PATTERNS -- So These REALLY Work???

Discussion in 'Technical Analysis' started by al c., Mar 16, 2003.

  1. I use a matrix where the cells are various patterns in part.

    The rows are ID'ed with names of the fractals I use to describe bar durations.

    The columns have descriptors of various kinds of groups of market conditions (pace mostly)

    It's net to see it operate.
     
    #31     Mar 17, 2003
  2. MACD

    MACD


    Jack,

    Is this "matrix" some software that you developed or is it an off the shelf program? In timing of patterns and swings we use something similar to measure "cycles". For most traders that are new to patterns this would slow down their "learning curve" and perhaps complicate what we see as a simple process. Not sure I am really addressing what you are doing but sounds interesting. We time "pace" by the number of bars in a swing but this too causes unnecessary confusion at the beginning of someone that is approaching pattern recognition. It is very important for a trader to keep things extremely simple at the onset to avoid confusion and frustration.

    I trade 2 types of patterns: Type 1 may be called the classical patterns which include triangles, head and shoulders, etc.

    The second group of patterns are in my opinion the BEST ones to trade as they appear often on all time frames and are "High Probability Trades." There are 12 patterns in this group. All are clear with good rules that state there perameters. It becomes quite simple for a trader to recognize the pattern -- measure the risk and predict the entry and exit -- stops and targets are also readily determined. I hope that "al c." who started this thread is going to show these patterns and give examples which will clarify his pattern trading style. He has also suggested above that he would post Real Time Calls showing his selections. This would help greatly to make the point that Patterns do really work.

    Good Luck, Jack, with your approach and I would love to hear more about it. Sounds like it has some relationship to point and figure systems but can't really understand what you are doing. Perhaps you would not mind posting a chart or screen shot of your trading setup.

    Thanks to you in advance,

    MACD
     
    #32     Mar 18, 2003
  3. Thanks for your comments. I will try to get an attachment for You. The computer I am posting from didn't have what you want on it.

    I think I could describe the primary value that it has in the meantime until I locate a floppy or file.

    There are subsets of patterns that relate to different paces. Paces are different for me as they primarily relate money velocity and volatility.

    What seems to happen is that all paces have sequences of patterns that lead to money making oppotunities. The most common opportunity is the BO (Breakout) of either volume or price or both.

    The principle that is so dominant (and trulymost helpful) is that the migration of the operating point of the market is smooth. There is no jumping around.

    To trace these paths also leads to different cells where the BO occurs. I have three BO locations.

    Today on ES you get to see at a slow pace a four step migration.
    The cell pattern names we are travelling are Congestion; Convergence, and Centering. The Centering will proceed to the adjacent BO cell.

    I know to trade against whipsaw in congestion and the fractal level (these are listed to name the rows of the matrix) dictates the cycle frquency of the "slalom" I do opposite of those getting whipsawed. as convergence pattern comes into play I have to sideline when the timing gets to be a "noise" function.

    If the centering becomes a FTP instead of symmetric or FBP, I have guidance for bracketing and regard for failure to BO.

    As you say beginners cannot handle this stuff because of the rate of learning required etc. Often not undestanding is okay. But just being knowledgeable about stuff on the horizon helps.

    I can definitely suggest to you that it is screamingly helpful to know what is not possible at any given time is extremely important. The fact that every cell location has a limited number of adjacent cells and that they are in to sets (one or two dimension changes required to enter), really puts you in a place of increased confidence for anticpatory purposes.

    I have just the beginnings of a journal going, I will try to amplify on this topic in the future.

    strangely, if a peson is looking for an excape hatch to get the heck out of the marcro analysis mire statistics creates, this is a very fertile place to go to.
     
    #33     Mar 18, 2003
  4. ZBEAR

    ZBEAR

    MACD, Glad to see you here again......

    Let's see, we have the Bullish & Bearish verions of the
    Gartley / Butterfly / ABCD / 3 Drives - that would be 8, what are the other 4 ?

