Pattern Trading

[swagat86]

Finaly im here Ashish, gr8 goin buddy. Gr8 thread iv just started with patterns. Keep rockin.

One from my side isnt Rcom forming Jhanda ( flag) .


Giv me an idea, how do v set targets and stops pls???

 

[aca_trader]

Finaly im here Ashish, gr8 goin buddy. Gr8 thread iv just started with patterns. Keep rockin.

One from my side isnt Rcom forming Jhanda ( flag) .


Giv me an idea, how do v set targets and stops pls???

Hi Swagat!
Thanks for your kind words.

I will take the Jhanda of RCOM more as an upward moving channel.
Flag is a consolifdation pattern and one important requirement of a consolidation pattern is that volume should decrease substantially. There may be more volume on up-move days even within the consolidation but on a broder level, the activity should decrease.
In the case of RCOM, you cam see that volume is increaseing every day.
Hence, IMHO, it's not a valid Jhanda.

In pattern trading, the targets are usually determined by the nature of patterns, like breakout from Flag is expected to achieve the height of flag-pole from breakout point. In other cases, you can apply the same method for target-determination which is being applied in Day-Trading methodology.

So far, I am maintaining Stop-loss as the previous lower (higher) pivot in case of long (short) entries. The trailing stop-loss can also be set on such methods as ATR, Volatility Stop, Darvas Box, 3-day HHV/LLV, etc.

Best Regards,
--Ashish

 

[bvpraveen]

.......
There may be more volume on up-move days even within the consolidation but on a broder level, the activity should decrease.
.......

Hi Ashish,

I know the volume pattern for flags - increase in volume while forming the pole, decrease in vol while forming the flag. But I didn't get you reg. the above point mentioned by you.

Can you clarify it?

Praveen.

 

[bvpraveen]

Hello Ashish,

Although I was very much interested in Pattern trading, I couldn't get how to deal with this problem: scanning hundreds of stocks daily.

1. Although I think there are some pattern recognition formulas, how much efficient are they in identifying such patterns.
2. How to handle scanning hundreds of stocks manually?

Thanks,
Praveen.

 

[aca_trader]

Hi Ashish,

I know the volume pattern for flags - increase in volume while forming the pole, decrease in vol while forming the flag. But I didn't get you reg. the above point mentioned by you.

Can you clarify it?

Praveen.

Hi Praveen!

Here, I was talking about consolidation patterns in general and not specifically Flag pattern. What I wanted to say that in some patterns like symmetrical triangle, when price is moving upwards, the volume may be higher than the volume when price is moving downwards within the consolidation pattern.

Hope it's clear now.

Best Regards,
--Ashish

 

[aca_trader]

Hello Ashish,

Although I was very much interested in Pattern trading, I couldn't get how to deal with this problem: scanning hundreds of stocks daily.

1. Although I think there are some pattern recognition formulas, how much efficient are they in identifying such patterns.
2. How to handle scanning hundreds of stocks manually?

Thanks,
Praveen.

It's really a big issue. No human body can go through all the charts manually.
Hence, I follow the strategy of watching as many charts as possible on week-ends and select the stocks under pattern formation. During week days, I just check those charts for breakout after market hours.

Best Regards,
--Ashish

 

[bvpraveen]

Here, I was talking about consolidation patterns in general and not specifically Flag pattern. What I wanted to say that in some patterns like symmetrical triangle, when price is moving upwards, the volume may be higher than the volume when price is moving downwards within the consolidation pattern.

Ya...you are right. I was thinking with flags in mind.

It's really a big issue. No human body can go through all the charts manually.
Hence, I follow the strategy of watching as many charts as possible on week-ends and select the stocks under pattern formation. During week days, I just check those charts for breakout after market hours.

Meanwhile what about my first question: 1. Although I think there are some pattern recognition formulas, how much efficient are they in identifying such patterns.

Thanks,
Praveen.

 

[aca_trader]

Ya...you are right. I was thinking with flags in mind.



Meanwhile what about my first question: 1. Although I think there are some pattern recognition formulas, how much efficient are they in identifying such patterns.

Thanks,
Praveen.

I have used John Murphy's pattern recognition pulg-in for metastock. But, it's very poor in identifying the patterns.

I have downloaded Patternz of Thomas Bulkowski but this program generates error and hence I have not been able to use it so far.

Best Regards,
--Ashish

 

[bvpraveen]

I have used John Murphy's pattern recognition pulg-in for metastock. But, it's very poor in identifying the patterns.

I have downloaded Patternz of Thomas Bulkowski but this program generates error and hence I have not been able to use it so far.

Best Regards,
--Ashish

Although formulas can't identify the patterns exactly, I think they can 'filter' the stocks, which 'might' have formed the patterns.

I have some AFLs, which I believe are got from Amibroker AFL Library. It seems they identify patterns like H&S, Inverse H&S, Wedges, Triangels, Channels, S/R,etc, ALL IN ONE!

I need to look at their performance closely, which i've not done so far.
Meanwhile others if you try them, please share your opinion about their performance.

Thanks,
Praveen.

 

[bvpraveen]

Hi Vish,

Can I post my views on some of the charts in this thread? Because they will be mainly for discussion. I'm interested in discussing some of the charts patterns being formed.

Praveen.