What is your most profitable pattern?

This is a discussion on What is your most profitable pattern? within the Technical Analysis forums, part of the Methods category; Originally Posted by barjon Nothing "works" in the sense of certainty in the outcome, but many things "work" in the ...

View Poll Results: My most profitable pattern is:
H&S 2 6.06%
Flag 3 9.09%
Pin bar 4 12.12%
Triangle 3 9.09%
Something else 14 42.42%
I don't trade patterns 5 15.15%
I trade against them all the time 2 6.06%
Voters: 33. You may not vote on this poll

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Old Mar 30, 2013, 2:08pm   #16
 
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Re: What is your most profitable pattern?

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Originally Posted by barjon View Post
Nothing "works" in the sense of certainty in the outcome, but many things "work" in the sense of giving you some reason to take a trade. What does work is the ability to take sufficient advantage when price moves favourably and to limit the damage when it doesn't.

Most of these patterns fire a starting gun, but you don't win the race at the start - you win it at the finishing line.
Agree with most of it Jon
High success/failure rate patterns would make more accurate starting gun. I prefer being spoilt for choice as how much profit should I take from the very start rather than starting with a loss. It could be something to do with my trading style - impatient, quick profit taking without too much 'profit running' involved.

BTW I can see that 5 members use some other patterns (from the poll), but they wouldn't reveal the specifics
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Old Mar 30, 2013, 2:19pm   #17
 
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Re: What is your most profitable pattern?

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..........It could be something to do with my trading style - impatient, quick profit taking without too much 'profit running' involved........
Aye, well if you're running in the 100 metres a good start is pretty important, less so over the longer distances.

Nonetheless, I still think momentum at the time of entry - rather than level - is the more important factor if you want to start off with a bang.
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Old Mar 30, 2013, 2:47pm   #18
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Re: What is your most profitable pattern?

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I prefer being spoilt for choice as how much profit should I take
My sentiments exactly. This is why when I publicly throw 100 or 200 pips away I felt perfectly fine because it was my choice. Further more I knew there were plenty more where those came from. Throwing some away was no biggie.

I think realising being satisfied with 20 pips gains is a path to loose is the first step to the next level.

Last edited by BeginnerJoe; Mar 30, 2013 at 2:57pm.
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Old Mar 30, 2013, 3:04pm   #19
 
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Re: What is your most profitable pattern?

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My sentiments exactly. This is why when I publicly throw 100 or 200 pips away I felt perfectly fine because it was my choice. Further more I knew there were plenty more where those came from. Throwing some away was no biggie.

I think realising being satisfied with 20 pips gains is a path to loose is the first step to the next level.
I'm not a great fan of throwing away profit BJ (not too much of it anyway), but I like being spoilt for choice as how much profit I should take. That's why I was trying to find such a pattern (with no success so far)

BTW That post of Jon's is excellent (post #17)

Last edited by ZEN archer; Mar 30, 2013 at 3:13pm. Reason: Jon's post number
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Old Mar 30, 2013, 3:49pm   #20
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I'm not a great fan of throwing away profit
Your constant fear of throwing profits away could be precisely the reason why more profit don't come to you. You just have to have the balls to allow more profits to come to you. In any case, I don't believe running profits has anything to do with patterns. It's a completely different problem and the solution can be extremely simple. Since it can be that simple, you can find it all by yourself.

Here's my final-final holy grail for trading you can have for free. Both rules are of equal priority:

A profit doesn't come easily, you must guard it.
A winner doesn't come easily, you must run it.
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Old Mar 30, 2013, 4:43pm   #21
 
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Re: What is your most profitable pattern?

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Here's my final-final holy grail for trading you can have for free. Both rules are of equal priority:

A profit doesn't come easily, you must guard it.
A winner doesn't come easily, you must run it
.
Not the best advice BJ (IMO)

This 'holy grail' of yours may be more to do with what may be pleasing for you to imagine (running profits for a long time) instead of reality (the market taking all that was offered and more)

Last edited by ZEN archer; Mar 30, 2013 at 4:50pm. Reason: IMO
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Old Mar 30, 2013, 4:44pm   #22
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BTW I can see that 5 members use some other patterns (from the poll), but they wouldn't reveal the specifics
That which I provided may not have been of great quantity, but it was certainly the specifics of my method, simple as it is. For the fine detail I use a 50 period exponential moving average and a 10 period linear weighted moving average. While it could be argued that the shorter moving average is unnecessary and I could use the price instead, I prefer the clean lines of an average which help me ignore the highs, lows etc and just focus on the aggregated movement rather than the individual bars.
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Old Mar 30, 2013, 4:53pm   #23
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Re: What is your most profitable pattern?

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Aye, well if you're running in the 100 metres a good start is pretty important, less so over the longer distances.
I used to wonder if changing to longer timeframes would offer an advantage, but realised you're offered the same opportunities and issues in all timeframes. I screwed up just as much and in exactly the same way when trading on the daily chart as I did the hourly. It then struck me that it was nothing to do with the timeframes themselves, but the number of bars I was comfortable being in a trade for. It's as tough to stick to 50 bars in a 5 min chart as it is 50 bars in a daily. Those that have the stamina for the longer haul (as defined by number of bars rather than duration in time) are likely to do better. This may just be idiosyncratic and in no way applicable to anyone else, but training myself to grit my teeth and stay the course has helped me enormously. I suspect most traders can spot a pattern, especially the simplest, the trend, and trade bits of it. The trick it seems is to trade most of it in just one trade. Something I'm still struggling with.
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Old Mar 30, 2013, 5:23pm   #24
 
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Re: What is your most profitable pattern?

