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; There is no such thing as and edge for a retail trader , it is an illusion , if such ...

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 31, 2013, 1:29pm   #46
tar
 
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Re: What is your most profitable pattern?

There is no such thing as and edge for a retail trader , it is an illusion , if such edge exists then it will become obsolete in no time due to the competitiveness nature of the markets especially FX and Indices , what an edge even means ?
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Old Mar 31, 2013, 1:30pm   #47
 
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Re: What is your most profitable pattern?

That's interesting - the common traits of the best traders I know are

1. They have an edge - they know what it is - it is clearly defined
2. They know all about that edge - it's performance metrics - what is probable, and what is possible
3. They constantly monitor the edge
4. They have closed any 'profit gap' associated with their trading of that edge.
5. They know that the psychological war is never won (Re 4 above) - it is battle each trading day - and they are vigilant in this respect.

I think it really is as simple as this....but most won't get anywhere close to understanding it let alone actually achieving 1-4 listed above.

G/L


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Originally Posted by barjon View Post
The best traders I know are constantly on the look out for momentum and if they use chart patterns at all, it is only as indications of where momentum might come in. Their edge is not in the pattern, but in their early appreciation of building momentum and in their appreciation of it falling off. In general, they are not in the business of looking for home runs and they play the bursts of momentum for as long as they last.

I suppose I'd describe them as in the "buy high, sell higher" camp which does not seem to attract newcomers half as much as the "buy low, sell high" camp who appear to throw themselves in front of the momentum freight train all too often.
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Old Mar 31, 2013, 1:34pm   #48
 
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Re: What is your most profitable pattern?

Sorry, but this is nonsense....whether it be an institutional or retail level trader - edges can be found and lots of them...see my post above numbers 1-5...and there is no reason that the edge will be eroded - particularly if it is built around the constants of trading such for example as supply and demand.

G/L

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Originally Posted by tar View Post
There is no such thing as and edge for a retail trader , it is an illusion , if such edge exists then it will become obsolete in no time due to the competitiveness nature of the markets especially FX and Indices , what an edge even means ?
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Old Mar 31, 2013, 1:50pm   #49
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Re: What is your most profitable pattern?

Quote:
Originally Posted by bbmac View Post
Sorry, but this is nonsense....whether it be an institutional or retail level trader - edges can be found and lots of them...see my post above numbers 1-5...and there is no reason that the edge will be eroded - particularly if it is built around the constants of trading such for example as supply and demand.

G/L
Found ?! Sorry mate but there is no such thing , what's an edge ? an advantage over others ? it is counterproductive , if setup A or B works and provides profits over time then why algos and pros and others didn't take advantage of it ? and if they did take advantage of it then it is obsolete already , there is no such thing as if you followed steps 1,2,3 then you will make money that's so stupid . I will give examples of what could be considered as an edge ? If you have deeper pockets than others that's an edge eg . : penny stocks pump and dump , GS and JPM ... etc , if you are faster than others "high technology" eg . : front running , flash orders , servers nearer to the exchange , another example of an edge : insider information "insider trading" , also market making is an edge , earning the spread instead of paying it . But it is certainly not a setup you see on your charts ,that's an illusion , FX daily volume is in trillions , infinite number of pros and banks and algos are trading it and you think a certain setup or pattern on the chart is an edge ?!
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Old Mar 31, 2013, 2:01pm   #50
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Re: What is your most profitable pattern?

Tar - if there is no such thing as an edge, what do you call what you do to trade profitably?
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Old Mar 31, 2013, 2:25pm   #51
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Re: What is your most profitable pattern?

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Originally Posted by Purple Brain View Post
Tar - if there is no such thing as an edge, what do you call what you do to trade profitably?
Trading
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Old Mar 31, 2013, 2:26pm   #52
 
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Re: What is your most profitable pattern?

For me an edge is as follows:

A Trading Edge is simply a repeating circumstance or set of circumstances (for eg a chart set-up [s,] ) that suggests there exists a greater probability of price moving one way over the other (for howsoever long,) based on the historical precedent of such to that point in time. Additionally and/or alternatively; if the edge does not suggest a greater probability of price moving one way over the other, then based on historical precedent to that point in time, it suggests that more pip gain is available when it succeeds than when it fails, sufficient to realise a net gain over any given sample.

That's it.

I mentioned in a post above that so long as your edge is based on the constants of trading and in the example of technical trading - demand/supply which results in support/resistance and price action then there is no reason that it should not last and that the edge shouldn't always be there (and that with practice/application you shouldn't find a way of bridging any 'profit gap' that you may encounter with it.) In trading repeating technical set-ups we are simply trading repeating patterns of market behaviour (probably of the very factors you describe) that are represented graphically - and we can take advantage of that. None of us have any powers of prediction so we don't know on any occasion we trade such a set-up (s) that it will produce a gain on that particular occasion but if we can identify the reasons/characteristics present why they tend to produce a gain when they do and a loss when they lose and ally that to sensible money, risk and trade management - optimised to the set-up then we have a edge. It doesn't always follow that '...algo's, pro's...' etc will exploit the same edge. You argument suggests that no edge is available from tech analysis/charts and this is plain wrong because there are consistently profitable traders who derive their gains from this analysis.

