Pattern testing

[danpayne]

Ok, good point, if it is statistics you want. Let me try to illustrate what I am saying using the weather as an analogy. Person 'A' might look outside and see that it is sunny now just like it has been for the last 3 days. Then, in order to determine if they should have a BBQ tomorrow they look up weather statistics and find that in June there is a 57% chance of rain on the 5th day whenever there have been 4 sunny days in a row.

Person 'B' has a barometer, hygrometer and thermometer and has actually made their own weather observations for the last 2-3 years and kept a careful record. They understand what cloud formations are like when it is about to rain and what conditions were like leading up to it. They were planning a BBQ for the same day and from experience they know that it is highly likely that it will rain heavily tomorrow.

Now, you want to plan your own BBQ but you haven't got a clue about the weather, so you ask person 'A' and they say "From my experience of studying statistics I say that there is a 57% chance of rain tomorrow", you ask person 'B' and they say "From my experience of studying the weather I say that it is highly likely that it will rain heavily tomorrow".

Which forecast would you use to make your decision?

Yeah fare enough I see where your coming from, its like anything the final decision at the end of the day is the individuals and must stay the individuals responsibility all the tools of trading are there to hopefully shed some light ,,,,some light. How many times have you or anyone traded a instrument based on say,,,a candle stick pattern(or similar) and the trade went bad . Does that mean that pattern is rubbish and shouldnt be used nor trusted ? .
t.a isnt a science but it does help search out higher probability trades , And the book is certainly no holy grail but it is well informed and providing the reader doesnt take things to literal can help .
Out of interst What would say to be one book you would recomend ?

 

[Chorlton]

trading patterns is like having a foreign alphabet and learning to write a language but not having a clue about the phonetics. I believe I will become infinitely more knowledgable in my trading if I learn more about sentiment and PA behind patterns etc.

Totally agree !!!