Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 56
Trading Tactics
ОглавлениеImagine if you found a pattern that could predict when the stock is going to turn. That's what I had hoped for this pattern. Once you know that the stock had bottomed, you could buy and ride it higher.
Does the stock really turn when it's supposed to and how high does the stock rise? Let's find out. Table 3.3 shows statistics regarding the behavior of price after the pattern ends.
How often does price reach or exceed D? If you use the pattern to predict turn D, then price will hit the target nearly all of the time. The 100% hit rate in bull markets is a round‐off thing. I found three patterns out of 1,741 where the stock failed to drop down to the calculated D. So it does fail to reach D, but it's very rare. That's the good news (it reaches D).
Table 3.3 Price Move after Pattern End
| Description | Bull Market | Bear Market |
|---|---|---|
| How often does price reach or exceed D? | 100% | 99% |
| How often does price turn at D? | 38% | 33% |
| How often does D appear within a week of calculated time? | 50% | 47% |
| How many rise to point A? | 40% | 22% |
| How many rise to point B? | 83% | 80% |
| How many rise to point C? | 47% | 33% |
How often does price turn at D? Here's where the pattern stumbles. For those stocks dropping to D, only about a third will turn when they are supposed to. Figure 3.3 shows an example of this when price ignores D and continues lower to bottom at F.
How often does D appear within a week of calculated time? Using the first three turns to predict the time when turn D will appear works about half the time. It could be better, but sometimes having a clue when something will happen can improve your trading. Use this idea just like I explain with price in the Identification Guidelines. That is, find the ratio between the time to move from B to C compared to the time to move from A to B. Point D should appear following the formula, (C – B)/Ratio + C, where ratio is the number you just found.
I'll discuss an example of this in the Sample Trade.
How many rise to…? For those patterns seeing price drop to D and turn upward, how far does price rise? The answer to that question is vital for swing traders.
I used the pattern's turns to gauge success. Point B is closest to turn D, and we see price climb that far 83% of the time in bull markets. That's very good.
Use A, which is at the top of the pattern, and we see that price makes it up that far less than half the time (40%).
Hopefully you can use the information in these tables to help improve trading results using Fibonacci‐based patterns.
