Chart patterns trading

Hello i heard that when trading chart patterns i can’t trade every triangle or flag i see cause i’ll be broke… so how these patterns are traded correctly?

By having a few hundred hours of education and a few thousand hours of screen experience under your belt.

There are plenty of textbooks written to answer this question, and reading a couple will help.

Here’s quite a good website about “patterns”: www.thepatternsite.com

Also, a tip for you: take only the entries whose direction accords with that of the overall trend in the next higher timeframe.

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There are a lot of ways to trade with chart and pattern. I usually trade with combing chart pattern with fundamentals and news. I always calculate my risk before I enter into a trade and follow money management strictly

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I think cart patterns are the most effective strategy in forex. I also follow this strategy. I think you have just started with this strategy. You need to study a lot if you really wanted to use chart pattern as your trading strategy. You can read few pattern books. You can get books from online. Thomas Bulkowski is a successful trader using chart patterns. You can follow his books as a trading guide.

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Just as long as you don’t put the horse before the cart patterns.

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Yep, this is exactly what your broker-- you know, those wonderful people who are not only bilking you for fees, but are trading against you-- wants you to do. Your broker wants you to learn all about these outdated pattern strategies so that as soon as you get baited into taking a breakout out of one of them, they’re right there to slam you going the other way, and take out your tight stop loss. Look at any five-minute chart. All those wicks sticking out of all those candles are false breakouts, courtesy of all the institutions trading against you. They are the norm rather than the exception.

Protect yourself:

  1. Trade the breakout of the pattern but wait for the breakout candle to close, and then a retest back to the pattern and a clear rejection of the retest. Then and only then take a market order in the direction of the breakout. Do not use stop orders to anticipate the breakout. The brokers advise you to do this. Always do the opposite of what your broker advises. Remember, they are the competition.

  2. It’s much harder for the stop-loss hunters to take you out on the higher timeframes. Also, the spread does not come into play as much. In other words, it is easier to make money on the daily charts than it is on the 5 minute charts.

  3. Get rid of boredom by trading a 5 minute demo account. Lose all you want on this account. After all, there’s no real money involved. Trade real money with wide stops on 4 hour and daily charts.

Be a pain to your broker. Be one of those annoying winning traders they hate so much.

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Good sensible protective measures 1 to 3 steve, I agree with all of these. Especially great to hear someone championing the cause of long-term trading. So many people think that with a small account and a trading platform all you can do is trade off the 5-minute charts. This is wrong. They lose. they do complain about getting their stops run, but they continue to do the same old thing. They lose more.

As far as it goes, I’m a UK-based trader with an account with a large UK-regulated spread-betting company. I know these aren’t available to traders in every jurisdiction, but I can assure that stop-hunting by the company is illegal here for such firms and doesn’t happen. (Even if it did, trading forex and indices etc. off the dailies makes it impracticable.)

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Don’t encourage this bloke bro, we’ve been down this path and you should know better.

No-one is trading against you, your broker is clever enough to know you will easily blow your account up in weeks all by yourself. Why risk their license by getting evolved.

True breakouts never retrace, little known retest. And as for a clear rejection, I doubt hillside steve could explain what the back of his hand looks like. He might have trouble explain this but hey, he read it somewhere on the net so it must be true.

This is the teaching of a snail-oil salesman. Ain’t nobody out hunting stops.

No it simply is not.[quote=“steveepperson, post:6, topic:121926”]
Always do the opposite of what your broker advises.
[/quote]

You’re broker is an agent not an adviser. If he does not go out of his way to explain this in his PDS or FSG you should find another bucket shop.

This could be very detrimental to your speculating. You play as you train! By all means have a practice account, even better if it’s a small live account just do what you would do live and test variants to your system.

Disappointed in you @tommor for liking this.

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Bob, you’re feeling disappointment because you’ve forgotten we’ve already established I don’t have all the same beliefs about trading or about forums as you do. We know this from what we’ve each posted. you can’t keep feeling new disappointment whenever I post something I’ve expressed already, it will just make you bitter.

