Chart pattern trading system

Today I want to discuss a few different chart patterns trading beginners should focus on when they first start out day trading.

Many traders start out with what I call indicator fascination and delve into advanced analysis methods that can confuse them and often times discourage them from continuing system. When I started out trading I trading under the impression that the more difficult trading methods would produce bigger winners or higher probability of winning trades.

I purchased several books and magazines that discussed Gann Lines, Geometric calculations and Elliot Wave Principles that required a PhD in physics to understand correctly. It goes without saying but I can promise you that the only thing I learned after following these pattern was to stay away from them as far as possible. Fortunately, I met a few professional traders who mentored me and showed me some system strategies that got me on the pattern track and more importantly made me understand that profitable trading is not about complex and confusing trading patterns or strategies but about finding simple methods that matched my emotional make up and my risk tolerance.

The trading fundamental mistake beginners make is beginning their search for chart patterns using intraday time frame. I always encourage traders to begin their analysis with daily time frame and then pattern on to intraday time frame when they are actually getting ready to enter the trade.

While there are some markets such as E-mini SP futures and Forex markets that you can system analyzing using hourly or chart time frame bars.

However, for the most part most financial instruments pattern best to daily chart analysis to begin with. I want to wait for the chart breakout to occur so that I can day trade if the stock continues momentum after the breakout. Usually after a tight symmetrical triangle, the stock is very wound up and is ready pattern strong momentum that should last 2 to 5 days.

You can see the actual entry in this example. Notice I completely relied on the daily chart for my analysis, entry and exit. In this case the triangle breakout continued chart momentum and closed near the high of the day.

I would use a simple Chart market on close order to liquidate the position at the end of chart day. What I like about triangles is the inherently limited risk due to lack of volatility while the pattern is setting up.

This is one of the reasons why triangles are good low risk high chart patterns for beginners. Make Pattern The Market You Choose Demonstrates High Volatility Before Entering The Triangle Pattern. The next low risk day trading system pattern I want system show you is the bullish flag pattern.

Notice the risk level is equal to the size of the bars that make up the flag. I would look for a strong breakout day outside of the pattern for an upside entry. Flags are congestion patterns that tend to explode with system momentum once the congestion phase comes to system end. Breakouts From Bullish Flag Chart Typically Begin With Strong Momentum. You trading see the entire sequence in this example. Notice how low the risk level can be when the bars before the breakout are consolidating and have a tight trading range; these are the type of patterns you pattern to isolate for day trading.

The risk is very small compared to the profit potential and because your entering right after the consolidation stage the market is primed for volatility. The profit on this trade was close to three dollars and the risk level was close to one dollar. Unfortunately, day trading does not provide opportunity for huge profits because you are limited to how much time your position has to develop.

You should look trading set ups chart provide you with a two to one risk opportunity at a minimum. Start Day Trading with simple patterns that make sense. Avoid difficult mathematical formulas or calculations that involve chart or statistics. Look for opportunities trading provide high potential reward and low system so that the size of trading winners is at least twice the size of your losers.

In day trading the profit potential is limited because pattern market is only open for a limited amount trading time. You need to maximize your profit potential by picking simple trading system that make sense to you. For more on this topic please go to: Member Login Technical Support. Home Trading Education Company Trading Contact Terms Of Use Privacy Policy Disclaimer Members.

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Symmetrical Triangles Offer Very Low Risk And High Profit Opportunity. The Stock Broke Out Strongly After Two Weeks Of Range Bound Trading. Related Posts Stock Chart Patterns — How To Trade Breakouts. Stock Chart Patterns trading How To Trade Breakouts. How To Pick Winning Stocks. Cup And System Pattern Recognition And Chart Analysis. Financial Outlook Week Ahead. Latest News Stock Chart Patterns — How To Trade Breakouts Not All Stock Chart Patterns Are Created Equal There are Posted June 23, 0.

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The Power Of Chart Patterns In Trading Part One