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I used to wonder if changing to longer timeframes would offer an advantage, but realised you're offered the same opportunities and issues in all timeframes. I screwed up just as much and in exactly the same way when trading on the daily chart as I did the hourly. It then struck me that it was nothing to do with the timeframes themselves, but the number of bars I was comfortable being in a trade for. It's as tough to stick to 50 bars in a 5 min chart as it is 50 bars in a daily. Those that have the stamina for the longer haul (as defined by number of bars rather than duration in time) are likely to do better. This may just be idiosyncratic and in no way applicable to anyone else, but training myself to grit my teeth and stay the course has helped me enormously. I suspect most traders can spot a pattern, especially the simplest, the trend, and trade bits of it. The trick it seems is to trade most of it in just one trade. Something I'm still struggling with.
I can see the sense in that.

I was less thinking about time frame than about profit target. If you are gunning for a few points with a tight stop you don't want price lurching about like a drunken sailor - you're after Usain Bolt as he accelerates away.
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Old Mar 30, 2013, 6:53pm   #25
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Re: What is your most profitable pattern?

Humans see patterns where there are none.
Ask yourself a question, how many institutional algo's
do you think are based on chart patterns?
No I don't use chart patterns, maybe time patterns...
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Old Mar 30, 2013, 8:01pm   #26
 
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Re: What is your most profitable pattern?

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Humans see patterns where there are none.
Ask yourself a question, how many institutional algo's
do you think are based on chart patterns?
No I don't use chart patterns, maybe time patterns...
I'm pragmatic LV - if the patterns work, I would definitely use them without thinking too much about institutional algos' design
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Old Mar 30, 2013, 8:13pm   #27
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I'm pragmatic LV - if the patterns work, I would definitely use them without thinking too much about institutional algos' design
If it works and turns a profit, fair enough.
Personally I think its just a coin flip variation.
When it 'works', how much is due to how you managed it?
Point I was making is chart patterns do not drive markets.
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Old Mar 30, 2013, 11:10pm   #28
 
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Re: What is your most profitable pattern?

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If it works and turns a profit, fair enough.
Personally I think its just a coin flip variation.
When it 'works', how much is due to how you managed it?
Point I was making is chart patterns do not drive markets.
Perhaps it depends on what you mean by a pattern.
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Old Mar 30, 2013, 11:38pm   #29
 
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Re: What is your most profitable pattern?

The essential underlying basis of tech analysis is that, simply put - what happened in the past can be a guide what may happen in the future. If you accept this then it follows that certain ' patterns ' be they for eg PA, indicator, classic geometric chart patterns etc must exist and that some repeat.... To some extent Ta is self fulfilling and self perpetuating (to what extent no one really knows) and this will therefore apply to 'patterns' in the generic sense of the word, but whatever the reason -they do repeat..... I know from my edge that the set-ups I use as part of it (patterns by any other name) do repeat and I know in what circumstances they are historically highest in probability...applying sound money and risk management to these and constantly monitoring their on going performance metrics ensure that I trade only the highest probability 'patterns' - any profitably - over any given sample. It is clear to me that most traders do not have sufficient info about the ' pattern (s) ' they trade in this respect and therefore do not really know from the outset whether an edge exists for them - let alone give the time to learn to bring any profit gap that many encounter (as mark Douglas describes - the difference between having a proven/theoretical edge and actually trading it such that it results in a consistent profit over any designated sample for you. This difference if it exists - is generally mainly psychological.)

Re the poll - interesting as another poster above pointed out - that 7 now have voted ' something ' else without specifying. Why should they ?

G/L
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Old Mar 31, 2013, 12:00am   #30
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Re: What is your most profitable pattern?

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The essential underlying basis of tech analysis is that, simply put - what happened in the past can be a guide what may happen in the future. If you accept this then it follows that certain ' patterns ' be they for eg PA, indicator, classic geometric chart patterns etc must exist and that some repeat.... To some extent Ta is self fulfilling and self perpetuating (to what extent no one really knows) and this will therefore apply to 'patterns' in the generic sense of the word, but whatever the reason -they do repeat..... I know from my edge that the set-ups I use as part of it (patterns by any other name) do repeat and I know in what circumstances they are historically highest in probability...applying sound money and risk management to these and constantly monitoring their on going performance metrics ensure that I trade only the highest probability 'patterns' - any profitably - over any given sample. It is clear to me that most traders do not have sufficient info about the ' pattern (s) ' they trade in this respect and therefore do not really know from the outset whether an edge exists for them - let alone give the time to learn to bring any profit gap that many encounter (as mark Douglas describes - the difference between having a proven/theoretical edge and actually trading it such that it results in a consistent profit over any designated sample for you. This difference if it exists - is generally mainly psychological.)

Great post.

Re the poll - interesting as another poster above pointed out - that 7 now have voted ' something ' else without specifying. Why should they ?

Cos everybody is looking for a shortcut / free lunch
Even if you did give them something of value, the majority would not see it.
I'm in the camp that says you have to experience it over and over and it's all part of the trading journey. Doing those reps over and over brings understanding.


G/L

But here's one for free.
Draw a line on a chart...if price goes above the line...buy...if it goes below...sell. Leave meaningful wiggle room for trade management.
No patterns required.
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