I've long thought what great and continuous efforts the market as a whole has been making for centuries to become immune from us, the crowd of traders. The only thing that makes us happy is crumbs from the feast we are never part of. We pick them up stealthily, run away and munch, munch. Because we know that no one has so far discovered what makes the market live and what makes it die. Governments? Laws? Address this question to Adam Smith, please.
The Market has been miraculously resistant to one million trade systems that were invented in the past and still keep coming in as new and incomprehensible bacteria. They come and go, the Market stays. Incredible. There lived and wrote one genius, H. G. Wells, about the Martians:
"But there are no bacteria in Mars, and directly these invaders arrived, directly they drank and fed, our microscopic allies began to work their overthrow. Already when I watched them they were irrevocable doomed, dying and rotting even as they went to and fro. It was inevitable. By the toll of a billion deaths man has bought his birthright of the earth, and it is his against all comers; it would still be his were the Martians ten times mighty as they are. "
The Evolution continued after this great book was written and Man created the Market. The Market has learnt from a billion of losses to be immune and independent from us. And we became the Martians. The history repeats itself. But is there a chance? Watch out for patterns, clues, candlestick formations - these are classic slogans. And we watch for them, see them, enter the market as bacteria and... still lose. That's why people continue to invent new patterns, or new names for the old patterns. Pinbar! Tripple low! ABC! DEF! 123! Or, 123456! Fozzy! I am losing my head...Can't you see the Market is already adjusting itself to these inventions? A joke? Nonsense? Alright, tell me how many traders are playing these days Head&Shoulders? They disappeared. Or if they were wise enough they turned into more agile creatures. We have to if we want to survive long-term. I see, as an example, pinbar play has become immensely popular among the forex community, they see it and jump in. Majority still loses and we do not understand why. Our grey-haired tuitors remind us: "Wait, look for the best setup." We do not wait because we are sure the next one is the best setup and, frankly, the best setups are the ones in history, in books. They are the best because the Market gave us a chance and we took it. Next time, the pinbar may be overshadowed, or engulfed and we shall be told "Loser!"
So, let's repeat the question - is there a chance? Yes, there is always a chance. For the smartest, defiant, unprejudiced and keen to adjust. Which means you may trade your patterns as long as they pop up in an unobstructed, clear view. You will also learn to trade failed signals. Let's say you are starting to lose against your favourite pattern. Should you reverse your position? I would not recommend unless a forward direction of trades is mastered.
Did you know that when traders slide into a streak of losses they should treat it as an infection? In this case the cure can be simple: lie in bed, smoke your favourite cigars, take 1 month vacation from the Market exposure, whatever makes you a normal, smiling and loving creature. You will see over the past month that the Market was ruthless and levelled out every single trader. I often find myself facing some strange market forces and if my losses confirm it I have to stay away, for my own protection. It seems to be so simple.
One last word, folks, from a wise man:
"If a new chart pattern became popular as a technical signal in the future (e.g. in the way breakouts are widely used today), a failure of the pattern could be viewed as more significant than the pattern itself. In this more general sense, the concept of failed signals could prove timeless." - Jack D. Schwager.
Hmm, Man is incurable.
Another chart - same price action:
