As we all know, it is very difficult to change the long established habits that were inculcated in us when we were quite young. People will fight to defend old maps and old symbols, regardless of whether those maps actually represent any territory here and now, and regardless of whether they ever did represent just what we were told they represented. Even when people take their map and go to the territory and compare them and note the changes or corrections the map needs, they will still cling to the old map, so much so that even when these realities have demonstrably changed, or are provably different from the "map", they still tend to deny the external reality and assert the "truth" of the map. Is it any wonder then that there are contradictions among the views of various . . . market analysts, if they are each clinging to a simple all-out view and for all practical purposes ignore anything that does not support the view they hold already? There are no contradictions in reality, you know. If we can just look away from the high abstraction long enough to see the facts, we find no contradiction. If we value the map more than the reality, we must not be surprised to find that the reality doesn't always fit the map. In such a case, the reasonable man will change his map, not try to explain away the facts. -- John Magee
I've been trading the 'flags' you mentioned for 40 years based solely on the pattern itself without any 'real world info.'. And I can assure you that in the vast majority of the cases, the supply and demand that created the flag continues on leading to the desired result. Moreso than any other pattern I know. And as it is my favorite, I had one embroidered on a sweater someone knitted for me! Actually, rather than reply to your post, I just wanted to show off my sweater!!
the only thing I firmly stick to is buy low and sell high. no secret to everyone here. a little bit advantage over others I programmed my rules into my trading platform. I am a small retail trader. trading is an art. at the mean time, it is science. when you talk about why sky is blue, that is science. when you talk about painting a blue sky, that is art. the market actually just does two things,either up or down. when you are in the market a lot, you will easily get a sense what the market will do next. even though not every time my guess is right, I know I only need 0.55% winning rate, I am on the roll. that is science. (I just factor 0.01% commission and slippage). I do not pay attention much to chart patterns. I know chart patterns are illusions. just like when you look at clouds, if you want something meaningful from the cloud, you can easily find out something like a car, a person,sheep, ...you name it. I called it make sense from non-sense. there is no science here. I wrote a small simulation program,randomly generate charts. I found amazingly those charts seems real! bascially if you are an ebay aution user, you know how the market works. stock/future/option are AUTIONED. my edge is I strickly follow BUY LOW and SELL HIGH law. I enjoy trading.
They're only illusions in your mind. The clouds (patterns) themselves are real. They are amazingly useful for predicting the weather that will follow if you pay attention to the clouds and not the shapes you believe they look like.
I trade pull backs to moving averages. I make money on most of them. A good product to trade these on are the eminis. You should be able to make around $2k a week doing this, assuming you have around a $20k account. NB: don't trade break outs. That is a loosing strategy. Trade 1 minute charts and use a 20 period moving average. Don't use candlesticks, since they lie. Use line chart to smooth out the noise.
cloud is cloud. you should never think cloud as something else. chart is chart. I give a joke here. there is a gamber, who throws coin. head up,draw a green bar. head down, draw a red bar. he is a professional gambler. magically he draws a nice up trend chart. then presents this chart to a chartist. the chartists' eyes light up, he insists on knowing what the stock/future/option sybboml is, and he wants to buy. the gambler told him: the charts is drawed using a coin flipping way. the chartist is mad! Chart itself does not add more information. In our programming word, it is a representation of data. that is why I called illussions. scientifically, in order to improve odd, you need add more information, the more raw information you have, the higher the odd. that is why house has edge, insider always wins. x=y+z+i+j+k look at this formula, you have five variables, in order to predict X, you need know all those five variables. if you know just one, you predict the X with other four unkowns, may be way out of the exact X, with more being known, your prediction of X becomes more accurate! chart is just like replace above formula with x=g+m+n+W+t. actually the same formula.
Isn't it funniest that the gambler after mocking the chartist says he makes money off the "lows and the highs" from the same chart..
You are right , there's no such thing as "an edge" - for retail traders - : http://elitetrader.com/vb/showthread.php?t=216484
BS... in short...throw you example why-there is an edges(in stocks in particular) that are too small to be exploited by big money. Yes, that simple. You just can't trade big size there, because of liquidity constraints. On top of that-50k a year trading simple *pattern* off a bunch of stocks might be enough for me, but not enough/not worth for a big house to exploit it. I'm saying this, cause I trade EXACT same thing over and over every day for YEARS. This post above might sounds good, sophisticated and s*** but reality is a bit different. Simplier perhaps.