What is your most profitable pattern?

[barjon]

Outside my house there is a bend in the road and a side road a couple of hundred yards further on. There's a little hut by the junction with the side road with "set-up" painted on it - here I sit.

I watch as cars come round the bend and if they accelerate out it it and maintain speed I reckon they are going to keep on past the turn off and hop on the roof like a latterday spiderman as they go past. I hang on if they slam on the brakes, but if they reverse and go down the side road I fall off and nurse a few cuts and bruises in the pub just down that road because it gets pretty dangerous further on and I know it'd be a hospital job if I fell off then.

Cars that dither around when they get round the bend with the passenger feverishly flipping over the map pages I'm not much interested in. They might stay on the main road but I'd prefer to hitch a quick ride towards town with someone who seems to know where they're going.

 

[Liquid validity]

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 .

Yeah but there is one crucial difference there.
Try that by randomly picking to back for win or loss without fixed odds.

 

[Splitlink]

Crikey, Jon. I thnk I prefer city life. Don't you have a bike?

 

[tar]

Yeah but there is one crucial difference there.
Try that by randomly picking to back for win or loss without fixed odds.

Sorry didn't get your point , your winnings are based on the odds you're given .

 

[Liquid validity]

Sorry didn't get your point , your winnings are based on the odds you're given .

In sports betting you have fixed odds.
In trading the odds can be dynamic, even if still decided by the market.
Enter randomly (not completely, time is one factor best not random).
When wrong GTFO.
When right, run it.

 

[the hare]

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 .

I'm a member at t2w and I can guarantee that there's not a single person here is trading the same set ups as I do.

Even if I where to give a clear entry rule such as buy GBPUSD at precisely 10:36 AM every Tuesday morning , it wouldn't really help anyone unless I gave clear instructions regarding exit, position sizing etc.

We also have to consider the typical imprecise rules regarding what constitutes a pattern, everyone's interpretation is different. Try getting a definition for something as simple as a pin bar from a public domain information source such as a forum, you'll probably really struggle, and that's before you've even started to add layers of subjectivity such as good and bad set ups.

Conversely, try finding systems based on optimized pin bar set ups, it'll take you 30 seconds with the right tools.

I'm stuck in the middle of 2 camps on this, I make my living by trading random entries, so I know pretty much where my edge lies, and its not in the set up. But conversely, Im prepared to believe that there are set ups that constitute part of other edges. I believe in those things in the same way I believe in gravity, or that the sun will rise in the sky tommorrow. I'm more comfortable tossing coins, but if I had to go back to trading support and resistance I probably could.

I honestly believe that making money as a discretionary trader has jack **** to do with developing an edge, its a whole other ball game. I would go as far as to say that if I could take a trader such as bbmac, and reprogram him to believe that his buy signals where sells, and vice versa, he'd still probably make money. He'll probably argue robustly that isn't the case, but I think it is. Years ago when I was a TA based trader, I was collaborating with a trader in the US who traded a TA based method that was almost the perfect inverse of the method I traded, and we both achieved very similar returns. We both had an edge, but it wasn't in the set up, despite both of us focussing most of our efforts on developing those set ups for years !

This stuff is the usual sort if t2w fare, a bunch of people arguing about a term without anyone even defining what it means. It's depressing really

 

[tar]

In sports betting you have fixed odds.
In trading the odds can be dynamic, even if still decided by the market.
Enter randomly (not completely, time is one factor best not random).
When wrong GTFO.
When right, run it.

There are odds in trading as well but it is hidden , yes it is dynamic but it is a product of your TP and SL targets , i don't see the difference , anyway i wasn't talking about random entries .

 

[Liquid validity]

There are odds in trading as well but it is hidden , yes it is dynamic but it is a product of your TP and SL targets , i don't see the difference , anyway i wasn't talking about random entries .

Remove the fixed TP, that is the only way it works
Actually, the same applies to stops or at least loss exit...

I only raised random as its what most would call a static ruleset.
Except for the fact that random is dynamic, just like markets are.

