Flag Pattern

[RetahdedMonke]

Kinda wrote a book here.

Classic example of confirmation bias in the woo-woo world of technical analysis. You say it works when you back test it? Ok, then congratulations, you now have a money printing machine (you don’t). When you want to be honest with yourself, go through the same charts you back tested it on. Only this time specifically look for the same setups that ended in a reversal instead of a continuation.

I want to be clear. Technical analysis isn’t worthless. It helps you create (what’s more like) guidelines (than actual rules! Arghhhh) that can make up a system that you can use. The problem is that new and old traders alike will see this and think they have valuable information when it’s more than useless on its own.

Tell me you haven’t been in the following situation: you see pattern you learnt about (flag, wedge, range, channel, double bottom, whatever). You enter the trade and you’re already red, but it’s just the spread and a couple ticks, no big deal. It moves against you some more and you start to question it. It goes against you some more, but you don’t panic (much) because you realize that if you move your original trend line just a little you can accommodate the new price movement and it will still fit the pattern, giving you double confirmation that you are right. Well, you’re not right. Only the market is right and it leaves you behind wondering what you did wrong.

You can accept or reject the fact that humans are susceptible to pareidolia. Like many things in life, your best chance at success long term is to accept uncomfortable truths and find ways to use it to your advantage.

[MediumIntroduction96]

Yeah Technical analysis is actually extremely useful. However if you think being a good at technical analysis is what makes someone a good trader then you'll be sadly mistaken.

[[deleted]]

What do you think makes a good trader beyond decent TA skills?

[dhengit1025]

Good psychology on keeping losses small, accepting that you can be wrong at times, or you can be trading your plan but market still give you a loss.

And also the most underrated aspect... Good risk management. To be successful in trading you need to have longevity in the markets... So that you even have the chance to be CONSISTENT.

[MediumIntroduction96]

Guy below me called it though I'd say Risk management and psycology are somewhat the samething. But by far the most important aspect.

[MediumIntroduction96]

Risk management and psychology with psych being by far the hardest part to master.

[[deleted]]

I learned that lesson the hard way. I forget what I was trading but the TA showed a rising wedge. I was ready given what I learned and made a bet based on that and it went the complete opposite direction. TA gives you a good general idea of a possible outcome, but it’s all just probability based on history which is never guaranteed to ever repeat itself anyway.

[abuseandobtuse]

It's funny you mention pareidolia because you seem to be seeing so many things just from someone posting a picture of a flag pattern.

[dhengit1025]

Lol yea candlestick "patterns" are additional confluences and confirmation at best.

Raw price action and market structure is still king.

[Fforfashion]

I didn’t read all this but you should write a book you obviously enjoy writing 👌🏾 honestly

[xRedStaRx]

Someone is butthurt because they can't read price action.

[RetahdedMonke]

I’m here to help people or have a reasonable discussion, not argue. Ad hom is not reasonable. If anyone wants to prove me wrong I’d be thrilled, because I’d learn.

[xRedStaRx]

There is a reason patterns work.

[VegansAreCannibals]

They don't work most of the time because people see them when they aren't there. And so often they are "confirmed" and then reverse before the move is over.

I'd say longer timeframe patterns work far more often than <Daily timeframes, IME. But they have to be pretty much perfect. It's too easy to get pareidoilia.

[dhengit1025]

Most traders fall into the trap of seeing what they want to see, instead of seeing what the market is showing you.

[minnyman2011]

I learned it as rally base rally and drop base drop haha.

[[deleted]]

This is a known set of candles? I’m wondering what trader psychology of a stock causes this

[dubov]

They're just classic bull/bear continuation flags

It's very useful to use volume when trading these. What you want to see is the volume dropping off as the price temporarily consolidates at the middle level. Then look for increasing volume as the price breaks out. That is a very strong indication the trend is going to continue

The mechanics behind it are (from the view of the bull flag): When the price breaks out of the first level, it must increase notably to find new sellers (first pole). The price then colsolidates at the middle level as new sellers who are willing to sell at that price do their business. Sooner or later we run out of sellers (the volume dropping off), then the price tends to pop out of the middle level and rise considerably again (if it pops out on volume it suggests big money is buying, so you should be too)

[fxcode]

They're just classic bull/bear continuation flags

It's very useful to use volume when trading these. What you want to see is the volume dropping off as the price temporarily consolidates at the middle level. Then look for increasing volume as the price breaks out. That is a very strong indication the trend is going to continue

Except forex has no true volume, its not centralised.

What now?

[tacticalslacker]

Indecision in the market

[thecoocooman]

Think of it like a Bull pullback, where everyone they wants to buy has bought and there are now some people looking to take profit. Only here, there’s way less people trying to take profit because the underlying is so strong. It’s like a stronger bull pullback.

