Intraday Technical Patterns

[Soultrader 12]

I was listening to an interview by Peter Reznicek today and found one of his comment particulary interesting.

 

I am not a candlestick pattern trader but he mentions how day traders focus too much on trendline breaks, channel breaks, and candlestick patterns on too short of a timeframe. He mentions how these technical patterns are only valid on a 15 minute or more timeframe.

 

I also agree with his comment. I am not particulary fond of price patterns when day trading. Any thoughts?

[TinGull 10]

He's a riot. I listened to him almost every morning for months...he's a bit too intense for me to listen to, though. ShadowTrader.net is him.

 

He NEVER looks at anything below 15 minutes except for the opening 5 minute. Most of the time the stuff is right on, but he's strictly a stock guy. Doesn't care for futures.

 

I do look at trendlines to play sometimes, and use it as a stop on occasion. I don't buy breaks of downtrend lines or breaks of triangle or anything like that. Usually they don't occur at a level I'd need them to be at (VAL/H...).

 

There's my 2 cents for what it's worth...not even 2 cents ?

[torero 10]

I will have to disagree with him and YOU, soultrader! (jk). I think patterns are extremely important, especially for me to find targets. Most people think it's useless but it's my guide to understand and calculate risk and reward. Simple as that. True that the patterns become less and less reliable as the lower the timeframe you are, but so is every other indicator on the market, including price action. No TA method is immune to this fact. Lower you get, more noise you get, straight up.

 

But there is a caveat for using patterns and trendlines, etc. and that it is must accompany price action. Yes, no indicator can be used properly without reading that dang price action, no matter how accurate the indicator is, price is king, simple as that. High or low timeframe, price action rules. So, when seeing the break of the trendline, or break of whatever pattern like triangle, price action must confirm that break, that is, if breaking down, I want to see lower high/low forming, if thrusting up, i want to see higher high/low forming. That's all I need to know to make my entry. So I got direction when a pattern or trendline breaks, the R:R calculated using patterns, and my setup ready with price action. 3 pieces of info to make my entry.

 

I don't use candlesticks but only for higher frames (60min and up) and candlestick patterns. I use only highs and lows of each bar as my main point of reading price action.

[walterw 10]

I think that more than patterns, you should be aware on what MAKES the pattern... thats more powerfull... looking inside a pattern and what forms it... not just a pattern by itself but what its behind... cheers Walter.

[torero 10]

Hi walterw,

 

Can you elaborate on that a little bit more? Here's my example of what I was talking about using patterns with price action:

 

 

Like I said before, patterns need to be confirmed by price action, in this case, lower higher and that turned the support area into resistance area (this is what I call confirmation of a breakout). My stop would have been the last higher low pivot (just below 796), and entry just below the confirmation area, then target is around 791. The R:R is not even 2:1 so I'd either take a small position or find a bigger pattern in higher timeframe that might be at play to find a bigger target to confirm the direction and possibly lower target. In this rectangle target, the target is near the low of the day, which is quite a safe exit.

[Bfbusa 10]

Hello everyone,

 

This is one very interesting thread. I think I am the only one here that employs 1 min. candle bars to pin point my entry on certain trades. As far as intra day pattens go, there are a few that I have seen that work very well and consistently over and over again when they appear. Using these along with the pivots and tape reading ( that I both learned from you, Soul , I not only have better entries but now able to hold stops of less that 10 tics, on initial entry, with very few stop outs.

 

As for trading trendline breakouts, I don't like. However, trendline failures ( that is, failed to break thru ), is a whole other matter. If I had traded yesterday, I might have traded a downward sloping trendline that could have given as much a 30 points of profit, all depending how you manage your stops. You can see this pattern on a minute chart and on the 233 tic chart.

 

If you want to see a chart, just let me know.

 

Your thoughts are always welcome.

[fatdog1 10]

Hi walterw,

 

Can you elaborate on that a little bit more? Here's my example of what I was talking about using patterns with price action:

 

 

Like I said before, patterns need to be confirmed by price action, in this case, lower higher and that turned the support area into resistance area (this is what I call confirmation of a breakout). My stop would have been the last higher low pivot (just below 796), and entry just below the confirmation area, then target is around 791. The R:R is not even 2:1 so I'd either take a small position or find a bigger pattern in higher timeframe that might be at play to find a bigger target to confirm the direction and possibly lower target. In this rectangle target, the target is near the low of the day, which is quite a safe exit.

 

Torero,

Perfect example of the stage 3 top.

The best part is it is shortable the first time back to it no matter when that happens. I am shorting those patterns in @NQ and @ES from 2002.

[Guest scalptrader]

15min is a life time for a scalper. A man on a radio show opens his mouth, probably never made dime trading on any time frame, and speaks his wisdom. These sort of comments have no value. Price action "time frame" is relative to trading style of an individual and has no relation to the success or failure of a trader.

[TinGull 10]

Peter never mentions that he scalps, he actually says he's not a scalper and doesn't like to trade in that manner. I'd ask you to listen to what he's got to say on his radio show (shadowtrader) before making assumptions that he never made a dime. Those kinds of comments just aren't constructive, and not really appreciated either.

[Guest scalptrader]

You are exactly correct. He never mentions he scalps.

 

"mentions how day traders focus too much on trendline breaks, channel breaks, and candlestick patterns on too short of a timeframe. He mentions how these technical patterns are only valid on a 15 minute or more timeframe."

 

He is saying anything below 15min is not "VALID". I am saying he has no clue what he is talking about. Good think he has a radio show to pay the bills and scrape by

[TinGull 10]

Just because he doesn't think it's a good way to make money doesn't mean he doesn't know what he's talking about. Maybe it's just not a good fit for him. When someone finds something that works for them, it's good that they stick with it. If scalping works great for you...awesome. More power to you. Just please don't go saying it's the only way to make money, because it's not.

