I think that the 'chart pattern' argument is somewhat of a semantical one.
On reading OP, I though "uggghhh chart patterns" because that brings to mind all the stuff already mentioned.
On the other hand, I have absolutely no issue seeing a market put averaging 6-8 tick pullbacks and then looking for an entry on a 6-8 tick pullback.
I also have no great issue with looking for shorts above value and longs below value.
I don't use LVNs but I can see the sense in them.
I do tend to avoid trading double tops because everyone else is doing the same thing. On the other hand, I do like the market to pierce the overnight high and find nothing up there for a trade back to the opposite end of the range.
I could go on - but I am pretty sure I'm using patterns there. I am looking at the chart and trying to figure where we are and I am pretty sure I'm looking for stuff that I have seen before.
I think you could call that patterns but on the other hand, it's not 30 year old "even works on womens average bra size over the years charts" sort of stuff.
Like I say - it's a semantical thing. When we hear patterns, we think Head & Shoulders and all that tired old stuff.
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IMO it is all about pattern, but in the sense in the 1000's of hours of trading paper you've put in you begin to understand what pattern means, the only evidence of which is that you are starting to win more than you lose.
There are "do-it-yourselfers" and "expert followers" according to Kevin Davies (a member on this forum). My preference is to trade a system that we develop ourselves but that takes experience. My experience has been all profitable systems have very much in common and I owe my start to Barry Burns (would not necessarily give him my email address these days).
Therefore my opinion is, if you can find a legitimate system (one that you can confirm is proven profitable) it makes sense to learn from it. Once you understand trading, develop your own system. Risk real money as little as possible in the process, work hard. Belonging to futures.io (formerly BMT) is a good start in that direction.
that's how I learned to trade oil futures. I learned by watching the ticker and comparing the behavior on the ticker to a simple 15- or 30-minute HLC bar chart and finding out where the congestion areas (support/resistance) are and how to tell when breakouts occur.
i have never used technical analysis, or chart patterns, or anything of the sort.
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Maybe the concept of patterns was created long ago as a way of learning to see what the market may be doing, or to help explain price action. For example, a H and S pattern could be viewed as a market making HH and HL and then there is a LH, or in the case of a H and S pattern, the right shoulder. If it's an inverted H and S then the right shoulder would be HL. In either case, just because one recognizes a "pattern" doesn't necessarily indicate a trade, does it? My understanding of a H and S pattern is that one is supposed to wait on the break of the "neck line" also known as support, and then wait for price to come back and test that broken support, now called resistance.
Even when price is in consolidation people call it a consolidation "pattern". We can call it balancing if we want. I don't think it matters what you call it. Call it a Bob pattern. In answer to the question is it about the chart pattern? No, it's all about a traders psychology. If one has their head up their butt psychologically, it won't matter what method one trades, or what they call it. I speak from experience. If there is a lot of fear and greed in my head I will loose 99% of the time. If one is angry, or want's revenge, they will lose. So, no, it's not about chart patterns, value areas, indicators, fibonacci, or even good old support and resistance. I think it's about having ones mind right to trade. Being calm, confident in ones approach, confident that one has some sort of edge at times, accepts the fact that they will have losing trades and can let it go. Accepts that there may be uncomfortable feelings, but has the ability to focus on the process of trading and not the feelings or negative thoughts.
Here is a beauty of an H and S on the the 60 minute crude chart. There is also what I would call a Spring. A spring could be considered a pattern, I guess, but it is a trade setup where price dips below support and is rejected and "springs" higher. I actually was looking at charts last night and was "anticipating" this scenario and taking advantage of it if it played out. I did not take advantage of it because psychologically I'm fearful of losing, so I don't even get up in time to watch. Anyway, don't want to get too far off topic.
Last edited by David_R; February 11th, 2013 at 03:39 PM.
Reason: added chart
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