    I recently read Scott Carney's book with great interest.....
    thought it was well written, and he's added a couple of patterns
    ( Bats & Crabs ) to his arsenal.... makes sense to me - what say you ??
     
    #34     Mar 18, 2003
  5. MACD

    MACD

    Hi ZBEAR,

    I cannot comment on Scott Carney's book as I have not read it. As to the other patterns there are several more:

    (1) Bullish .618 - .786 Retracement Pattern.
    (2) Bearish .618 - .786 Retracement Pattern
    (3) bullish 1.27 - 1.618 Extension Pattern
    (4) Bearish 1.27 - 1.618 Extension Pattern

    These are the other 4 you are questioning above. In addition these also come into play occasionally with another pattern which you might call "The Opening Price Play".

    So these represent the 12 Primary Patterns.

    This all sounds like a lot to learn and experiment with. But there are learning systems for patterns which will greatly reduce your learning curve.

    The beauty of this type of trading is that it "objectifies" the conditions for a trade and makes those conditions "visual". You can "see" the pattern on the chart WHILE it is forming. So you can ANTICIPATE the completion of the pattern. This permits you to know when to enter a trade as well as providing profit targets and stops -- and all objectively -- rule based -- not guesswork.

    If, for example you have 12 people trading together,then unlike other systems' you will get all 12 to agree on the same entries and exits. All will "see" the pattern -- all will AGREE that it is tradeable.

    Other pattern recognition systems do not work across all time frames and markets and in addition there is frequent disagreement amongst the proponents of the system as to the validity of a particular trade. Not so with this system. All will see it and all will agree that it is valid.

    I am hoping that we will soon make this thread an actual real learning experience by getting to Specifics and get out of the generalities. I am waiting for the originator of this thread to lead the way and make this thread a great value to traders searching for a method that produces High Probability Trading. This may be demonstrated with real time calls and chart posts. I will try to encourage by my posts here that we shall make that happen.

    It is certainly UNUSUAL that al c. has offered to post calls in "REALTIME". This will validate what we are talking about. As far as learning this pattern trading system, books by Larry Pesavento are certainly useful. However, I look forward to making this method at least understandable on this thread.

    Let's work together to that goal. That is to make this an example of a really valuable learning experience for all those interested. We should guide this thread to that conclusion. So I await further elaboration from al c. and I shall try to continue to post while I am trading as well.

    Thanks,

    MACD
     
    #35     Mar 18, 2003
  6. ZBEAR

    ZBEAR

    Hi MACD,

    If possible - could you post chart examples of the 4 above mentioned
    "Types" of .618 .786 / 1.27 1.618 patterns,
    so that those who are interested might have an example.

    **Unless of course they are somewhere in one of the Larry Pesavento books that you could refer us to.
    Perhaps I have overlooked them ?

    Thanks.
     
    #36     Mar 18, 2003
  7. al c.

    al c.

    ZBEAR,

    I saw that you asked MACD to post some charts, so I thought I would post one with what you were asking for however, this chart also shows a Bearish Gartley. I hope this helps.

    MACD,

    You must be a part-time novelist, I wish I had you writing skills! :)

    thanks,
    al c.

    p.s. sorry about the crosshairs on the chart.
     
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    #37     Mar 18, 2003
  8. Jack,

    what are Hausdorff dimensions of your fractals?

    Thanks,
    Wally
     
    #38     Mar 18, 2003
  9. al c.

    al c.

    The patterns have been working extremely well in recent days.
    Attached is the first of 2 charts posted. The first chart shows the confluence of 2 patterns shortly after the market open yesterday.

    The second chart will be on my next post and, shows the move after the patterns completed.

    Still amazing to me to watch these patterns and ratios setup and produce consistent results.

    al c.
     
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    #39     Mar 18, 2003
  10. al c.

    al c.

    Attached is the second chart I mentioned in my previous post.

    al c.
     
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    #40     Mar 18, 2003