What we are now covering will be ADDITIONAL information that will improve your pattern recognition skills…which will ultimately have a multiplication factor on your existing level of efficiency when trading because it will increase your knowledge and your confidence. Therefore, let’s say you were a $250 a day trader taking two trades a day. When you improve your pattern recognition skills, you may discover an additional trade or two each day. And, those additional trade setups may be the ones that increase your daily efficiency by a factor of 3 to 5 as you progress in your trading career.
For example, and I don’t expect you to have identified this point, but let’s say you have an additional data feed that has been showing for the last few weeks that hedge funds and mutual funds are being forced to sell or liquidate many of their positions…let’s say to cover the money that is being pulled out of their funds and you notice that in the last half hour of trading, the market tanks rapidly every trading day for the last few weeks. That is a pattern recognition that you may be able to capitalize on if you recognized it…you could call this Hedge Fund Forced Liquidation Pattern.
One of the ways you might be able to take advantage of this identified pattern (let’s say you have a rule that says…you don’t trade in the last half hour)is that let’s say you see everything lining up on the chart the correct way and now you say to yourself…this other pattern has been happening…so let me take this trade setup…and it works. You still trade the charts but you have recognized this pattern and it is in confluence with what you are seeing on your chart.
Here are a couple candlestick patterns that you may or may not be aware of …
Read this carefully…before attempting to use it…
When you have a significant reversal pattern such as an Evening Star pattern to go short or a Bearish Engulfing pattern to go short…the high point of those patterns, at some point in the future, will become an area of resistance. Also, a Morning Star pattern to go long or a Bullish Engulfing pattern to go long, the low point of those patterns, at some point in the future, will become an area of support.
Please note…that noticing this Significant Candlestick Reversal Pattern is useful in a future trading opportunity because if you are in a trade, at some later point and you notice the prior pattern, you would be wise to look to exit most of your position, if not all of your position at the area of support or resistance based on the prior pattern.
Also, if you see that that area is not holding as support, when you thought it should be holding as support based on the prior pattern, that could be signaling the market is making a sustained move in that direction.
Now, let’s say you notice that there is a Quarterly Earnings Release After Stock Market Closes Pattern where a major company like GOOG, AAPL, GE, GM or whoever releases their earnings after 3 pm Central Time and the announcement is either a huge disappointment or favorable surprise and you notice that the futures market does not close until 3:15 pm Central Time and you notice that the ES futures moves in the direction of the announcement for the first 5 min after the announcement, you could possibly take advantage of noticing this pattern.
Now, let’s assume you notice that there is an Opposite Directional Chart Pattern when you look at the ES emini contract and the 10 Year Treasury Note emini contract…you notice that they are going in opposite directions most of the time and now you notice that the ZN contract appears to be leading the ES contract and you see a Reversal Closing Pattern on the ZN. You may want to take notice of what is happening on the ES to see if a reversal pattern in the opposite direction is setting up.
Let’s say you notice the “What if what I expect to happen does not happen” Pattern. This is when you let’s say you noticed a Bullish Engulfing pattern to go long and you thought the market should be headed back up because you were at the lows of the day. And you notice, the target, the most recent pivot high has been reached BUT…instead of the price continuing higher, you see it going sideways or starting to rollover to the downside. What do you do? GET OUT FAST! You can always get back in on a “continuation” break of the price signal if the market turns back around.
In a case like the last one described, some people hold on to a trade too long…I noticed, but I don’t know if you have noticed, that when a “what if what I expect to happen does not happen”, that the market is going to turn back against you or drift sideways…that’s a pattern that I noticed for me while I am following and thinking about the market on a bar-by-bar basis. So, I put an automatic rule in that says…GET OUT FAST!
I have identified many different types of patterns based on different distinctions. I just want YOU to start paying attention to different types of distinctions to identify different patterns…make up names for them.
For example, I noticed the following patterns on Fed Day Announcement Pattern. The market makes a UP…DOWN…UP and continues from there OR a DOWN…UP… DOWN and continues from there pattern after the announcement. I noticed the first leg of the move is violent and volatile and I noticed about 35 to 40 minutes after the announcement, that’s about when the market begins, or is about to begin, it third leg of the pattern. Now, if you know this, you can feel a little more comfortable on Fed Day…if you notice the pattern unfolding, in conjunction, with one of your standard trade setups learned in the private mentoring program.
As you continue reading and studying the things indentified in these writings, you will start seeing all sort of patterns that can help you. As for right now, I just wanted to open your mind so that you could see that a pattern is NOT just a price pattern. A pattern can be anything that you notice that can help you to pull more profits out of the market, either one time or on going in the future.
You have the right methodology…The Traders Advantage Methodology mentoring program prepares you for anything the market will throw at you. If you have not enrolled in that mentoring program, consider doing so immediately…it is costing you money to not have this information. Remember, my advice is always as follows:
All you have to do is TRADE WHAT YOU SEE ON YOUR CHARTS ONLY! You must follow your rules and trade setups…and take those trades only.
Always trade what you see on your CHARTS…period. Never trade your “directional bias”. Let’s make this point clear so you never get tricked by market manipulation. Your rules should be clear on when and how you enter into a long trade…how you stay out of trades when the market is in transition and when you can take a trade in the opposite short direction. Trade your rules and nothing else.
Please be sure to read my 15 page newsletter on Understanding Market Flow. It is already posted on the website. That newsletter provides you with incredible additional insights how to read the markets on a bar-by-bar basis.