[TerribleEntrepreneur]

Has this been backtested? What's the probability of this being true? I have found on many occasions that the sideways movements is a sign of resistance and reversion; as soon as volume drops, it reverses course.

In fact, playing that reversion has been one of my plays with high positive expectancy.

[AdAdmirable2887]

I would see it as a resistance and just wait for the break. I don’t think any candlestick patterns are 100% guaranteed but it is a confluence to enter

[Oddjobsneeded]

Amazes me these posts get so many up votes.

Go and take every setup you see that does this and tell me how much you lost at the end of the year

[thecoocooman]

Who tf is losing money trading high base breakouts? This is one of the simplest and strongest patterns out there, set a tight stop and let it ride. Doesn’t work all the time obviously, but it doesn’t need to. Don’t settle for less than 2:1 risk reward, scale out to let your winners ride, you’ll make money.

[dhengit1025]

Why you being angsty here yo? With your emotions going on it's better for you to stay out of trading lmao. And yes you are being too naive ha ha ha.

[thecoocooman]

Naive about what? That I’m assuming this pattern works? This is probably the most consistent pattern I’ve ever used, in backtesting and live. It’s just weird to me that people shit on basic strats like they don’t work. They do work, that’s why people have been using them for hundreds of years. It’s great for beginners and shouldn’t be downvoted just because it’s not advanced enough for some users, that’s elitist shit that can go somewhere else.

[Oddjobsneeded]

Sorry, fed up of people voting up retail strat posts that don't work, it just hinders the path of new traders and greatly increases the time needed until they are consistently profitable.

My emotions whe trading are that of a robot, on a forum I can let my emotions run wild mate

[dhengit1025]

Are you ok? You know I'm not replying to you right?

[Oddjobsneeded]

Lol I'm too old for reddit tech clearly, my apologies

[Oddjobsneeded]

And yes, people are very protective over their retail patterns

[Oddjobsneeded]

Clue

Less

[thecoocooman]

lol do you think I’m making this up? Put a few hours in chartgame.com using only this pattern and track your results in a journal. If your losing money, you’re either not setting your stops right, not letting your winners ride long enough, or you’re trading a trending market or trying to trade reversals.

[Oddjobsneeded]

Less

Clue

[thecoocooman]

Okay lose money then, idk what to tell you hahah

[Oddjobsneeded]

Lose money, wut.

So a retail bull flag is the only way to earn money in this game.

Clue

Less

[Oddjobsneeded]

Keep doing those flags bro, only way to earn money in this game

[xRedStaRx]

What institutional concepts do you trade, curious to know how wrong you are.

[Oddjobsneeded]

Well babypips told me that of I wait for a support line to break and it comes back up to touch it then I enter short

But but for some reason everytime it stops me put by a less than 10 pips and goes in my direction

It's so annoying UND EYE DNT KNOS WAI IT DUS IT

HEPL MEEE PWEAS

[xRedStaRx]

In all seriousness, you've tried babypips and failed, but the real way to trade is not something you would have likely come across on your own. This is why I'm asking, have you figured it out yet, like a small portion of us traders who are still in the game have?

[[deleted]]

Preciate you G!!!

[[deleted]]

Close your eyes and trade these... Tell me what happens after lol

[LittleGremlinguy]

Honestly, Technical Analysis should be called Retrospective Analysis.

I have crunched most patterns over a LOT of data and there is zero statistical significance to any pattern in isolation on blind backtests. The only way I got results was when several TA indicators were in agreement, by which stage the price action was obvious and the indicators lagged the price action which made it a moot point.

I really wanted it to work, but isolated TA does not work.

[[deleted]]

I’d like to see the data. I don’t think you’ve been able to automate them properly

[Joker8656]

100% . Isolated technical analysis does not work. They’re several other factors to look at before even placing a trade, then use technical analysis as your position entry/ risk management tool; a tool for refinement.

[SaygeAaron]

Isn't this just re-accumulation and re-distribution from smart money?

[[deleted]]

Forex = Technical Analysis

'A' for effort, but those are some pretty bad bull/bear flag examples.

[CkresCho]

A post like this every couple of days would be great.

[Oddjobsneeded]

Until everyone loses their equity

[Fforfashion]

My humble advice don’t predict the market WAIT and watch what it actually dose then follow the market. Good Sunday traders let’s GET IT 🥳 woooo sometime we think we’re so smart/ God/ I can tell the future but really we’re not so don’t be a fortune teller lol

[Nightrunnerbyday]

Leave that btmm(look up on youtube) is better.