Interested in trading chart patterns? Like the idea of making all of your trading decisions based on price and volume alone?
For the last few years I have been trading nothing but chart patterns. W bottoms, flags, pennants, channels, I’ve tried them all. And after years of unhappy trading moments I started to get some clarity.
I got a lot of that clarity by clearing off my charts and using either nothing but price and volume or a couple simple moving averages.
With clear charts, and no indicators cluttered around price, I sat back and watched patterns emerge.
For the most part I use only 3 master patterns. Breakouts, Continuations, New Highs. By focusing on nothing but those 3 master patterns (which I cover fully in this blog post) I’ve improved tenfold as a trader.
To learn more about patterns and to find out which ones you like best, I suggest looking at 5 minute charts.
Now, I don’t suggest trading them because the lower time frames are VERY difficult to trade, but because all charts at fractal, meaning they look the same on all time frames, by watching 5 minute charts (or even 1 minute charts!) you can watch patterns develop over and over in real time.
Take today’s market for instance.
Looking at the 5 minute chart I see three patterns right off the bat:
How awesome is that? Three separate patterns, and all within a few hours!
And these patterns happen everyday. Day in, day out.
I admit, it can take awhile to see them, but once you do you will be able to spot them as they are forming and watch as they complete and you will start to get a bigger picture of the market and how price moves.
And that’s what makes you money. Because knowing where you are at all times creates confidance. And confidance inspires action. And action creates results. And the more practice you have, the better those results become.
So I hope this quick tip about how to learn chart patterns has helped. It sure helped me. What are some of your favorite chart patterns? Leave a comment below, and let me know!