Whisper

I wonder if he is just trying to sell his wares or he has mathematically tested these patterns and knows that these have a statistical edge. I have never seen any mathematical back test results that prove H & S can be profitable. All those that claim its profitability are discretionary traders/educators etc that always illustrate with hindsight.

Fair enough. Though I need to answer if a tendency is exploitable. How I exploit it will be the detailed trading plan. How do I establish that a particular market tendency is profitable. Lets say a double top. People say it is a pattern that can be traded. How can i prove to myself first that it can indeed be traded. Once I have hat answer, I can work on the defining entries, exits et all. Am I approaching this the right way or I need to formulate the entire plan before I can test out whether it is profitable or not?

By patterns I meant Inside Bar, Outside Bar, Pinnochio Bar, shooting star etc. The way I am approaching system development is to first identify a market behavior where I can say that the if certain conditions happen in the market, then it is more likely to do x rather then y. Once I am able to find such a tendency, then I can move to the next stage of proper entry, exit, trade management to refine the system further. I think the very first step in system development is what is a tradeable market tendency. I should be able to say that given a particular market context that can be defined by a computer, if event A happens, then the market is atleast 55-60 percent likely to do X rather then a Y. This should be observable across markets and over multiple years to be of any value for further system development. I am having difficulty finding that. I think, without this one would be dabbling in randomness trying to find an profitable trading system.

Hi Folks, Are there really any price patterns in the forex market that have an edge and can be verified? I am not sure about stock, futures but I have not been able to find any price pattern that has a testable edge in the forex market. Most patterns have a 50-50 WL ratio and when spread is factored in, it is a losing proposition.