The korea-option.com team starts a new series of articles. Chart pattern trading strategies can be found in our step-by-step guide. This article will elevate and enhance your trading to a new level. This technique allows you to systematically investigate a fight between a bull and a bear.
By trading the most profitable chart patterns, you can deduce who will win the battle between bulls and bears. You can use this strategy to identify stock chart patterns. It is also used to identify any instruments you wish to use for daily trading.
We share this because it greatly improves our ability to understand price movements and price fluctuations. Ultimately this will make you a much better trader. The key to this trading style is to identify how patterns form. It also increases your overall understanding of market analysis. This article introduces a few entry-level patterns, then discusses some specialized patterns.
This pattern is a symmetrical triangle and a double bottom. I also think it’s important to use it with pivot points. This type of training sets you apart from regular traders.
To get started, I recommend getting a basic stock charting software with very simple tools like moving averages and other indicators. This allows you to do market analysis and view charts as patterns form. The ascending triangle will be a valuable pattern in your trading arsenal.
Round bottoms, head and shoulders patterns, inverted head and shoulders, back head and shoulders, triple bottoms, cups and handles, and descending triangles are also worth a look. These patterns help you find trading ideas faster than the average trader can find them. It helps you enter trades at the right price level.
This type of pattern allows you to trade any currency pair. Trading does not rely on market trends or economic schedules to find successful trades during weekly trading. This article is unlike any other blog article you’ve read. This is because we provide step-by-step instructions on how to place trades using the exact price patterns for your strategy.
There are thousands of merchants all over the world who trade certain types of structures, such as triangle patterns. Renowned trader Dan Zenger used a chart pattern trading strategy to turn $10,000 into $42 million in less than 23 months.
To achieve true success in trading, all you need to do is emulate what professional traders do. Start testing your strategy and then measure the results.
We have spent a lot of time studying price action. Studying the best pure common chart pattern strategies provides some evidence.
- Forex Strategy: How to Trade Bull Flag Patterns
- Simple wedge trading strategies for big profits
- Price Action Pin Bar Trading Strategy
Let’s define exactly what we’re moving forward with. More importantly, it will define how we can benefit.
What are chart patterns?
In Technical Analysis, chart patterns form simply represented price in a graphical way.
It is undoubtedly one of the most useful tools when performing technical analysis of price charts. Chart patterns are a very popular way to trade all kinds of markets. The most profitable chart patterns provide a visual representation of supply and demand. It also shows the relative strength of a particular price level.
If we are on the topic of supply and demand, we recommend that you study more on this topic: Trading Supply and Demand – Learn About Market Movements.
What makes chart patterns so compelling is that they shed light on what is going on behind the scenes. This means buying and selling pressure.
Note* Charts have their own language and speak through chart patterns, leaving the footprints of big money or smart money. These footprints can lead us to profitable deals.
Why Chart Patterns Matter
This is the preferred time frame if you are looking at price action on 5-minute charts, daily charts, etc. by removing all indicators and momentum indicators from the chart, anything that can make the chart less clear. . You can get more insight into what’s actually happening in the market.
As long as the candlestick has a variable open, high, low and close; You can use them to check your position or enter new trades. You can build a successful chart pattern trading strategy without any other technical indicators. Here is an example of a master candle setting.
There are bullish and bearish chart patterns. Anything that makes them work tends to happen again over time, so you can backtest and find out the odds of success.
Type of chart pattern:
Throughout this article series, we discuss how to monetize the most profitable chart patterns. Here are some of the most profitable chart pattern trading strategies.
- Triple Top Chart Pattern Trading Strategy
- Handle Trading Strategy Cup
- Bump and run chart pattern
- Price Channel Pattern
- Symmetric triangle
- Double Top Chart Pattern Strategy
- Double Bottom Chart Pattern Strategy
- Rectangular chart pattern strategy
- Forex chart patterns
- Inversion chart pattern
- And many more.
