Chart pattern percentages

Discussion in 'Trading' started by rfoulk, Jun 24, 2002.

  1. rfoulk


    I'm looking for sources of information on the success/failure rate of various chart patterns.

    I heard that a Dr. Earl Davis of Purdue University authored some sort of study on the subject, but haven't been able to find much on it.

    Are there other studies or sources of such information available?


  2. A recent issue (last 3 months) of TASC had an article on the Head and Shoulders success / failure rate. Might be worth a look if you're interested.
  3. Bulkowski wrote a big fat book about it (Encyclopedia of Chart Patters?) , but there's big doubts about the validity of his studies. But hrm, so unfortunately all I can say is good luck. If you find some good info on this, let us know.
  4. You might check out the Victor Sperandeo book..."Trader Vic II--Principles of Professional Speculation". He shares a lot of
    interesting insights. Here's a quote to get your mouth watering...

    :) " If there is a gap, and it is going to reverse, it will do so
    10 to 15 minutes after the opening 95 percent of the time.
    Please believe me on the odds, they are real."...Victor Sperandeo.
  5. Yes there are studies out there in books and online articles...but you probably aren't going to like the suggestion I'm about to make to you.

    First of all, ignore all book suggestions unless they were written and published yesterday...the market is forever changing and results yesterday will have different results tomorrow.

    Now...with that said...boot up your chart program of the financial instrument you trade. For me...its the NQ, ES and QQQ and start printing each day...going backwards if intraday...for easier research than staring at the computer monitor.

    Now...based on all the chart patterns you know (have printed examples even if they are from a website like for example) go thru each day back about a year.

    For example...I have printed out every trading day of the NQ, ES, QQQ (1min, 3min, 15min and daily charts) for the past two years with in-depth annotations.

    Review each day and write down each pattern with its own heading. Then...based on how YOU TRADE and not how someone else trades...write down how many winners and losers each pattern has on each time interval they appear.

    My point is this...your statistical result no matter how much work it took for you to get the results...will be MORE VALUABLE then someones published work.

    In other words, someones published works on Ascending Triangles in Nasdaq 100 stocks may have (most likely will) completely different results of Ascending Triangles in stocks in the Dow 30.

    Or in my case...what works well and appears often in the NQ...may not work well nor appear often in the ES.

    It's what I did with Japanese Candlesticks...the results was a bit surprising and how their probability for success changed when such patterns occur in relationship to other indicators on different time intervals.

    Thus, I can say without a doubt...will improve your trading tremendously.

    P.S. It your results are good...write a book :cool:

    and make sure your easy to find just in case a year from now someone else post a similar question to yours and won't like my reply.

    Nihaba Ashi

  6. that one right there made me glad I tuned in.
  7. toby400


  8. trader vic is a great book. I don't know if he is still trading or just enjoying all the money he made. He has several chapters in the book about psychology and balance in life so I wouldn't be suprised.
  9. toby400


    I think if you read the article you will find he went bust.
  10. Read Trader Vic's books a couple of summers of them can't remember if it was I or II, but it had some really bearish thoughts on what would happend with regard to the Clinton Adminstration taking over and how that whole thing was going to play out on a Macro level. At the time I was reading it it was I think 99.....I remember thinking how bad it looked for someone that had picked it up in the last few years because he wrote much of that in the first couple of Chapters.

    If he did blow up I would guess that he broke trading rule numero uno. Discipline trumps conviction. He must have gotten it backwards.

    One of the books had some good info on the Austrian School of Economics though. The first I have seen in a trading book. Their theory of the business cycle is the best explanation for what is happening in the economy right now that I have found.

    #10     Jun 25, 2002