Most reliable reversal patterns

[red ear]

Hello all

Could anyone advise or point me in the direction of where I could find out which CS reversal patterns are most reliable?

Thanks

 

[wackypete2]

http://www.candlestickgenius.com/candlestick-patterns-top-5.html

http://www.trade2win.com/traderpedia/Technical_Analysis#Candlesticks

There's plenty of good free info on the net. Just google "candlestick patterns"

Peter

 

[intradaybill]

Hello all

Could anyone advise or point me in the direction of where I could find out which CS reversal patterns are most reliable?

Thanks

Reliable? What do you mean by that? It all depends for how long the reversal, if any, will last and for what amount. If you have a target of X% you may make money but if you have a target of Y% > X% you may lose money. The same applies to the stop loss.

IMO, there are no reliable CS patterns. These are just a special class of price patterns that has been so much used that it has lost any edge. They must be used in conjunction with other methods to work.

Paper on the effectiveness of CS patterns

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=980583

Intro to price patterns, the general class of patterns CS belong to

http://www.tradingpatterns.com/Literature/article2/article2.html

 

[SvenFoster]

Hello all

Could anyone advise or point me in the direction of where I could find out which CS reversal patterns are most reliable?

Thanks

"Stalks".

ok, not a candle pattern as such but run aways from candles with long shadows/stalks whatever they are called.

 

[The Artist]

Hey,

Also, let's not forget that "the term „reversal pattern“ is somewhat of a misnomer [...] A trend reversal signal implies that the prior trend is likely to change, but not necessarily reverse. This is very important to understand.” (Nison)

This means that these patterns may be best used when in a position, as a signal for exit/partial profit taking.

 

[red ear]

Apologies I should have clarified that I'm looking at using reversal patterns as a trigger for entry/exits at support/resistance levels and pivot points.

Thanks for the responses thus far

 

[pboyles]

PIN bars as described in the james16 chart thread on forexfactory. Cant remember the name for them in candlestick analysis but its the same pattern.

I only trade them at S&R levels and preferably with divergence.

 

[tomorton]

Steve Nison on candlesticks and Thomas Dorsey on point-and-figure charts are very useful references.
'Encyclopedia of Chart Patterns' by Thomas N Bulkowski details the most readily recognised patterns and their statistical reliability.
'Street Smarts' by Laurence A Connors and Linda Bradford Raschke add some less well researched patterns.
Additional reversal patterns worth looking into include Hole-in-the-Wall Gaps (see Alan Farley), Key Reversals and Hikkake (see Chesler).

 

[SvenFoster]

PIN bars as described in the james16 chart thread on forexfactory. Cant remember the name for them in candlestick analysis but its the same pattern.

I only trade them at S&R levels and preferably with divergence.

Hammers..... or as I called them "stalks"

 

[MrGecko]

... and Hikkake

Not to be confused with Bukkake, another past-time of Japanese Housewives.

 

[tomorton]

Not to be confused with Bukkake, another past-time of Japanese Housewives.

Naughty boy!

On a similar note I do admit to once getting whipsaw and whiplash confused.....

 

[The Artist]

Naughty boy!

On a similar note I do admit to once getting whipsaw and whiplash confused.....

Ahah, how about wondering what dandruff had anything to do with trading first time you heard of the "head and shoulders" pattern?

 

[tomorton]

Ahah, how about wondering what dandruff had anything to do with trading first time you heard of the "head and shoulders" pattern?

as seen on point and finger charts.....

 

[maiden22]

Apologies I should have clarified that I'm looking at using reversal patterns as a trigger for entry/exits at support/resistance levels and pivot points.

Thanks for the responses thus far

Pins are a good place to start, then try chucking in engulfing bars at swing highs / lows.

Just remember that no candles or candle patterns actually exist - they are simply a visual representation of a specific aggregation of price data.

 

[kilotrader]

Pins are a good place to start, then try chucking in engulfing bars at swing highs / lows.

Just remember that no candles or candle patterns actually exist - they are simply a visual representation of a specific aggregation of price data.

Backtest results for Bullish-Engulfing Pattern are shown below:
http://blog.kilotrader.com/2010/05/backtesting-bullish-engulfing-pattern.html

 

[pboyles]

It all depends on the stoploss and TP criteria, like every other signal

 

[samuelhogg]

Thomas N Bulkowski website is http://thepatternsite.com/ who wrote 'Encyclopedia of Chart Patterns' as tomorton mentions, he also wrote 'Encyclopedia of Candlestick Charts'.

You can find his top 10 Reversal Candlestick patterns here:
http://thepatternsite.com/CandleReverse.html

No.1 is Three Stars in the South.
Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 86% of the time
Frequency rank: 99
Overall performance rank: 103
Best percentage meeting price target: 50% (bear market, up breakout)
Best average move in 10 days: -3.64% (bull market, down breakout)
Best 10-day performance rank: 23 (bull market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

 

[samuelhogg]

Anyone tried APS Automatic Pattern Search?

http://www.trade2win.com/boards/trading-software/14298-automatic-pattern-search.html

 

[ronblack]

Anyone tried APS Automatic Pattern Search?

http://www.trade2win.com/boards/trading-software/14298-automatic-pattern-search.html

I have been using it on a daily basis for the last couple of years. The program does exactly what they claim it does and support have been fairly good, even during weekends I was able to get support. APS won't make you rich fast but if you know how what you are doing this program will pay for itself in a few trades and afterwards make you some money. I repeat, this program is not for everyone. I do not recommend it to people who do not have knowledge of probability and statistics. In this forum you can see some examples by another user and my comments.

 

[samuelhogg]

I have been using it on a daily basis for the last couple of years. The program does exactly what they claim it does and support have been fairly good, even during weekends I was able to get support. APS won't make you rich fast but if you know how what you are doing this program will pay for itself in a few trades and afterwards make you some money. I repeat, this program is not for everyone. I do not recommend it to people who do not have knowledge of probability and statistics. In this forum you can see some examples by another user and my comments.

Cheers ronblack. I was recently bought his book on Profitability and Systematic Trading.

I see you can use data from Ninjatrader and the APS software also generates code for Ninjatrader. Might have to try the demo.

Just gonna check the other forum, cheers.