Quantitative Strategy, Trading, and Algo Development Industry News


The Patient Chart Pattern Trader

“Although HFT and algo trading dominate market activity nowadays to the tune of about 80% of transaction volume, there are still a number of old school chart pattern traders around. This is evident from social media messages where these traders post charts with patterns, such as head and shoulders, triangles, trendlines, double tops and bottoms, just to name a few. Although some of those chart traders aim to only teach their “art” to new traders, some are obviously patient enough to trade with it.” 
“Chart pattern trading is a style that is more suitable for recreational trading rather than professional. This is one reason it was never considered seriously by the majority of hedge funds. In addition to requiring patience, slow chart pattern formations offer enough time for detection and competition is high at diminishing returns.”
“The conclusion is that chart trading was a style for patient traders during times when everything was slow, from data collection, to chart drawing, to analysis and to executive trades. Nowadays the word is faster by several orders of magnitude. Good chart traders could obviously survive the new dynamics but the expectation should be low given dominance of algos. At the same time, learning that old style of trading is more interesting in the context of studying the reasons it is no longer applicable to the markets.”
See what Michael Harris has to say about it on Medium.com
Note: CloudQuant has seen many chart pattern traders bring their discipline of trading and analysis to their python based algorithms.
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