Earlier, we posted a clear price chart for EUR/USD. However, by looking more closely and reading the chart pattern language, you can identify the most profitable chart patterns (pictured below).
When there is a battle between buyers and sellers, it doesn’t matter the time of day or the market because chart patterns are ubiquitous.
Let’s discuss how we can use our trading strategies and in which markets we can trade money. The key is to look at the lower trend line and mark the bottom of the triple anywhere on the chart.
Chart Pattern Trading Strategy – Rules
We have developed 5 step-by-step guidelines for you to consider when trading chart patterns.
Step 1: Always check if the market is in trend mode or consolidating
While some of these simple chart patterns are often in the form of consolidation, they are actually continuation patterns of the underlying trend, so this step is important.
For example, a bullish flag pattern, which you read more about here, is a pattern that forms after a larger move. The pattern itself is a brief form of relaxation or consolidation in the underlying trend before breaking through a new high.
Basically, a bullish flag pattern is a continuation pattern.
There are mainly two types of chart patterns that can be distinguished.
- Continuation pattern: Signals that a trend will continue
- Reversal patterns: signal the end of a possible trend and the beginning of a new one.
An example of a reversal pattern is the double top pattern highlighted in the picture below.
It is important to determine whether the market is trading or consolidating. Because it shows you which type of chart pattern is best for each trading environment.
Note** The reason many price action traders fail is because they don’t follow this first rule. They try to trade every pattern regardless of the overall picture.
Step 2: Decide which chart pattern you want to use
Do you want to trade Reversal Reversal Patterns?
Figure this out first! Once you decide which way to go, master your specific trading setup.
Repetition is the mother of all learning. The more you trade the most profitable chart patterns, the better you can spot these chart patterns in real time.
The TSG team is a fan of the triple top chart pattern. This is because of the potential benefits available if a new trend develops.
Step 3: Find the story in your chart patterns.
What you need to do here is create a story behind your favorite setting.
What does that mean?
Simply, look at the full price picture and don’t just focus on chart patterns. All you need is for this story to confirm price action patterns. Everything else should point in the same direction. Finding the right direction to place your trades will help you increase your win rate.
For example, the story behind the bull flag highlighted in Step 1 is easy to find. We are in an uptrend because we have developed a series of highs and lows.
Second, we broker and close old highs. Any resistor above the market price is not good material. They speak volumes in favor of our bullish flag pattern.
Step 4: Trade chart pattern trading strategy by joining good price positions.
Chart patterns work best with good price positions that can cause confluence in trades.
What does price position mean?
In simple terms, price position is an important area on the chart where price reaction is usually expected. That price position could be a support/resistance level, a swing high/low point, or some pivot point. Combining the two, position can also be a technical indicator.
For example, the price channel pattern highlighted in Figure 3 has resolved as it has joined higher time frame resistance levels. EUR/USD simply traded in an ascending channel but headed towards a resistance level.
Step 5: Create non-subjective trading rules for your trading chart patterns.
The final step in creating a chart pattern trading strategy is not only to have non-subjective trading rules, but to write them down and strictly follow the plan.
There are many ways traders can profit from this chart pattern.
For example, bullish flag patterns can be entered from flag support retests or breakouts on flags. You can also trade with the Breakout Triangle Strategy.
Become a master of one setup and one chart pattern trading strategy. Prove to yourself that profitable trades are possible with just one pattern before you move. Simply put, find a pattern pattern you like and put that chart pattern trading strategy to good use.
Conclusion – Trading Chart Patterns
We hope you enjoyed this article on trading chart patterns.
We provide you with the most profitable chart patterns to help you fast track your career. One thing we can’t give you, however, is screen time and experience. It will have to be obtained over a period of time. Here is another strategy called Forex trading volume.
There is no magic bullet when it comes to chart pattern trading strategies. Because you make mistakes. Second, you will still lose trades. The whole idea is to be selective about the chart patterns you trade.