 

[the hare]

There are odds in trading as well but it is hidden , yes it is dynamic but it is a product of your TP and SL targets , i don't see the difference , anyway i wasn't talking about random entries .

Lets ignore spread to simplify matters

You have trader A without a clue who opens a trade pretty much at random (based on some system he's developed with his mates on a forum) with a fixed 10 pip stop, and a fixed 10 pip target. He's got a theoretical odds of winning of 50%. He then decides he'll use a 20 pip stop and a 10 pip target, and his odds of winning increase to 66%. Alternatively he sticks with his 10 pip stop, and sets a 20 pip target, and his odds of winning drop to 33%.

Then we have trader B whose a bit more clued up. He's sticking stops behind support or resistance, he's selecting values for stop levels based on ATR multiples, or he's using historical statistics rather than numbers plucked out of this air. Do you think trader B's win rates would be the same as trader A's for the same risk reward ratios. I'm not saying that's going to make him profitable, but its a step in the right direction.

Then of course, perhaps trader B won't be quite so dumb as to treat the market like a clockwork toy, and maybe rather than constraining himself to set levels, he uses his experience, perhaps he actually looks at a chart occasionally to see what direction (if any) that price has been moving in !

Odds are based on a great deal more than just stop and target levels. Sure an understanding if the mechanics of how these can be manipulated is a part of the game, but its not the thing that gets you profitable, but it probably helps to stop the bleeding

 

[tar]

Lets ignore spread to simplify matters

You have trader A without a clue who opens a trade pretty much at random (based on some system he's developed with his mates on a forum) with a fixed 10 pip stop, and a fixed 10 pip target. He's got a theoretical odds of winning of 50%. He then decides he'll use a 20 pip stop and a 10 pip target, and his odds of winning increase to 66%. Alternatively he sticks with his 10 pip stop, and sets a 20 pip target, and his odds of winning drop to 33%

Then we have trader B whose a bit more clued up. He's sticking stops behind support or resistance, he's selecting values for stop levels based on ATR multiples, or he's using historical statistics rather than numbers plucked out of this air. Do you think trader B's win rates would be the same as trader A's for the same risk reward ratios. I'm not saying that's going to make him profitable, but its a step in the right direction.

Then of course, perhaps trader B won't be quite so dumb as to treat the market like a clockwork toy, and maybe rather than constraining himself to set levels, he uses his experience, perhaps he envelopes at a chart to see what direction (if any) that price has been moving in !

Odds are based on a great deal more than just stop and target levels. Sure an understanding if the mechanics of how these can be manipulated is a part of the game, but its not the thing that gets you profitable, but it probably helps to stop the bleeding

No arguments there , the "It is not possible to make money consistently by backing United or the same horse in every event , the odds are already priced in ." is to illustrate what i mean by " you cant make money consistently by following the same setup/pattern " or otherwise it would be a free lunch , no one argued that you can make money from the markets and that setups can be part of your success and profitability , but this is beyond the original point about the existence of edges in a specified setup or pattern which is impossible : Markets 101 .

 

[Liquid validity]

No arguments there , the "It is not possible to make money consistently by backing United or the same horse in every event , the odds are already priced in ." is to illustrate what i mean by " you cant make money consistently by following the same setup/pattern " or otherwise it would be a free lunch , no one argued that you can make money from the markets and that setups can be part of your success and profitability , but this is beyond the original point about the existence of edges in a specified setup or pattern which is impossible : Markets 101 .

Just to reiterate, I do agree with you as far as rigid setups go.
That exactly why I don't use setups, I just get in if basic conditions are right and manage it.
Its other factors that make them appear to work (assuming someone is profitable with them off course).
Trade management and money management being the key deciders,
and PA experience for discretionary traders, although trade and MM
can mask any shortfall in reading price more than most people believe.

 

[Shakone]

No arguments there , the "It is not possible to make money consistently by backing United or the same horse in every event , the odds are already priced in ." is to illustrate what i mean by " you cant make money consistently by following the same setup/pattern " or otherwise it would be a free lunch , no one argued that you can make money from the markets and that setups can be part of your success and profitability , but this is beyond the original point about the existence of edges in a specified setup or pattern which is impossible : Markets 101 .

