Common Knowledge in Patterns

The reason for repeated pattern failures we see in the market is because of the Common Knowledge. Common Knowledge in simple words is that opponent knows that you know that a particular thing is relevant, and you know that opponent knows that you know that opponent knows .. going into a long loop. Since, the market players are aware majority traders are looking at a price chart with an expectation of pattern, they also know where the stop losses of the patterns are, and hence it makes enough sense to go against the Common knowledge and take out the stops. Over a period of time if creates repeated pattern failures making the most common pattern - highly recognized patterns - less and less effective.

In other words, you may say crowds cannot trade patterns, though they are actively involved in creating patterns on charts.

When a pattern becomes a crowd knowledge the ability of that information to give you an 'edge' in trading is nullified. Following a pattern in such a scenario leads to failure of trades.

Similarly, almost all the popular concepts used by traders when popularized becomes extremely vulnerable to overcrowding. However, on the flip side, if the trading concept is too complex it is unlikely to be consistent over a period of time; and to be consistent over a period of time, these concepts have to be simple to very simple, making them easily learn-able / popular. This would imply that at any point of time, few concepts / methods including Pattern trading are routinely attacked by opponents.