[Soultrader 12]

I personally have no idea who the man is until I heard him on the radio show. 15minute for me is way too long and on the other hand scalping is not my style of trading as well. We all have our bread and butter.... for me its one shot one kill type trades.

 

I have tried scalping but had little success. That does not mean scalping does not work. It just doesnt work for me. I have also tried using 5min, 15min timeframes. Never liked it since I was entering late all the time. I tried using 1minute timeframes.... too much noise. Now Im comfortable with a 233 tick chart and do not place too much importance on time when viewing a candlestick bar. I prefer to see how fast 233 transaction are taking place.

 

Peter Reznicek was also reffering to intraday techinical patterns. I am assuming you do not use these patterns as a scalper scalptrader? Most scalpers I meet rely heavily on the tape using super tight stops. Always amazed how their execution and entry is flawless. Perhaps you can elaborate on how you identify scalping opportunities? I am definitely interested.

 

Soultrader

[Guest scalptrader]

"Just please don't go saying it's the only way to make money, because it's not." Where did I say that??! I didnt even say I scalp personally, or mention a word about my own trading! Hell I dont even trade myself 

 

Those who cant do, preach, become talk show hosts and open chart rooms.

 

We all have to pay bills, hell I cut the neighbors grass on weekends and flip burgers in the evenings to pay my monthly gas bills. This industry is filled with so much trash and myth, its too easy, I am even thinking about joining the band wagon after listening to this guys show. I think Ill start my own radio show, gives me credibility, and instant guru status, pay a couple well known guest speakers to talk trash, setup a site and rename variations of rsi and moving averages coded to make them so they look different and pretty, give them cool names and sell them for thousands of bucks.

 

Any one want to appear on my show, please send me a private message.

[Soultrader 12]

Guys... please respect each others posts. I try to maintain a friendly and quality environment here. Either kill this debate or I will close this thread permanently.

[Guest scalptrader]

Ok Ill start a more constructive thread tomorrow. Need to prepare some screen shots.

[Soultrader 12]

Thanks scalptrader. My main focus here is for folks to share and exchange ideas and knowledge to make them a better trader. Let's try to keep it educational.

[torero 10]

In a way scalptrader is right because there are alot of false messiahs in this industry that no one should be fully trusted unless he proves with performance and results. Anyone can claim anything, including me, but without proof, it wouldn't fly unless you do careful DD. A better way to interpret scalptrader's thread is: don't follow blindly, do research for yourself.

 

Anyway, I personally don't follow anyone after follow so many already from earlier in trading career. But it's healthy to look around but always with a skeptical eye is all. Accept these people are your mentors/guides etc, but remember that it's your own initiative to get into their chat rooms, your own bank account and credit card that you punched in on their site to get education from them. In the end, accept these fact with responsibility is all I'm saying, can't blame anyone else for trying to make a living, a bit dishonest by some but always the responsibility always lie with you. This is trading, accepting responsibility for your own actions is the first step to growing as a trader so accept this step too as your own doing.

 

Good luck and happy new year! Be nice and play nice please!

[enlightedtrader 10]

I was listening to an interview by Peter Reznicek today and found one of his comment particulary interesting.

 

I am not a candlestick pattern trader but he mentions how day traders focus too much on trendline breaks, channel breaks, and candlestick patterns on too short of a timeframe. He mentions how these technical patterns are only valid on a 15 minute or more timeframe.

 

I also agree with his comment. I am not particulary fond of price patterns when day trading. Any thoughts?

 

1 min, 2 min, 3 min, 5 min, 10 min, 15 min, you name it. Any time frame is workable as long as you know how to make it work. Or any time frame is not workable if you don't know how to make it work. The key here is not the length of time frame, it is up to the trader to make things work.

 

Having said that, I do think lower time frame will generate more trading opportunies. In lower time frame, you can be a scalper, a swing trader or you can be both a scapler and swing trader. On the other hand, you can't be a scalper in higher time frame,

 

My personal experience is that since I moved from higher time frame (5 min) to lower time frame (1min/3min), my trading has become more flexible and more efficient. I realize other traders may have opposite experiences. There is nothing right or wrong. The important thing for traders is to find our own comfortable trading style and edge.

[walterw 10]

Coming back to "Intraday Technical Patterns" what I said before about whats behind the pattern I believe it is Support and Resistance.... and the performance both have as they are tested or breaked... The example above is very clear, a support got breaked... then this support became resistance and DID hold.... I call this "break and Hold" and will expand the topic on a diferent thread ... about scalping or trading.... its the same... they are in diferent speed universes... a bank can be a scalper on weekly universe... ALL technicall aproaches are just about the same.... we can vary on our speed universe... but all technical concepts are common for scalpers as to traders...

[mikjurado 10]

This chart show us a really amazin pattern... Is really important to recognize that specially the measures... I think that only Torero knows what we are talking about

 

mike

 

Hi walterw,

 

Can you elaborate on that a little bit more? Here's my example of what I was talking about using patterns with price action:

 

 

Like I said before, patterns need to be confirmed by price action, in this case, lower higher and that turned the support area into resistance area (this is what I call confirmation of a breakout). My stop would have been the last higher low pivot (just below 796), and entry just below the confirmation area, then target is around 791. The R:R is not even 2:1 so I'd either take a small position or find a bigger pattern in higher timeframe that might be at play to find a bigger target to confirm the direction and possibly lower target. In this rectangle target, the target is near the low of the day, which is quite a safe exit.