Having read through the 'Master Swing' Trader, I have come upon an interesting bit of information, sorry if this is obvious but I just want to get some confirmation from advanced traders.
So is he basically saying that the clearer the chart pattern, (better formed?) the higher the risk of it failing, so you have to look for chart patterns that dont appear to standout? Is that right, as I though that the clearer the pattern the better and if it does not jump out at you then dont trade it?
I would appreciate any comments
Thanks Ilia
But sometimes patterns don't do what the crowd expects. A powerful entry signal may flash when a setup fails to act according to its tendency. Pattern failure now goes well beyond concepts presented in recent trading books. The contemporary market crowd recognises the odds that price will move in the direction of the most accepted prediction.
The most recognisable patterns carry the greatest risk for failure. Perfection attracts attention and invites those who might stay on the sidelines in other circumstance. When setups look too good to be true, most participants enter long positions on one side of the trade and attract whipsaws.
So is he basically saying that the clearer the chart pattern, (better formed?) the higher the risk of it failing, so you have to look for chart patterns that dont appear to standout? Is that right, as I though that the clearer the pattern the better and if it does not jump out at you then dont trade it?
I would appreciate any comments
Thanks Ilia