(Actually I agree with your view that traders should not see the market as a system set up to rob private retail traders. If people see it as this it will affect their decision making, which will become skewed to not being screwed, rather than trading well.)

Meantime, although you and I both have experience in trading, we use a confident and direct writing style, and we say what we think regardless, your posts concerning me and my posts have a patronising edge which comes across as an expression of arrogance. I’m reading your stuff less and less.

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What-ever bro, like, I care boo hoo.

You’re as wishy washy as the best of them!

Well there you go.

At least you didn’t come back with an arrogant post…

I like and respect both of you, and am sorry to see you publicly disagreeing. Especially when for various reasons there are so very few longstanding, respected members left here.

(But that’s my problem. Such is life. I do actually think it’s a mistake - to put it mildly - to encourage this Steve Ep person.)

Cheers Charlie. I’ve agreed with some of what each says and disagreed on other points. And told them both so. Both have “Liked” some of each other’s posts. Both have experience. I actually find its healthy to have people critique my trading ideas and ask for evidence or justification or what have you - its mostly why I’m here. They can even critique my critiques and that might help me better firm up a point - what doesn’t kill you makes you stronger.

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well. wouldnt be a good day if there wasnt me to annoy some people in yet another thread again.

the issue with chartpaterns is the same issue as with overtrading.

easy q/a

do they work?: yes
can you base your trading on them?: partially yes mostly no
do they work in all time frames equally effectife/innefective?: no they dont

the issue with trading is not to find one methode and use it. the holly grail is to know all the methodes that are out there and use the correct one that works on the exact security in the exact MOMEMT.

every market faze/situation/setup has its own strategy onto how to trade it. your job is to find out in which situation the market is at the very moment right now.

so boiling down most people fail on the very first lession of trading: identify in which condition the security is. or in other words: identify the TREND.

people see the trend lession as the first one in the book and naturally think its the least important and easiest to learn. but no… failure… its the hardest and most important to learn. thats why its in the very first page of every good book. it comes first for a very good reason.

everything else builds up on that chapter. if you got the trend wrong it doesnt matter what you use. pa. mva. patterns. emtpy charts. oscilators whatever… you will fail.

now back to overtrading i mentioned in the 2nd sentence. yes chart patterns have the same problem as overtrading. people learn briefly about them and then think they see a chart pattern in every situation and everywhere. they “overpattern” so to say. seeing things that are not there. thats only logic simply because our brains are object oriented and patterns help us make logic to something we dont fully understand. your brain is prone to see patterns where there are none. people follow this immagination and make decitions on wrong judgements and then conclude it doesnt work.

it works. you just need to know when and why and when its real and no immagination.

chart patterns are rare. veryyyy rare. you can see maybe 1 or 2 tradable patterns in 5 years or even in 10 years in one security. but when they occur they are the most profitable thing you can trade.

here are 2 examples. its the only 2 good paterns gold and dow jones gave in the last 5 years. everything else was no pattern at all. they were both tradable with huge gains and tiny risks.

gold. reversal triangle - 16.000 pips

dow. simple double bottom - 8000 points

patterns are psychology based. they are not based on math or statistics or market condition. they are the mirror of the psychology and opinions of all market participants. they are the only methode that can actually forecast the future. the only oscilator/indicator that is future based and not lagging.

as you can see- the ones with good and experienced eyes: after a strong pattern you can throw everything else away. oscilators give false signals. indicators are useless. price action doesnt help you to find a turnpoint/peak. supply and demand is beeing beaten up like a kitten vs mike tyson. only thing that matters is the pattern.

why? because the pattern was a months long or even years long building up of opinions and piling up of big money. huge money. that opinionated mountain of money has found its route and it will walk its line, no matter what anything else (pa. mva. osc. ind. s/d. etc etc) says about it.

its psycholigy in its finest picture shape.

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