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Trading by the patterns
Mon, Sep 22 2008, 13:13 GMT
by The Trader's Journal Collaborators
This article is taken from the Trader's Journal magazine (Aug 2008 issue)
The author, Teresa Appleton is the founder and CEO of TradeLogic, LLC. She started trading while pregnant with her first son (Troy) and not only was that a blessing it was the start of a new career. 1997 was the big market boom when you could hear grandmothers talking about trading at the grocery store. Teresa is self-taught and reading for hours to her newborn (trading books of course, not Dr. Seuss) helped to keep her sane and upbeat
- Teresa Appleton outlines and discusses various technical charting patterns that provide clues into the direction of the markets
Is ‘trading by patterns’ similar to ‘painting by numbers?’ It could be looked at that way and the purity of the price action with your favorite indicators can take a lot of noise out of the market for you. Trade entry, exit, money and risk management can all come from a few simple pieces of information off of each pattern. Chart patterns can take the guesswork out of trading and letting the price guide trading decisions regardless of what market you trade is wise.
When trying to identify trade setups, you must first define what type of trader you are. Do you trade multi-week, daily or intraday? Once that question is answered, you can begin looking for setups in the right timeframe for your trading style. Trading within the timeline where the pattern is found is important. If you are a swing trader, 65- minute charts and daily charts should be viewed. Investors can use weekly and monthly charts to find setups. Intraday traders can use 5-minute, 13-minute and 30-minute charts. Scalpers often use 1-minute and 3-minute charts. Regardless of the timeline you use or type of trader you are, A PATTERN IS A PATTERN. They all trade the same. The difference is in the speed and timeline.
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Other article in this issue:
Published on Mon, Sep 22 2008, 13:41 GMT
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