It's not a free lunch. A free lunch doesn't have risk attached. A free lunch doesn't have losses.

Also, can you explain how, if there did exist profitable patterns, that these would be found by other participants? This implies that other participants can find and assess all other strategies (of which there are an infinite number).

 

[barjon]

...................I'm stuck in the middle of 2 camps on this, I make my living by trading random entries, so I know pretty much where my edge lies, and its not in the set up. But conversely, Im prepared to believe that there are set ups that constitute part of other edges. I believe in those things in the same way I believe in gravity, or that the sun will rise in the sky tommorrow. I'm more comfortable tossing coins, but if I had to go back to trading support and resistance I probably could...............

Aye, and there's no contradiction there is there. For you, what you do after after entry is more important than the entry itself and it is not necessary for you to enhance it by finding a more favourable entry (assuming that's possible). It seems to me that the telling word you use is that a good set-up constitutes only PART of other edges. It is, after all, exits that move account balances, not entries and I suspect than many who think their edge is in their entry set-up would find that it's really in their exit skill.

As an aside there are other factors beyond price action set-ups that come into play. What about time? For example, there's likely to be significant moves in ftse around 9am, 10am and 3pm.

 

[kalott]

Any chart pattern with extreme success rate will do

Also chart patterns with extreme failure rate could be very profitable if your trade against them (h&s etc.)

it depends of what you trade

forex or indices/stocks?

 

[Triggerfish]

.....or that the sun will rise in the sky tommorrow.

This stuff is the usual sort if t2w fare, a bunch of people arguing about a term without anyone even defining what it means. It's depressing really

The sun doesn't rise, the earth spins to provide that illusion.

People arguing here is normal, this has already been pointed out very early in this very thread by the elephant example as different people see different parts of the elephant and they "BELIEVE" that is what an elephant is.....The point here is they are not SEEING the WHOLE!

There was a video once about a team of basketball players and one were asked to count how many times the basketball were being passed between the players.....yet they cannot SEE the big brown polar bear in the video.....This thread is the same, as long as people were to answer directly to the title of the thread, they are merely counting the basketball being passed between players and not SEEING what they should be seeing.....wonderful!

 

[ZEN archer]

it depends of what you trade

forex or indices/stocks?

Mainly forex K

 

[BeginnerJoe]

Here goes another pattern of unbalanced liquidity weighted on the short side.

 

[ZEN archer]

The sun doesn't rise, the earth spins to provide that illusion.

People arguing here is normal, this has already been pointed out very early in this very thread by the elephant example as different people see different parts of the elephant and they "BELIEVE" that is what an elephant is.....The point here is they are not SEEING the WHOLE!

There was a video once about a team of basketball players and one were asked to count how many times the basketball were being passed between the players.....yet they cannot SEE the big brown polar bear in the video.....This thread is the same, as long as people were to answer directly to the title of the thread, they are merely counting the basketball being passed between players and not SEEING what they should be seeing.....wonderful!

Some of the posts are very good TF
Maybe there are not many specific posts about patterns, but most of them are about trading.
I liked that parable of yours as well (the elephant story)

BTW Few members posted very specific posts - the way they trade. Very helpful

 

[Purple Brain]

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 .

If what you said is true trends would not exist. Trends exist because reaction to price action is self-reinforcing, not self-defeating.

 

[BeginnerJoe]

BTW Few members posted very specific posts - the way they trade. Very helpful

As in the story of the blind man, elephant, and tree I related earlier in the thread. You have to be careful with seeing what you think you are seeing. Although people might be looking at the same thing, the meaning of what they see can be quite radically different.

My last trade was closed out for a profit, the holy grail kicked in on the reverse of the down spike. Although the liquidity picture has changed with the probability now lower on the short side, I still feel the bias is short. So in there again with a new trade. Again it's a play on the liquidity pattern.