Market Patterns Evolving

Pipsaholic · Jun 17, 2011

Hi,

This is aimed at those who have been in the game for a while. How often does the patterns in the market change have they drastically changed over the last 2-3 years from say 5+ years ago? Basically what I am saying is that candlestick formations that worked 5+ years ago still work today?

Chartsy · Jun 17, 2011

Heh, i've thought about this too and the answer is (for me) quite possibly. BUT i've come to realise that entry triggers, such as candlesticks, are maybe of 20-30% importance. The long term context, trend and condition of the market, and the ability to read it is far more important, such patterns are unlikely to change as drastically.

Pipsaholic · Jun 17, 2011

I heard someone say that the market we see today will not be the market next year possibly as professional traders are retrained on candlestick formations/patterns as new ones emerge as the market takes new turns.

YouAreNotFree · Jun 17, 2011

Human behavior doesn't change and so largely neither will the markets.

bbmac · Jun 17, 2011

Perhaps the advent/growth of algo/auto/hft trading in some markets have changed the patterns somewhat but in others not so...supply and demand governs all markets and there remain repeating patterns of human behavious that are represented on a chart and these by definition do repeat and can form the basis of a trading edge. In the market I trade - ie forex, specifically gbpusd I have not seen any significant changes in the timescale you mention, but I think candlesticks are just part of the mix.

G/L

trader3cnd · Jun 17, 2011

Pipsaholic said:
Hi,

This is aimed at those who have been in the game for a while. How often does the patterns in the market change have they drastically changed over the last 2-3 years from say 5+ years ago? Basically what I am saying is that candlestick formations that worked 5+ years ago still work today?

I find that they haven't changed a lot. Volatility often makes it appear so. Candlesticks and price patterns in general tend to repeat. This is an interesting piece from this blog I'm following:

http://www.priceactionlab.com/Blog/2011/03/performance-of-three-sp-500-patterns-from-my-1999-book/

Basically, the author comes back 12 years after the publication on his book to test 3 S&P 500 patterns he had fully disclosed in it. The test results indicate beyond doubt I think that even fully disclosed patterns can stay profitable for long periods of time. Very interesting work.

Bowgett · Jun 19, 2011

YouAreNotFree said:
Human behavior doesn't change and so largely neither will the markets.

You are rigth that humans will not change but 50-60% of daily volume comes from coputers now so markets do change.

YouAreNotFree · Jun 19, 2011

Bowgett said:
You are rigth that humans will not change but 50-60% of daily volume comes from coputers now so markets do change.

Yeah, I think the changes have been subtle over the years of computers because they are still programmed by humans.

Pipsaholic · Jun 19, 2011

Great info its good to know we don't need to learn new market pattern formations every 1 to 2 years where in almost every other professional you need to learn about the new rules or technology introduced.

Market Patterns Evolving

Pipsaholic

Well-known member

Chartsy

Experienced member

Pipsaholic

Well-known member

YouAreNotFree

Experienced member

bbmac

Veteren member

trader3cnd

Member

Bowgett

Junior member

YouAreNotFree

Experienced member

Pipsaholic

Well-known member

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