Are patterns really profitable, or are we just connecting random candles with a story?
Most of us started trading by seeing patterns on the chart: double bottoms, pin bars, three green candles, “smart money” footprints… but do we have any evidence they actually works ?
In this idea, I want to talk about the statistical significance of chart patterns, and how you can use simple statistics + Pine Script to move from “I think this works” to “I measured this edge.”
◼ Patterns are opinions until you define them
“Strong bullish candle”, “nice rejection”, “liquidity grab” – these are subjective words.
Statistics don’t work with feelings, they work with clear rules. Before testing anything, a pattern must be converted into something like:
Candle 1: bullish, body size > X% of price
Candle 2: low does not break previous low
Close of Candle 3 > high of Candle 1
Once you can write your pattern as strict conditions (true/false), you can: Count how many times it appeared, measure what happens after it appears, and decide if it’s worth trading or not. That’s where Pine Script becomes a powerful research tool.
◼ What does “statistical edge” actually mean?
A pattern is interesting if, when you look at many occurrences, you see a consistent tendency. For example, choose a simple question like: “When this pattern appears, where is the price on average after 10 bars?”
If you track that over hundreds or thousands of samples, you’ll get:
How often price is higher vs lower (win rate).
The average move (for example, +0.8% after 10 bars).
How volatile or noisy the results are.
This doesn’t magically make a holy grail, but it tells you: Is this pattern better than random? Is it worth building a full strategy around it? Without this step, you’re basically trading based on screenshots and memories.
◼ Using Pine Script as your statistics magic tool.
Even without going deep into code, the logic in Pine Script is simple, here is a simple example that you can do.
A. Detect the pattern Whenever your conditions are true on a bar, mark that bar as a “pattern bar”.
B. Look forward in time For each pattern bar, check the price after N bars (for example 5, 10, or 20 bars later). Calculate the % change between the pattern close and the future close.
C. Aggregate the results Keep a running count: How many patterns triggered (sample size), How many ended positive (wins), The average % move after N bars.
D. Interpret the numbers If you find that your pattern appeared 800 times, and after 10 bars: 62% of the time price was higher, Average move was +0.6%... then you have something much more concrete than “this looks good on the chart.” You don’t need to turn this into a full strategy immediately. Even a simple statistical study like this already filters out a lot of illusions.
◼ Common mistakes when testing patterns
When you start doing this, it’s easy to fool yourself. A few traps to avoid:
Tiny sample size : If your pattern only occurred 15 times and 11 of them were winners, that 73% win rate is probably not reliable. Statistics start to mean something with large samples (hundreds or thousands of events).
Obsession with win rate : A 70% win rate means nothing if your winners are tiny and your losers are huge. You must look at: Average move, Distribution of outcomes (are there huge negative outliers?), How a realistic stop-loss / take-profit would behave. Sometimes a pattern with 52–55% win rate can be excellent if the average reward is larger than the average risk.
Overfitting the past : If you keep changing rules until the backtest looks perfect, you are no longer discovering a pattern – you’re forcing the past to agree with you. A healthier flow is: Start with a simple, logical idea. Define it clearly in rules. Test it on one market / timeframe. Check it on other symbols and timeframes without changing the rules.
If the edge survives in different environments, that’s much more interesting.
Using this approach will save you a lot of time and money in losses, do your research before taking a trade, make sure you have the statistical evidence if you want to trade a pattern.
i will be sharing more ideas on the use of Pinescript to improve your trading in the next days. make sure you follow me.
Most of us started trading by seeing patterns on the chart: double bottoms, pin bars, three green candles, “smart money” footprints… but do we have any evidence they actually works ?
In this idea, I want to talk about the statistical significance of chart patterns, and how you can use simple statistics + Pine Script to move from “I think this works” to “I measured this edge.”
◼ Patterns are opinions until you define them
“Strong bullish candle”, “nice rejection”, “liquidity grab” – these are subjective words.
Statistics don’t work with feelings, they work with clear rules. Before testing anything, a pattern must be converted into something like:
Candle 1: bullish, body size > X% of price
Candle 2: low does not break previous low
Close of Candle 3 > high of Candle 1
Once you can write your pattern as strict conditions (true/false), you can: Count how many times it appeared, measure what happens after it appears, and decide if it’s worth trading or not. That’s where Pine Script becomes a powerful research tool.
◼ What does “statistical edge” actually mean?
A pattern is interesting if, when you look at many occurrences, you see a consistent tendency. For example, choose a simple question like: “When this pattern appears, where is the price on average after 10 bars?”
If you track that over hundreds or thousands of samples, you’ll get:
How often price is higher vs lower (win rate).
The average move (for example, +0.8% after 10 bars).
How volatile or noisy the results are.
This doesn’t magically make a holy grail, but it tells you: Is this pattern better than random? Is it worth building a full strategy around it? Without this step, you’re basically trading based on screenshots and memories.
◼ Using Pine Script as your statistics magic tool.
Even without going deep into code, the logic in Pine Script is simple, here is a simple example that you can do.
A. Detect the pattern Whenever your conditions are true on a bar, mark that bar as a “pattern bar”.
B. Look forward in time For each pattern bar, check the price after N bars (for example 5, 10, or 20 bars later). Calculate the % change between the pattern close and the future close.
C. Aggregate the results Keep a running count: How many patterns triggered (sample size), How many ended positive (wins), The average % move after N bars.
D. Interpret the numbers If you find that your pattern appeared 800 times, and after 10 bars: 62% of the time price was higher, Average move was +0.6%... then you have something much more concrete than “this looks good on the chart.” You don’t need to turn this into a full strategy immediately. Even a simple statistical study like this already filters out a lot of illusions.
◼ Common mistakes when testing patterns
When you start doing this, it’s easy to fool yourself. A few traps to avoid:
Tiny sample size : If your pattern only occurred 15 times and 11 of them were winners, that 73% win rate is probably not reliable. Statistics start to mean something with large samples (hundreds or thousands of events).
Obsession with win rate : A 70% win rate means nothing if your winners are tiny and your losers are huge. You must look at: Average move, Distribution of outcomes (are there huge negative outliers?), How a realistic stop-loss / take-profit would behave. Sometimes a pattern with 52–55% win rate can be excellent if the average reward is larger than the average risk.
Overfitting the past : If you keep changing rules until the backtest looks perfect, you are no longer discovering a pattern – you’re forcing the past to agree with you. A healthier flow is: Start with a simple, logical idea. Define it clearly in rules. Test it on one market / timeframe. Check it on other symbols and timeframes without changing the rules.
If the edge survives in different environments, that’s much more interesting.
Using this approach will save you a lot of time and money in losses, do your research before taking a trade, make sure you have the statistical evidence if you want to trade a pattern.
i will be sharing more ideas on the use of Pinescript to improve your trading in the next days. make sure you follow me.
I am Trader and Pinescript Freelancer with more than 300 projects on Fiverr, follow for more valuable ideas and scripts
免責事項
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I am Trader and Pinescript Freelancer with more than 300 projects on Fiverr, follow for more valuable ideas and scripts
免責事項
この情報および投稿は、TradingViewが提供または推奨する金融、投資、トレード、その他のアドバイスや推奨を意図するものではなく、それらを構成するものでもありません。詳細は利用規約をご覧ください。