pattern trading you do better analysis and catchs the trend very early then other trading methods and once you analyse the trend it is your call to pick that trend as a professional trader each trader having his won way to enter in the market. I observed this method to analyze the trend. Any pattern when you are trading initially you need to understand the pattern and then identify the pattern length then wait for breakout of that pattern and enter @ right time. Trading Flags, Pennants you can wait for clear breakouts but if you have trading with patterns liked broadening formation or wedges you can’t afford to wait till it gives breakouts because then lost most of the trend.
What I identified is in any pattern formation; normally @ 2nd wave or 4th wave market creates double bottom or double top depending on the trend. For example I just posted two charts one is GBPCAD-DAILY and another Indian company Infosys. Both are broadening wedge formation. In GBPCAD forex I have taken daily chart. In daily chart it created double bottom in 2nd wave which means this scripts is bullish but! As not it touches 3rd wave upside and coming down which means one need to look for only short position till it touches the trend line which is going to be the 4th wave.
Similarly in Infosys now it just completed 4th wave of broadening wedge formation as to day it is 5% up! But one need to look for short position but… you can’t just buy once it touches the trend line. As a professional trader you have your own criteria to enter.

Any comments

shivashimoga · Apr 30, 2008

shivashimoga said:
Only in pattern trading you will catchs top and bottoms. infact in any trading process the best way to catchs intial tops not necessarly it is the peaks! Catching tops and bottoms not peaks is what I want to say. In pattern trading you do better analysis and catchs the trend very early then other trading methods and once you analyse the trend it is your call to pick that trend as a professional trader each trader having his won way to enter in the market. I observed this method to analyze the trend. Any pattern when you are trading initially you need to understand the pattern and then identify the pattern length then wait for breakout of that pattern and enter @ right time. Trading Flags, Pennants you can wait for clear breakouts but if you have trading with patterns liked broadening formation or wedges you can’t afford to wait till it gives breakouts because then lost most of the trend.
What I identified is in any pattern formation; normally @ 2nd wave or 4th wave market creates double bottom or double top depending on the trend. For example I just posted two charts one is GBPCAD-DAILY and another Indian company Infosys. Both are broadening wedge formation. In GBPCAD forex I have taken daily chart. In daily chart it created double bottom in 2nd wave which means this scripts is bullish but! As not it touches 3rd wave upside and coming down which means one need to look for only short position till it touches the trend line which is going to be the 4th wave.
Similarly in Infosys now it just completed 4th wave of broadening wedge formation as to day it is 5% up! But one need to look for short position but… you can’t just buy once it touches the trend line. As a professional trader you have your own criteria to enter.

Any comments

In continuation to the above message. I am today attaching the continuation chart
It has given 160+ pip profit as on short trade from yesterday. The target is 4th wave which is touching the trend line ( approx 600 pip profit from today!).

Reg infosys, it is today created long leg doji with more then half of the volume then yesterdays white candle which clear indication on selling pressure. volume-spread analysis clearly shows the weakness.

jonj · Apr 30, 2008

i think if i understand you correctly,that you are correct in saying that pattern formations can catch the h/ls of a trend and get you in early,stands to reason.when price concolodates its often happens at a price where sentement changes.i have to disagree with the part about using only for possition trading though,love tradin hourly patterns (demos only)and often make the first 60-80 pips in 1or2 candles.

shivashimoga · May 3, 2008

Ya true. but we are here to make profits! One need to understand trading is not for FUN, for me it is a very serious business were I can do the best what I understand market with technicals. Why I said position trading is in position trading you take position after analysis, not taking positions and then start doing research on that! another flexibility in position trading is you get wide move. to get wide move. when I was start trading my difficulty is keeping stop-loss and secondly if I start waiting for breakout on pattern I lost most valuable swing. so I start analysis the market very deeply and I found out! that any pattern creates 5 waves ( which every body knows!) but in that 5 waves I found 2nd wave and 4th wave normally creates double / triple bottom or top according to the trends ( approx. 60-70% of the time). if in 4th wave double bottoms created then the stock will move in that direction same way if it created double top then it will fall. Now interestingly you watch the DOW which created reducing triangle in daily chart with 4th wave created double top, it means DOW will fall... Now what my strategy is to look hourly chart and enter short then your stop-loss is very tight.

