Hi All,

Very often 5-point patterns look not perfect, and hence my question: is there an accuracy/tolerance (e.g. in percentage) that if pattern falls within it we can still consider it in a trade?





The above pattern I attached just for an example. It is not completed and now it looks even worse. But just for this case, is it "good" enough to take it into trade consideration?

Regards,
ijon

And similar thing with ABCD pattern...

Hi Ijon and welcome.
I would say that depends on what else is in the area. I would never trade a pattern by itself. For me it has to have a significant line there and at least a couple of significant fibs. 4pt Continuation patterns are a good example. They sometimes terminate at the .685 instead of the 786 or 886. If there is compelling evidence that it might turn at the .685 and not get to the 786/886 then I will take a shot.

Thank you, Mreisner. Let me continue than. What if there is a retracements grouping and pattern that is not perfect (like above)?
The best is (as you mentioned) to have pattern and fibs together. But how to qualify pattern then...
I know this knowledge comes with the experience that I have very small, hence my beginners questions.

Just call me M. Where is your line in these charts?

OK, M. There is not a line. I just attached example patterns because was interested in the very geometry.

Like I said I wouldn't trade anything without a line. Look at Roofer's charts in this forum.
The geometry is only one aspect of it. The same way the setup itself is only so little of what defines us as traders.
It's all about the mental game and believe me I've had many painful lessons to realize it.

OK, thank you. I will come back to this topic when I have the concrete example with all the stuff on it.

ijon, it's just my opinion. I don't have authority over this. It's just what I look for. Other people may have other ideas.

ijon,

Let me say a few quick things here. I don't have a set percentage or anything I use for tolerance, it is more a matter of experience. Let me say, though, that even though I wrote a book on a new 5-Point pattern (which I wrote because, at the time, I really liked 5-Point patterns, and people were asking me all the time about them), I really don't use 5-Points at all in my current trading approach (although I watch for them to see what others are seeing). As I explain to my students, I focus on ABCD's at key lines, with Fib groupings (specific Fib groupings, something I get into detail on when I do one-on-one work), and appropriate 'context'. With time and practice I came to see how 'tight' the area should be for me to find it acceptable. This is a visual thing for me, not one where I use a formula. I just 'know it when I see it'. I hope this helps.

Yes Jim, it helps. Let me explain why I asked this (maybe not very wise) question. After reading your material it got obvious to me that using those techniques with success is a matter of experience and everyone who wants to apply them in trades should be prepared for a long and hard work. I like this attitude. Recently, I started to test MetaTrader 4 environment and I found it is quite easy to write my own indicators/scripts for fibo retracements and also for ABCD and 5-point patterns to draw retracements lines and pattern coefficients. Drawing retracements of ABCD it is quite easy (there are some on the above image) but I thought to do more calculations with 5-point patterns, hence my question. I didn't really expect the fixed percentage. Rather a hint if I go the right way, so your and M's answers are very helpful.

Thank you.

Thanks a lot Jim! It is very helpful info for me.