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  1. #1
    Junior Member Proteso's Avatar

    Are chart patterns "reliable" in all TFs? !!!

    Hi all, i'm starting the journey to THE DREAM but, for now, all i have are some silly questions and any help is appreciated

    Well, as in the title:
    i'm aware that chart patterns (head&shoulders, double top, flags, ecc..) are not the Holy Grail, but can i assume that they're more reliable in higher time frame charts (ex. 4h candles +)? Or do you think they're pretty accurate (or inaccurate) equally in high and low TFs?

  2. #2
    Legendry Member Okane's Avatar
    Hey!

    What you want to be looking for is, price action.
    Patterns are good, but only if you combine them with price action.
    Meaning, identifying and confirming strong valid key support and resistance
    areas. You can find such areas buy simply drawing lines, most valid are
    the ones on higher time frames. Draw lines and then check patterns.
    In trading, you have to see the whole picture! Only then the patterns
    and indicators will work well. If you solely rely one just one thing
    to indicate price direction you will lose most of your trades.

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  3. #3
    Legendry Member milos's Avatar
    Charts are good.It is needed to learn how to read the charts.

  4. #4
    Junior Member Proteso's Avatar
    Hi Okane, thankx for the reply!
    Price action, ok. Bigger price movements means more time for a signal to stay ITM, so if i spot a pattern where the price is touching a sup o res, i can expect a bigger price excursion. But the price touch sup/res only a few times in a day and even fewer times it creates a pattern.

    Seems like candle formations (pin bar, shooting, ecc..) are a bit more useful as a confirmation for the signal of a certain strategy, at least they are small and only a few candles away from the signal given by the main strategy.

  5. #5
    Junior Member Proteso's Avatar
    Milos that is super true, my problem is that my reading tend to change when i change TF.. shame on me!

  6. #6
    Active Member hecky3's Avatar
    I came across a book called the Encyclopedia of Chart Patterns by Thomas Bulkovski. He looked at every pattern he could find and checked how many hit the target predicted by the pattern. The most successful was the head and shoulders which won 40% of the time. I personally don't think a system that loses 3 trades out of 5 is worth using. He probably used daily charts but I don't know.

  7. #7
    Moderator Kolyo's Avatar
    Quote Originally Posted by hecky3 View Post
    I came across a book called the Encyclopedia of Chart Patterns by Thomas Bulkovski. He looked at every pattern he could find and checked how many hit the target predicted by the pattern. The most successful was the head and shoulders which won 40% of the time. I personally don't think a system that loses 3 trades out of 5 is worth using. He probably used daily charts but I don't know.
    Hi hecky3,

    I think I have this book in my library and it is really great book of char patterns. I donít know where you spotted that the best pattern has 40% rate of success but it is not true. The best patterns out there can give 75-80% success, but most of the patterns are in the range of 60-65% if properly applied. If you want to automate the process of chart pattern recognition you can try Autochartist. This is a great tool for Metatrader, available only true some of the big forex brokers. For example with Oanda demo account you achieve full access to this service but with 60 minutes delay in painting which is ok, for long term setups. For real accounts it is real time and it works very well for me! Also you can see there the statistics for each pattern - the percentage of the successful trades based on a chart pattern. I donít think that you can achieve best results relying only on this but it can greatly help you to improve. I will explain this in more details in a separate thread later
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  8. #8
    Active Member hecky3's Avatar
    Quote Originally Posted by Kolyo View Post
    Hi hecky3,

    I think I have this book in my library and it is really great book of char patterns. I donít know where you spotted that the best pattern has 40% rate of success but it is not true. The best patterns out there can give 75-80% success, but most of the patterns are in the range of 60-65% if properly applied. If you want to automate the process of chart pattern recognition you can try Autochartist. This is a great tool for Metatrader, available only true some of the big forex brokers. For example with Oanda demo account you achieve full access to this service but with 60 minutes delay in painting which is ok, for long term setups. For real accounts it is real time and it works very well for me! Also you can see there the statistics for each pattern - the percentage of the successful trades based on a chart pattern. I donít think that you can achieve best results relying only on this but it can greatly help you to improve. I will explain this in more details in a separate thread later
    Thanks Kolyo, I was quoting from a review of the book in the Traders' magazine. I've been averse to using patterns since I read it so I'm grateful for your comments and will give them more weight from now on.

  9. #9
    Veteran Member Dan21's Avatar
    I don’t think that one and the same chart patterns are equally working in all different time frames. Some of them may work better on higher than lower frames and vice versa! However beer in mind that market movements are fractal in nature and the patterns can be observed with the same frequencies on each time frame. The only difference is that on smaller time frames the setups are more noisy and probably less predictable.

  10. #10
    Junior Member Proteso's Avatar
    Quote Originally Posted by Dan21 View Post
    market movements are fractal in nature
    I admit i had to google this but now i got it, something like "history repeats itself", and it reminded me to add Fibonacci on charts.

    Trading seems such an hard thing to do, i mean, it is really possible to be profitable for like 1 year and more? With all these variables coming into play? No surprise that autotrading is failing so far, you can spend all your life coding the algorithm and still you will be missing a lot of things.

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