jonj · May 3, 2008

shivashimoga said:
Ya true. but we are here to make profits! One need to understand trading is not for FUN, for me it is a very serious business were I can do the best what I understand market with technicals. Why I said position trading is in position trading you take position after analysis, not taking positions and then start doing research on that! another flexibility in position trading is you get wide move. to get wide move. when I was start trading my difficulty is keeping stop-loss and secondly if I start waiting for breakout on pattern I lost most valuable swing. so I start analysis the market very deeplybut in that 5 waves I found 2nd wave and 4th wave normally creates double / triple bottom or top according to the trends ( approx. 60-70% of the time). if in 4th wave double bottoms created then the stock will move in that direction same way if it created double top then it will fall. Now interestingly you watch the DOW which created reducing triangle in daily chart with 4th wave created double top, it means DOW will fall... Now what my strategy is to look hourly chart and enter short then your stop-loss is very tight.

hi there,
"and I found out! that any pattern creates 5 waves ( which every body knows!)"...i dont!/didnt.could you suggest some reading material??or mabye post some charts?this interests me greatly.
not sure i understand your bouble top theory though
" if in 4th wave double bottoms created then the stock will move in that direction same way if it created double top then it will fall. "
that means the price is going in only one direction no matter the double top??
but what i basicaly understand your statergy to be is to b/s the h/l of the pattern not just the breakouts??isnt this standard??mabye im amiss here and appologize but could you clarify for me.

shivashimoga · May 3, 2008

Let me explain... the chart you posted I found you have identified the pattern but to enter you have to keep waiting for the pattern to complete and broke the triangle and then take position. that is the chart you posted it created reducing triangle and broken around 15800 levels and you have to enter @ 15800 levels. if so then your stop-loss is were 16000 levels?. it is not particle to keep stop-loss @ such a long distance, ofcouse you get big move in this chart but it is very risky. Lets assume that, if you get a tool which gives you the direction @ very initial stages then? it is great isn't? So my system allow you to analysis in better way. lets analysis the chart you posted. in my system I will short not @ 15800 levels because this beautifully created 4th wave a-b-c pattern. this I call "MSK a-b-c channel". I modify the chart and attached the same pl.. go through. Here your advantage is you know that once it created "4th wave msk-abc channel" then simply look for short in the chart you posted it gives short @ 15950 levels as it broken 1-2-3 formation and it is sure that because it created double top @ 4th wave it is going to fall and go ahead to take position in the direction which is short

similarly DOW also crated and I am expecting DOW also going to fall like EUROUSD, if you are shorting DOW then it is clear short bellow 12900 bellow. you need not to wait DOW to cut 12600 levels! which means you are entering 300 points early!

mp6140 · May 3, 2008

MP -- hey, neato with all those lines and stuff !

Pattern trading is an extremely popular form of tech analysis (naturally) and does very nicely in and of itself BUT REQUIRES INTENSE CONCENTRATION ON FORMING AND FORMED PATTERNS that is more a "researchers" job than a traders !

Wave theory, while valid in many ramifications, is as much art as it is science because one must identify WHERE the first wave starts, with essentially NO information. Even once cued to a pattern, one must really wait until the third wave to "connect the lines" or else you have NO point to plot your pattern on !

any of this, from a man who uses zigzags routinely, might sound a bit silly, but the zigs give me a quick peek into what "may" be a wave --- actually zigs are ALWAYS accurate as to trend direction, but often early because one must constantly wait for the next candle, to see if the ziggy is going to be modified --- such goes life with waves also, as "real time" must become "historical time" before any decisions can be made !

there is some nice pattern recognition software written for the MT4 charts, and if this is your bent in analysis, ive enclosed one i "sorta kinda" use when i have the time.
Unfortunately, whereas I have a chart pattern alert somewhere, i need some time to find it, so these candlestik identifiers will have to do for a bit !

Chart Patterns, commodity and stock chart patterns, charting, technical analysis, commodity and stock price chart analysis, stocks, futures and options trading

Pattern recognition and wave theory are just another tool in the box and a very good tool at that --- its just that it requires a very "attention concentrated" form of trading that while working well for some, requires far too much effort and attention for others !

personally, i would think it requires a lot of "right brained" logic, and anyone who would do this would probably be using a Mac computer and not a PC --- so you go to the clinic, spend the bucks, find out which side of your brain is the "driver of the ship" and choose your trading systems accordingly ----- should work ---- knowing the wait possible for the tests needed under your health system, ive enclosed a little test you can use quickly ---- perhaps some of you will have to go out and buy a different brand computer after this ! The Right Brain vs Left Brain | The Daily Telegraph

enjoy and trade well

mp

chump · May 3, 2008

ok,just to get me kicked off on this brain test which ways clockwise again ?

Until someone get's a bra on this girl I'm struggling to focus on direction !

Attention to detail, how many spotted she is 5' 5 1/2'' , 117lbs ,takes a small brief with a 34B cup up top ,is a natural brunette and non coffee drinker with a penchant for lilac nail polish .Born in Wagga Wagga of course ,but you all knew that didn't you.

Pattern trading - Is the best way to catch Bottorms and Tops!

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