hmmmm... instead of evaluating pattern's predictive power, you should evaluate it with a strategy. Predictive power is only about win rate but you need expected value to make it work.
Quantitative Trader
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DislikedMoin. I've added 'reversal detection' - or name it better, - based on Stochastic, because I saw that condition somewhere. lw - lower wick uw - upper wick bd - body sk - StochasticK with lenght=14 lw > (bd*2) && bd < 50 && uw < 2 && sk < 20 → (lower wick is 2 or more times bigger then a body, body occupies less then 50% of a range, upper wick is less then 2% of a range) sk = 100 * (close - lowest(low, length)) / (highest(high, length) - lowest(low, length)) Final dataset was reduced from 496 to 72 casesQuantiles. {image} Random bear...
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DislikedWhat supports the thesis that banks and marketmakers "use" old (working) strategies out of trading books to suck people into market who apply it and take their money.Ignored
DislikedIf one decides to go short after any bearish candle and wait for (t) <=100 hours, there is 80% chance to gain 35 pips (green) If one decides to go long after any bearish candle and wait for (t) <=100 hours, there is also 80% chance to gain ~35 pips (yellow)Ignored
DislikedIf you see an arrogant 'experienced' trader, who has ben trading patterns for ~20 years, show him this.Ignored
DislikedSuppose we go long and set a TP at +35 pips. In those 20% of the cases the TP was not reached, what prices did it touch? {image} In those 80% of the cases the TP was reached, what prices did it touch before reaching the TP? {image} It is this last graph that shows why it is not trivial to make money even if prices reach +35 pips in 80% of the cases. Even if you set a very wide SL at 4x35 pips, it will be touched occasionally in which case you miss out on the TP, thus lowering the 80%.Ignored
Dislikedin the other 20% your avg. loss will be -140 pips, correct? That would fit R:R of 1:1. So: 80% of the time = 35 pips 20% if not hit: = -140 pips equals R:R of 1:1.Ignored
DislikedImportant reference post Stats for GU, hourly If one decides to go short after any bearish candle and wait for (t) <=100 hours, there is 80% chance to gain 35 pips (green) If one decides to go long after any bearish candle and wait for (t) <=100 hours, there is also 80% chance to gain ~35 pips (yellow) {image} Or go long/short after any bullish candle {image} If you see an arrogant 'experienced' trader, who has ben trading patterns for ~20 years, show him this.Ignored
Disliked{quote} Omg, the results are even negativ if I interprete it correctly. Is it really true that we have a hammer and stochastic "oversold" sk<20: 50% 0.0107 to 50% -0.0137 ?? also invertet hammer with context sk<20: 50% 0.0132 to 50% -0.0148 These figures are horrible. What supports the thesis that banks and marketmakers "use" old (working) strategies out of trading books to suck people into market who apply it and take their money. I think the easier the signal is generated, the easier it is possible to reverse it (costs of reversing is little compared...Ignored
QuoteDislikedIs it really true that we have a hammer and stochastic "oversold" sk<20:
50% 0.0107 to 50% -0.0137 ??
also invertet hammer with context sk<20:
50% 0.0132 to 50% -0.0148
QuoteDislikedNow the question is: can you reduce the negative outcomes of hammers by using a SL to avoid max. DD?
DislikedSuppose we go long and set a TP at +35 pips. In those 20% of the cases the TP was not reached, what prices did it touch? {image} In those 80% of the cases the TP was reached, what prices did it touch before reaching the TP? {image} It is this last graph that shows why it is not trivial to make money even if prices reach +35 pips in 80% of the cases. Even if you set a very wide SL at -140 pips (=Break even, (80%/20%)x35 pips), it will be touched in 2.5% of the cases that would otherwise eventually have hit TP.Ignored
Dark cloud
DislikedPlease check for 154 pips with your algorithm. Is it the same thing?Ignored
Disliked{quote} Happy to check, but I am not sure how to read your scatter plot. If you put the TP at 35 pips, and the dots represent all cases were the TP was hit, then I expected all the dots to be on a vertical line at PosMax=35 pips with various PosMin pips.Ignored
DislikedPosMax is a position in a sequence where the maximum high occurred. PosMin - position of lowest lowIgnored
Disliked{quote} Ok, clear. I'll try to reproduce your result. So your assumption is that when a candle pattern has any predictive power, you expect to get a high before a low (in case of a Buy)? What is not clear to me is how you intend to make money with this finding. Of course it helps if the high occurs before the low, but you don't know beforehand how high the high will be. Trailing stop?Ignored
QuoteDislikedSo your assumption is that when a candle pattern has any predictive power, you expect to get a high before a low (in case of a Buy)?
QuoteDislikedOf course it helps if the high occurs before the low, but you don't know beforehand how high the high will be. Trailing stop?