Is Chart Pattern Still a Useful Tool for Trading?

[Jack Francisco 10]

Hello Guys,

 

I need your advice guys, Do you think rarely that chart pattern is still a useful tool for trading?

Let's share the ideas to have a better trading. Is there any other tools to take into consideration when trading?

 

Thanks

[Trader1 10]

Chart patterns are very useful, double tops and bottoms, flags, heads and shoulders are my favorites

[Obsidian 10]

my trades are mainly based on formations-patterns-trend lines. I do not think this concept will ever die.

of course paying attention to when and where these patterns occur is crucial as well...

[BlueHorseshoe 10]

Hello Guys,

 

I need your advice guys, Do you think rarely that chart pattern is still a useful tool for trading?

Let's share the ideas to have a better trading. Is there any other tools to take into consideration when trading?

 

Thanks

 

There was a good book published last year by Peter Brandt called 'Diary of a Commodity Trader'. Brandt trades purely from chart patterns. What's interesting about him is that he operated very successfully as a CTA for several decades (hence lots of audited accounts proving he's not just another vendor/huckster). He also has a blog where he posts a lot of his analysis - a google search should pick it up.

 

Hope that's useful to you.

 

BlueHorseshoe

[natureboy1618 10]

Chart Patterns are definitely still useful - all the more if they are able to be identified via computer.

 

The Diary of C. Trader book is good. The author records his trades for about one year, earns about 60% Return using classical patterns and discretionary trading. The fascinating thing is his accuracy was really low - near 10% at times if I recall.

[Jack Francisco 10]

Thanks guys- I do appreciate all your replies about this point. For sure I will definitely look for this book to improve the effectiveness of my trading.

 

Others share your views- is there any other alternative tools which is very useful for trading?

>>>>>>>>>>>>>>>>>>>>>>>>>>>:helloooo:

[ForexTraderX 10]

Thanks guys- I do appreciate all your replies about this point. For sure I will definitely look for this book to improve the effectiveness of my trading.

 

Others share your views- is there any other alternative tools which is very useful for trading?

>>>>>>>>>>>>>>>>>>>>>>>>>>>:helloooo:

 

Nope. that's all of em. next post.

 

j/k.

 

here's a list of what i find works. it is not a complete list, and much of it is conceptual, but it should give you some ideas:

 

support and resistance

 

previous significant highs and lows, such as daily, weekly, monthly, session, etc.

 

trendlines, and trendline breaks.

 

VSA

 

market profile

 

candlestick patterns (check out bulkowski. he's done some amazing work on probabilities and patterns)

 

understanding market microstructure

 

understanding auction market therory (microstructure is a subset of this)

 

trading failures of parabolic moves.

 

statistical arbitrage (see "pairs trading")

 

going long once price breaks out into a relatively low liquidity zone, and covering once it hits a zone of significant liquidity.

 

fading barrier options

 

pushing into barrier options

 

arbing forex futures against forex spot market (takes proper capitalization, but can be a guaranteed profit if one is prepared for potential black swan volitality swings - hint, use options as insurance here)

 

fading a gap fill, either in forex, but better yet in equities.

 

using options in the equity markets to get "paid" while you wait for your order to fill...so you make money regardless of whether you even get the trade to trigger or not.

 

there are many more... but, this should be enough to get you started.

[natureboy1618 10]

Better still, combine chart patterns and the contextual filters that ForexTraderX has listed.

 

Using patterns like ABC or ABCD within the context of say buying a support level or VSA confirmed breakout, etc will make systems with different probability distributions than if you just traded the patterns alone. Generally pattern allows a tighter stop loss, thus skewing reward to risk on successful trades. More stop outs can be part of the package.

 

More important though is money management.

[ForexInvestor 10]

I think candlestick still really important tool to trade, but we must use this candle stick in higher timeframe like D1 to get better signal result