What is your most profitable pattern?

[BeginnerJoe]

Somebody chose triangles. It's not a bad pattern at all - for me it has clearly defined entry and exit levels:

Except if the liquidity happens to become exhausted after breaking out of the triangle, the whole thing reverses. If triangles work that well, we'd all be using it.

 

[ZEN archer]

Except if the liquidity happens to become exhausted after breaking out of the triangle, the whole thing reverses. If triangles work that well, we'd all be using it.

I wouldn't enter it on a weak momentum BJ
That's why I would combine it with few indicators and a bit of previous/historic pa analysis around that level to get additional info. As Jon pointed - momentum takes care of the rest (if there is a strong momentum around trigger time)

I guess it could be entered randomly as well, if you like that approach - r/r can be very good (especially if the break is closer to 1/3 from the apex) to justify it as the 'risk is shrinking' (if you follow it and keep moving the stop)

 

[kalott]

For those who believe in computer generated patterns

Introduction to Performance Statistics - YouTube

 

[barjon]

You can find patterns everywhere you look if you try hard enough. Here's a trade I took in the midst of what finished up as a pin bar type bar.

You could see it as a bull flag breakout, a channel break out, a minor support play, a fib level play, an MA play - even, at a stretch, a small inverse head and shoulders (more clear on a line chart). Had I been inclined to go short I could probably find some pattern to support it - there's a 1,2,3 reversal pattern for a start.

 

[Splitlink]

You can find patterns everywhere you look if you try hard enough. Here's a trade I took in the midst of what finished up as a pin bar type bar.

You could see it as a bull flag breakout, a channel break out, a minor support play, a fib level play, an MA play - even, at a stretch, a small inverse head and shoulders (more clear on a line chart). Had I been inclined to go short I could probably find some pattern to support it - there's a 1,2,3 reversal pattern for a start.

You are right. You can always find a pattern to justify what you want to do, anyway. We are such fools, sometimes. Why don't we go ahead and do what we think, regardless? Probably, because we want to explain the reasons for our actions on sites, such as this and, without a pattern, our reasons don't make much sense.

 

[ZEN archer]

No votes for h&s, flags or pin bars so far

Something else is the most popular choice

 

[malaguti]

No votes for h&s, flags or pin bars so far

Something else is the most popular choice

Nope, mine is definitely H&S, but used when reversing a short term trend, back in the direction of the longer..just amazing

 

[jungles]

the best patterns in my view are both simple and easily spotted by market participants

below is the pattern and then an example from a trade last week

 

[BeginnerJoe]

Here's a demonstration of my high probability liquidity based pattern. The trade currently represents a 12%+ account growth. But my previously mentioned holy grail dictates I run this and so I do because I see more liquidity ahead.

 

[Purple Brain]

the best patterns in my view are both simple and easily spotted by market participants

below is the pattern and then an example from a trade last week

I can well imagine there might be an upward sloping moving average running below, perhaps even just touching, those lows on the first chart, and a downward sloping one just above the highs on the second. Which is exactly how I trade. I am embarrassed I have nothing more complex to offer.

 

[Liquid validity]

@ Purple - Absolutely nothing wrong with good old HH HL / LL LH.
Its not as susceptible to time series bias for a start,
as its based largely on levels, not patterns within a certain time series.
Keeping it simple is a very sound approach.

@ Jungles, completely agree.

 

[Liquid validity]

http://www.trade2win.com/boards/tec...ur-most-profitable-pattern-7.html#post2104826

http://www.trade2win.com/boards/tec...ur-most-profitable-pattern-7.html#post2104846

TBH I sort of agree with both arguments in part.
Tar is saying that a solid, more guaranteed edge at an
institutional level is by definition something that is more concrete.
NBBO front running on the NYSE, co-location latency etc.
They are hard and fast, quantifiable advantages.
They will only fail outright due to regulation, although competition
still plays a part even here - costs and liquidity to name but two.

I also agree with bbmac that a sound well thought out and tested plan
can also give an advantage over those without such a plan.
As mentioned, aside from the risk of failure due to regulation and costs,
you also face more of a risk of an approach failing at some point.
That is the only additional difference for me.

So in that sense, with the kind of advantages that institutional players
enjoy, they would be insane to resort to a less robust method as employed
by a retail trader.
That does not mean a retail trader can't turn a profit with a plan,
its just harder as a retailer faces greater obstacles:

1 No fixed salary.
2 Greater costs (paying spread, increased comms etc.).
3 No technological advantage.
4 No information advantage.

You also have to remember a retailer does have the following advantages:

1 Less obstructive regulation.
2 No OPM pressure.
3 No shareholders to please.
4 Greater flexibility - in sizing (entry / exit liquidity), instrument choice and duration.