All the things you mention in your post may or may not provide an edge - they certainly sound as if they would (based on your evidence - which for me is purely anecdotal,) but they are not available to me.

G/L



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Originally Posted by tar View Post
Found ?! Sorry mate but there is no such thing , what's an edge ? an advantage over others ? it is counterproductive , if setup A or B works and provides profits over time then why algos and pros and others didn't take advantage of it ? and if they did take advantage of it then it is obsolete already , there is no such thing as if you followed steps 1,2,3 then you will make money that's so stupid . I will give examples of what could be considered as an edge ? If you have deeper pockets than others that's an edge eg . : penny stocks pump and dump , GS and JPM ... etc , if you are faster than others "high technology" eg . : front running , flash orders , servers nearer to the exchange , another example of an edge : insider information "insider trading" , also market making is an edge , earning the spread instead of paying it . But it is certainly not a setup you see on your charts ,that's an illusion , FX daily volume is in trillions , infinite number of pros and banks and algos are trading it and you think a certain setup or pattern on the chart is an edge ?!
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Old Mar 31, 2013, 2:42pm   #53
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Re: What is your most profitable pattern?

If you want to get all philosophical you could argue that edges don't exist. You could equally well argue that gravity doesn't exist, sure drop an apple and it was probably fall to the floor, until such time that maybe something changes and it doesn't behave that way.

You have just be a bit pragmatic and hope gravity keeps doing its thing
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Old Mar 31, 2013, 2:50pm   #54
 
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Re: What is your most profitable pattern?

ZEN archer started this thread I was reading about one of the patterns used by few traders who used to make a living trading S&P for years. It's a complex pattern consisting of 5 waves and precisely defined entry, stop and target.
I don't think that algos etc. managed to make all the patterns obsolete in the last 10 years. 'Wolfe waves' pattern's success rate may have changed , but there could be some other/new patterns with similar success rate nowadays (somebody else's waves)



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Old Mar 31, 2013, 3:03pm   #55
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Re: What is your most profitable pattern?

BBMAC each to their own , but saying a certain setup or pattern provides profits over time is a counterproductive argument for obvious reasons , and it can be used by others to make money the other way by hunting stops "trap" . We have some facts in front of us : as mentioned earlier that's a highly competitive environment ( Money , information , technology ) , and the Bid/Ask liquidity is very limited . I leave the conclusions to the reader .
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Old Mar 31, 2013, 3:08pm   #56
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Re: What is your most profitable pattern?

Quote:
Originally Posted by the hare View Post
If you want to get all philosophical you could argue that edges don't exist. You could equally well argue that gravity doesn't exist, sure drop an apple and it was probably fall to the floor, until such time that maybe something changes and it doesn't behave that way.

You have just be a bit pragmatic and hope gravity keeps doing its thing
And you can trade martingale strategies and hope it keeps doing its thing , BTW it could be years !
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Old Mar 31, 2013, 3:09pm   #57
 
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Re: What is your most profitable pattern?

so, assuming that it is not in a vacuum, which way would you bet when the apple is dropped - long or short ?

That is an essential point about an edge - which is why it needs constant monitoring and knowledge of it's historical performance metrics

G/L

Quote:
Originally Posted by the hare View Post
If you want to get all philosophical you could argue that edges don't exist. You could equally well argue that gravity doesn't exist, sure drop an apple and it was probably fall to the floor, until such time that maybe something changes and it doesn't behave that way.

You have just be a bit pragmatic and hope gravity keeps doing its thing
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Old Mar 31, 2013, 3:09pm   #58
 
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Re: What is your most profitable pattern?

call it what you will this ' trading ' is your edge !

G/L

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Trading
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Old Mar 31, 2013, 3:12pm   #59
 
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Re: What is your most profitable pattern?

they may be obvious to you, - but they ain't to me lol. As do I.

G/L

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Originally Posted by tar View Post
BBMAC each to their own , but saying a certain setup or pattern provides profits over time is a counterproductive argument for obvious reasons , and it can be used by others to make money the other way by hunting stops "trap" . We have some facts in front of us : as mentioned earlier that's a highly competitive environment ( Money , information , technology ) , and the Bid/Ask liquidity is very limited . I leave the conclusions to the reader .
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Old Mar 31, 2013, 4:53pm   #60
 
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Re: What is your most profitable pattern?

ZEN archer started this thread Somebody chose triangles. It's not a bad pattern at all - for me it has clearly defined entry and exit levels:
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