I will add: fake patterns have the highest profits expectations. For example, a fake H&S is one of the most profitable pattern I know. Because everyone knows H&S and try to short when the neckline is tested. CM
Triple bottoms, Retail confidence after the 2nd bottom worked is high, so good odds the triple will fail and fast to trade / slip SL's. That's about the only pattern which has a 70%+ chance of working. Look for Trend line, draw line through the middle of price, then look to enter long below the line on Support being visible and vice versa for short, if it starts heading to new low's / high's then bail, keep it that simple!!
Yes, but the transitions between trend and chop occur randomly in time, and at all time frames. However, the nature of the randomness is such that using Gaussian statistics to analyze markets is not so accurate of a model either. It's a tough game to be sure.
There are programs out there like that some label as "scanners" or "screeners". Also, depending upon what you're doing...many definitions of the word pattern. For example, I read an article on bloomberg about social media algo's searching social media for "patterns" for trade opportunities and they were not talking about "chart patterns". First software I ever saw that could be customized for someone looking for whatever "pattern" was TradeStation easylanguage programs when they first started in the 80's via the name "Omega Research". Simply, pattern recognition programs have been around since the 80's regardless if the recognized pattern work or didn't work for the trade or investment at the time when the program found the pattern. I suggest you use google considering you're new and probably didn't know there's thousands of software out there on the market that does what's called "pattern recognition" that some folks just call "scanners" or "screeners". There's even free websites that does scans/screens for patterns. Heck, even Yahoo had one or still does that searches fundamental patterns and its free via something called scanners or maybe screeners. Once again, its been around for a few decades but that doesn't imply they work.
Rather than studying patterns, another approach could be asking "what is the market trying to do"? Sometimes depending on context, it seems obvious, but the tricky thing is not just see it in hindsight but on the hard right edge where anything might happen. Patterns may be overruled because of context or other more invisible factors, ie. fundamentals, news and events. So even though some traders run stats on patterns and derive signals from that, there just might be more going on that the patterns don't show.
You got my attention here. Can you please elaborate on the bold line? Possibly with a screen shot. Thanks in advance for your time/reply. What you say by middle of price? Also in Trendlines, I find the angle is also the key? I see more confirmed breakouts/reversals happen when the Trendlines are at 45degree whether it is long or short.
Well I am sure that happens, sometimes news cause a temporary imbalance in price, a run in an unexpected direction or an extension of the move. But those are just deviations, which are to be expected and that's what your stop loss is to protect against. Also, if what you're doing is mathematically sound, a fair amount of times on any news you're actually positioned in the correct direction anyways. I guess what I am saying for most instruments, it's a lot more difficult to consistently (Trade) them via news, than it would be via technicals. So, any news is a minor thing in the grand scheme of things(this is assuming your setup is profitable and repeatable over time).
The angle you write of is entirely an artifact of your screen size, your timeframe, and even the detail in your price data. To wit, you can kill, *or*create*, a 45° line, any ol' time you want. If you wish to salvage the thought, consider this: mathematically, a 45° line is a slope of +1. This is rise/run. Thus, your 45° line represents something like "the same degree of increase in price, per unit of time" -- a 0.01% increase in price, in the period of 0.01% of the time displayed, gives you the 1|1 ratio. With that in mind, you can translate that to a trading rule for other prices/times.
Can you elaborate on this. I find the 45 Degree TL brk is more confirming in whatever time frame I use. Most of my best trades are when I take the 45 degree TL brk out/downs. What do you mean by your statements? (slope of +1)? What you mean by rise/run? brk out/down?