As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20
As of 10/29/2020
  Indus: 26,659 +139.16 +0.5%  
  Trans: 11,184 +237.90 +2.2%  
  Utils: 868 +2.32 +0.3%  
  Nasdaq: 11,186 +180.72 +1.6%  
  S&P 500: 3,310 +39.08 +1.2%  
YTD
-6.6%  
 +2.6%  
-1.3%  
 +24.7%  
 +2.5%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 10/23/20

Bulkowski on Small Pattern Performance

 

This article compares the performance of small chart patterns.

I don't have a definition of what a "small" chart pattern is, but I include those that are a few bars wide.

The longest, is the Nr7, which is seven bars long.

Small Patterns: Upward Breakout Performance

Table 1: Performance of Small Patterns with Upward Breakouts
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 
Downside weekly reversals$132.3960%361
Open-close reversal, uptrend$118.6759%312
Key reversal, downtrend$95.2858%283
Wide ranging day downside reversal$92.0458%294
Open-close reversal, downtrend$90.3158%305
Outside Days$90.1658%296
Narrow range 4$89.2058%307
Upside weekly reversals$84.5857%368
Hook reversal, downtrend$81.5057%269
Inside Days$79.8238%2810
Narrow range 7$78.7957%3111
Wide ranging day upside reversal$75.9856%2712
Hook reversal, uptrend$75.9557%2813
3L-R$75.9357%2614
Pivot point reversal, uptrend$73.5657%2915
Key reversal, uptrend$71.1156%3016
Pivot point reversal, downtrend$71.0356%2817
Shark-32$69.5556%2618
Inverted gap2H$65.4456%2919
One day reversal, bottom$61.3556%2720
Gap2H$56.0855%2821
One day reversal, top$46.1254%2922
Closing price reversal, downtrend$0.0952%2823
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 

Table 1 shows the performance of small chart patterns based on the average gain.

In the tests of each pattern, I used a 7% gain for the profit exit and a 7% drop as the loss exit. In other words, after entering a trade, I set a profit target of 7% above the entry price. If the stock climbed 7%, the stock was sold for a 7% gain less $20 round trip commissions ($10 each way).

If the stock broke out upward but then dropped, the position was sold if the stock dropped 7% from the buy price. Averaging the results for all trades using the pattern gave the average gain, which I show.

The percent wins column is the percentage of times the chart pattern won.

The hold time is the duration of the trade, in calendar days.

The rank is a number for 1 (best), sorted by the average gain.

As the table shows, small patterns are not huge winners. Each trade began with $10,000, so they won $680 or lost $720 (it should be $700 each except for commissions and slippage).

Trades could make more or lose more if the stock gapped higher or lower.

Notice that the average gain is tiny -- $132 -- compared to $700 (a 7% gain).

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Small Patterns: Downward Breakout Performance

Table 2: Performance of Small Patterns with Downward Breakouts
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 
Wide ranging day downside reversal($35.77)46%241
Upside weekly reversals($40.89)47%292
Open-close reversal, downtrend($47.93)45%283
Wide ranging day upside reversal($53.46)46%254
Narrow range 7($55.52)45%255
Pivot point reversal, downtrend($55.99)45%266
Hook reversal, downtrend($58.02)45%247
Narrow range 4($62.95)44%268
One day reversal, bottom($69.57)44%249
Inverted 3L-R($72.32)44%2510
Gap2H($72.55)44%2311
Inside Days($75.73)43%2512
Shark-32($76.36)43%2313
Open-close reversal, uptrend($76.87)43%2814
Outside Days($77.81)43%2715
Hook reversal, uptrend($77.94)43%2616
Inverted gap2H($84.45)43%2417
Key reversal, downtrend($88.09)43%2518
Pivot point reversal, uptrend($96.35)42%2619
One day reversal, top($97.80)42%2820
Key reversal, uptrend($108.82)41%2721
Downside weekly reversals($135.13)40%3322
Closing price reversal, uptrend($137.97)39%2723
Pattern Name Average 
Gain
 Percent 
Wins
 Hold 
 Time 
 Rank 

Table 2 uses the same method as Table 1 except that the patterns listed had downward breakouts. That is, all trades began with $10,000. All shorted the stock and looked for price to drop 7% in a bull market. If it did not, a stop placed 7% above the entry price closed out the trade for a loss.

Commissions were $10 per trade or $20 round trip.

In this case, the average gain column actually shows a loss on every pattern! In other words, none of the chart patterns made money by shorting the stock.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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