Day Trading With Short Term Price Patterns and Opening Range Breakout

by Toby Crabel

Explains the importance of detailed studies on price patterns. Attempts to find forecastable events based on the relation between opening, closing, high and low prices. Includes computer-tested answers to many common short term trading questions. Consists of 5 sections: 1) opening range breakouts, 2) short-term price patterns, 3) patterns of expansion and contraction, 4) combination of price patterns with expansion and contraction patterns, and 5) openings and closings that occur in various segments of a price bar; includes the results of computer analysis for each topic. We highly recommend this book for the serious short-term trader.

Genres: Finance

288 pages, Hardcover

First published August 1, 1990

Reviews

[Tadas Talaikis · Rating 3 out of 5]

Someone commented under my How to 10x an account? The chapter of the theory with a link from someone called Marc Brown, who claims he found (2009) "holy grail" (e.g., term used in trading community). Further, found that Marc Brown had read this book back in 2005 with high praise. Haha, short this morning's story how I came to this book.

Then I looked into Crabel's fund performance. It's a loser in several past years. I think it should be if strategies aren't flexible enough, because 1) patterns work best only with higher volatility regimes, 2) a lot of good patterns are missed by purely mechanical systems, you should be much more creative in defining broader terms, 3) exits are usually worst part for short term pattern based trading, 4) any pattern strategy doesn't catch all available profit.

Problems in this book:

1. Although it provides price action patterns, which are testable, the author misses the entire point of quantitative - to rely only on data. TA indicators in provided form have nothing to do with this concept - publicly known indicators provide no signal, trading on them is trading on noise (if you don't transform them into more useful ones).

2. All provided tests are statistical errors, because you can rely only on relative data, like win/ loss ratio, probabilities, skewness, kurtosis, not absolute numbers. Also: no in-sample/ out-sample, multi-market validation. If he still uses this erroneous process, no wonder, fund is not profitable.

3. Trading on 5M ("day trading") is useless usually, first, the lower the timeframe, the more random it is, second, any test will show that it will give you less gain (most often - negative) compared to higher TF (well, due to randomness and higher costs). Currently better to use market making strategies instead on such frames.

So, from this book some good ideas can be derived, but also it is too old in understanding the theory behind the random processes (i.e., markets).

[James Gilbert · Rating 1 out of 5]

The fact that I can't even find the book no more I think thats a creep selfish move on Toby Crabels part, he became successful and took it right off the shelf. That should of been expected though. When people make it that say fuck everybody else.

[Javier Villar · Rating 3 out of 5]

These entry patterns might well be useful but the style of the book is so uncomfortable that becomes repulsive.