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Thread: Patterns in market

  1. #1
    Super Moderator RoboForex Trader's Avatar
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    Patterns in market

    As we know, market is two-sided auction and if you want to buy, you need somebody to sell. Or if want to sell EURUSD, you need somebody to buy. Forex has much liquidity and you have no problems doing that. Trades are made every second. Somebody wins, somebody loses. It’s continuous process.

    Now, let’s imagine that there is one group of traders, employing some statistical pattern, that allows to have edge on the market. They earn money while other group agrees with that. Then, that pattern becomes more recognized by other traders and first group (that benefits from this pattern) becomes wider. Also they have more capital over time. Some people from that group think that they have a «Holy grail» and borrow money to increase leverage. They reinvest all profit and try to «make a fortune».

    Over time, second group loses more money. Somebody has run out of money and got margin call, somebody has achieved loss limit. Second group becomes less in capital and in quantity. Capital migrates from pockets of second group to pockets of first group.

    Then, profitability of this pattern is screwed up as second group starts reevaluate their trading and adjust it to the market.

    This example is simplified for the sake of quick understanding. There are lots of groups of traders on the market with different strategies and targets. But one thing works always – the more one group loses money, the stronger the pain and their intention to change their trading before blowing up an account.

    Now let’s get back to patterns. They are different.

    Obvious patterns:
    We see it, but can’t benefit from it. For example, everybody knows that market operates from Monday to Friday but nobody can benefit from this knowledge. There are of course come marketplaces that aren’t closed on weekends, but volumes there are slim except some unexpected events, when we see gap on Monday.

    Hidden patterns:
    You can’t see it without any specific tools. You need to find it and once you’ve found it you can build trading system around it. Quick example: EURCHF was in flat couple of months ago, gravitating to 1.2000. You could purchase at this price with stop at 1.1500, expecting intervention of Swiss Central Bank.

    Temporary patterns:

    Those patterns appear from time to time. For example, if price of EURUSD grows rapidly throughout the day, odds are pretty high that you can capture small pullback (work counter-trend) or join a trend wins this pullback. There are lots of other temporary patterns. You will find them if you are willing to spend some time observing charts and journaling what you see.

    Seek, find, and earn!

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    Last edited by Value trader; 08-15-2013 at 10:35 AM. Reason: ошибка закралась

  2. #1881
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    Quote Originally Posted by Abhishekwala View Post
    THere are numerous chart patterns and we need not know them all but the patterns we know, we should know them in and out. Using all the chart patterns can create confusion and chaos in our trading and hence we need to do the practice to find which chart patterns can be profitable for us and how. Traders has to make sure he is doing the correct work and trading with realistic mindset.
    When we are studying the patterns on demo and practicing them, we will find all of them are not so useful, some are more useful then the others. Some patterns are clearer than others, while some patterns needs an experienced eye to study the charts. Like temporary patterns can be clear from using the chart patterns or some indicators but hidden patterns needs more detailed market analysis and experience.

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  3. #1882
    Registered user layigold's Avatar
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    My own knowledge of market patterns is completely different from what is discussed min this thread though I have utilized the privilege of learning it and by that adding more to my knowledge. I am well familiar with candlestick and chart patterns , Harmonic patterns, Wolfe pattern and Elliot wave patterns. Of all these patterns, I dedicated much of my times to learn candlestick and chart patterns and that is really working for me though I know few things about harmonic patterns but I sparingly employ itbin trading .

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  4. #1883
    Registered user Sascha's Avatar
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    Quote Originally Posted by layigold View Post
    My own knowledge of market patterns is completely different from what is discussed min this thread though I have utilized the privilege of learning it and by that adding more to my knowledge. I am well familiar with candlestick and chart patterns , Harmonic patterns, Wolfe pattern and Elliot wave patterns. Of all these patterns, I dedicated much of my times to learn candlestick and chart patterns and that is really working for me though I know few things about harmonic patterns but I sparingly employ itbin trading .
    we actually learned and known something earlier before coming to this thread or forum while the rest just like me also learned a lot from here. knowledge will always be knowledge, no matter where we get them and in what form, it's always good for us to increase our knowledge with something new to improve our strategy and understanding with market patterns. this improves my strategy a bit and maybe i can make it more accurate than before.

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