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In the stock market,

Can one use the knowledge for long term investments, such as, patterns recognizing points of reversals, to profit from short term trading?

in other words, is the pattern of the charts the same in microscale and macroscale?

Thank you!

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    Someone can do anything if their crystal ball is clear enough. – quid Oct 4 '16 at 17:32
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    It is extremely difficult to profit from short term trading, period. Remember, unlike long-term this is a zero-sum game and the other players are pros who have better resources than you do. If you don't see the sucker at the poker table, he's sitting in your chair. – keshlam Oct 4 '16 at 18:07
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    The simple answer to your Q "is the pattern of the charts the same in microscale and macroscale" is "yes" - indeed when Hanno ("God of the rice markets") invented charting back in Ye Olden Days, it was of course focussed on day trading, and indeed most "charting" today focusses on day trading. (It would probably be more common that this question is asked the other way around - "Can you use charting for long term also?") But be aware that (1) it is an absolute certainty you will simply lose money if you try to "trade" (short or long term) (2) of course, most believe charting is mystic crap. – Fattie Oct 8 '16 at 13:47
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When structures recur at different scales, they're called "fractals", and there is something called the "fractal markets hypothesis" which attempts to analyse stock market movements as fractals and in terms of (related) chaos theory.

Whether you can profit from it I have no idea. If it was easy, everyone would be doing it. Many of the non-academic pages linked in the search results (previous link) remind me of technical analysis/chartist stuff (which - to me - always seems to be a lot better at explaining things after the event than actually predicting things).

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Most patterns can be used on various time frames. For example you could use candle stick reversal patterns on monthly charts, weekly charts, daily charts or intra-day charts like one hour, or even one minute charts.

Obviously if you are looking for longer term positions you would be looking at daily, weekly or monthly charts and if you are looking for shorter term positions you would be looking at intra-day to daily charts.

You can also use a combination of time frames - for example, if you are trying to enter a trade over a long-term uptrend you could use a weekly chart to determine if the stock is currently uptrending and then use a daily chart to time your entry into the trade.

Most patterns in general don't really determine how long you will be in the trade but instead usually can provide an entry trigger, a stop loss location and possibly a profit target.

So in general a pattern which is being used to enter into longer term trades on weekly charts can also be used to enter shorter term trades on intra-day charts.

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There are Patterns inside of Patterns. You will see short term patterns (flags / pennants) inside of long term patterns (trend lines, channels) and typically you want to trade those short term patterns in line with the direction of the long term pattern. Take a look at the attached chart of GPN.

I would like to recommend two excellent books on Chart Patterns.

  1. Richard W. Schabacker book he wrote in the 1930's. It is the basis for modern technical pattern analysis. Technical Analysis and Stock Market Profits

  2. Peter Brandt Diary of a Professional Commodity Trader. He takes you through analysis and trades.

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    +1 - good answer showing some examples - also a note that the same patterns and technical analysis can be used on most instruments, whether you are trading commodities, FX or stocks as well as on multiple timeframes. But it is a good idea to back-test the patterns on the instruments you plan to trade. – Victor Oct 5 '16 at 22:00
  • Good points Victor +1 – MTRIG Oct 6 '16 at 23:17

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