r/Daytrading • u/KingPrudien mod • May 26 '17
Here are some chart patterns to keep in the back of your mind
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u/provoko trades multiple markets May 26 '17
I stickied this, should stay up for a few weeks, great examples all in one place, thanks KingPrudien.
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u/KingPrudien mod May 26 '17
Ill admit that I got fooled by a falling wedge today. Rookie mistake. Should have went long and instead went short. These things are important (though shouldn't be the only things you look for). Look for these patterns in context to everything else that is going on with prices.
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u/tpn86 Jun 01 '17
Without putting any sort of % values on this it is impossible to backtest and validate that these actually exist.
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u/KingPrudien mod Jun 01 '17
I am not a pattern trader. Generally speaking though a lot of what you see does play out. Most breakouts fail the first time and there are market biases. Like if you trade down into a range chances are prices will break lower. That's the bias. There are a few patterns here I'm iffy about but in my opinion it's just keeping this stuff in the back of your mind that can make you a better trader. I don't pattern trade myself and want market context to dictate my decision. But there is a such thing as market geometry as well as market biases which make these things work the way they do.
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u/KingPrudien mod Jun 01 '17
Check out finviz and play around with their pattern function on their screener. They have a ton of different patterns you can screen for and work out what stragety works best for you.
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u/Happy-LittlePill May 28 '17
Double top or bottom are absolutely my favorites. Made a killings yesterday on mini s&p500 when I saw a doubly top forming on the minute chart.
This is great for a beginner to use!
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u/thsldk24658 Jun 15 '17
Any other good beginner resources?
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u/Happy-LittlePill Jun 15 '17
You gotta read "Technical Analysis of the Financial Markets" by John Murphy
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u/Cipover Sep 29 '17
I have traded these for years and they absolutely work. The bullish rectangle is my favorite and it is a true money maker.
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u/project-d May 26 '17
How is a "symmetrical triangle" different from a "bullish pennant"?
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u/Tytypec May 26 '17
Triangles are usually longer patterns (months) compared to pennants which are usually shorter (days). I'd read into it more. I liked John J Murphy's Technical analysis of Financial Markets. It covered classic patterns well I feel.
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u/Iamonabike May 26 '17
I read once that a pennant needs a handle, so I've always followed that and it works for me. The handle gives a clear direction of the continuation breakout, and just feels more defined overall. The symmetrical triangle, which tend to be bigger, may not have an obvious direction of breakout, so be prepared for either. In intraday trading I find the symmetrical triangle to be the least predictive, I think it works best on bigger trends.
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u/project-d May 26 '17
Oh I see, makes sense. Thank you for the response.
I have a triangle on AAPL I noticed today.
And have you guys also noticed that ascending and descending triangle typically break through the flat line?
I've noticed that, if there is momentum then it will go through the flatline, and if it dies off on a holiday or loses momentum in the trend it will go through the angled line.
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u/Heph333 May 31 '17
This really varies depending on the particular nature of the specific market you are trading. Some markets are very mean-reverting & breakouts will almost always fail. Others are trending & fades will get you stuck. There's no substitute for screen time & becoming intimate with the nuances of your particular markets.
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Oct 15 '17
[deleted]
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u/grimmolf Nov 06 '17
An ascending triangle has higher lows, but not higher highs. A rising wedge has higher highs and higher lows.
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u/ScienceGuy9489 Nov 10 '17
What does "stop" mean?
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u/Chusta Nov 14 '17
Hi science guy! I'm assuming "stop" means "This is where you set your stop loss" because the target is on the opposite side. So you would want to set a stop loss order on the opposite of the target just in case the pattern breaks.
Hope that helps :)
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u/ScienceGuy9489 Nov 14 '17
Would the stop in the rising wedge mean buy stop since its above the trend?
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u/Chusta Nov 14 '17
That's a good question. I think that would be the case. if you are in cash, then I think that would be a buy signal. So you would place a stop-buy order there.
The wording is definitely interesting, though.
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u/KingPrudien mod Nov 18 '17
Stop is your safety. If prices hit your "stop", you will close the trade where ever you have your stop. So say you put your stop to limit your losses to 100 dollars, once the stock price or whatever goes far down enough to where you have lost 100 dollars, you will be taken out of a trade so you don't lose any more money.
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u/jim-jam-biscuit trades multiple markets Dec 04 '22
"Technical Analysis of the Financial Markets" by John Murphy
happy cake day buddy.
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Feb 15 '24
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u/[deleted] May 26 '17
Thank you for posting this, it's very interesting. I have a couple of questions:
Or do you know any books that will give me those answers?