Its far from easy at any level, but its certainly possible nevertheless.
Its swings and roundabout whatever you do.

 

[tar]

LV , thanks , yes it is possible for retail traders to make money that's for sure and some do make money , whether with TA or PA or buy and hold it is possible for an experienced disciplined good retail trader to make money , that's not an issue , the issue is there is no such thing as an edge in a form of a specified setup or chart pattern that it has to be found , markets are dynamic and competitive and such thing wont exist that's the whole idea behind the markets .

 

[Liquid validity]

LV , thanks , yes it is possible for retail traders to make money that's for sure and some do make money , whether with TA or PA or buy and hold it is possible for an experienced disciplined good retail trader to make money , that's not an issue , the issue is there is no such thing as an edge in a form of a specified setup or chart pattern that it has to be found , markets are dynamic and competitive and such thing wont exist that's the whole idea behind the markets .

I tend to agree with the bold highlight, at least from my own
perspective with automation.
I'm yet to find anything other than semi random entry that
works when automated (I doubt I will either).

Anyone who does so on a discretionary basis is probably using
price action experience more than they think to filter out
duff, low quality 'setups'.

Those same 'setups' without that discretionary PA filter are largely baseless
in my own experience in a none subjective automated setting.
That is backed up by lots of other anecdotal evidence from people whose
opinions I trust (Eckhardt to name but one).
Many research papers reach the same conclusion,
although as a lot of them are from none trading
academics, a pinch of salt is sometimes needed with the conclusions .

 

[tar]

I tend to agree with the bold highlight, at least from my own
perspective with automation.
I'm yet to find anything other than semi random entry that
works when automated (I doubt I will either).

Anyone who does so on a discretionary basis is probably using
price action experience more than they think to filter out
duff, low quality 'setups'.

Those same 'setups' without that discretionary PA filter are largely baseless
in my own experience in a none subjective automated setting.
That is backed up by lots of other anecdotal evidence from people whose
opinions I trust (Eckhardt to name but one).
Many research papers reach the same conclusion,
although as a lot of them are from none trading
academics, a pinch of salt is sometimes needed with the conclusions .

It is not possible to consistently make money with the same predefined static set of rules "setup/pattern" because bets influence prices = self defeating process .

 

[Liquid validity]

It is not possible to make money with the same predefined static set of rules "setup/pattern" because bets influence prices = self defeating process .

Not if its random.
The random element compensates for the dynamic element,
offsetting the static ruleset disadvantage.
Otherwise completely agree 100%.

 

[the hare]

It is not possible to always make money with the same predefined static set of rules "setup/pattern" because bets influence prices = self defeating process .

What do you mean by 'always make money' ?

Its beyond dispute that some traders do influence price, but I doubt if most t2w members with a few grand in a spread betting account have much significant influence. There's no doubt that they might move price in illiquid stocks, even with small orders, and this sort of manipulation has been exploited, but its low level noise

I suppose it comes down to semantics, if you believe an edge has to be permeant for all eternity, then I agree edges don't exist. If on the other hand you believe that an edge is something that can be developed, refined, exploited and possibly retired at some future point, then they exist.

 

[Liquid validity]

There's no doubt that they might move price in illiquid stocks, even with small orders, and this sort of manipulation has been exploited, but its low level noise

I can personally vouch for that, when I was trading AIM,
I decided to see exactly what kind of impact it had.
15k whole block - market order, fill price was £500 ish worse than quote (not spread)
at time of execution and quote reflected that straight after.

You can do it the other way around to take advantage of all the
tip sheet muppets, but I realised you needed deeper pockets than I had to do that.
Plus you are fighting against the NOMADS / market makers who are
often one and the same, who always stay impartial with no info exchange
between NOMAD and broker offices as that would be illegal lol:

 

[tar]

What do you mean by 'always make money' ?

Its beyond dispute that some traders do influence price, but I doubt if most t2w members with a few grand in a spread betting account have much significant influence. There's no doubt that they might move price in illiquid stocks, even with small orders, and this sort of manipulation has been exploited, but its low level noise

I suppose it comes down to semantics, if you believe an edge has to be permeant for all eternity, then I agree edges don't exist. If on the other hand you believe that an edge is something that can be developed, refined, exploited and possibly retired at some future point, then they exist.

I already edited it to "consistently" , this has nothing to do with t2w , as you are well aware if t2w traders are trading a certain setup/pattern then others are doing so as well , so if a specified something or setup or pattern is supposed to give money then traders will jump all over it and it will become obsolete in no time that's what i meant by bets influence prices .

 

[tar]

laymen terms : It is not possible to make money consistently by backing United or the same horse in every event , the odds are already priced in .