[Robert]

Can one rely on strictly chart patterns to trade the markets? For example: triangle, wedges, flags, pennants, etc...

Do you think one can make money in the markets in the long run relying only on chart patterns? Thanks

[phil895]

Yes, a lot of pros use charts in combination with TA very sucessfully; Bulkowski and Dan Zanger are some of the best at it.

[torero]

If you ask some of the older and successful trading veterans, most used to hand-drawn chart patterns before modern technology. They never used anything else since the advent of the personal computer, except it has quicken their analysis. My mentor used it for 15 yrs, still making money today. Patterns are the meat of my trading. Not complaining so far.

[bathrobe]

There is an excellent book with some patterns that I had not heard of before called "Trade Chart Patterns Like the Pros" by Suri Duddella.

[Soultrader]

Originally Posted by bathrobe »

There is an excellent book with some patterns that I had not heard of before called "Trade Chart Patterns Like the Pros" by Suri Duddella.

Also note that Suri is a member on this board with alias suriNotes.

[BlowFish]

I think undoubtedly yes. If you add a bit of 'context' so much the better. Of course realistic expectations are important! Just like any method patterns can fail but on balance they 'work'. It is because they tend to be a graphic representation of sentiment. (I guess some of the more exotic ones like Bats and Gartleys are less so). If you stick to flags, pennants, double tops, 2bs, 12'3s etc. You can develop profitable and simple strategies.

[eurotrader]

I believe in the May issue of "Technical Analysis of Stocks & Commodities" magazine Bulkowski has an article discussing exactly this. He went back and ran some analysis on some of his previous patterns to see if their reliability had drop off in today's markets. I believe he was very surprised to find that their reliability was not what they once used to be and found far more failures than previously. You might want to have a read of the article to see exactly what he had to say about it.

[sep34]

Chart patterns are reliable-- Mastering them is another subject....so too is Trading them profitably .

The problem that many have with patterns or their claim that chart patterns are not reliable is usually linked inexperience of understanding Price action or other variables like not enough time to master a pattern...to truely know it like the back of your hand and that takes time.

Part of the mastery is realizing that many variables influence any particular chart pattern that is trying to form. Because of this fact Programmatic back testing via a code usually will miss the value and the true reliability of chart patterns--In contrast a trader that has mastered his favorit chart patterns knows exactly when to trade them and when to let them go by. He has learned to be aware of the influencing variables and understands their impact on what he is trading , thus he can make appropriate adjustments on the fly.
Asking a Code to do the same thing is near impractical, unless you have a team of top notch programmers at your disposal and even then I dont think you would get the same results....some things just cant be communicated through code.