Forex m et w patterns
Please Select Please select a country. Triangle patterns are a charting tool that rely on sound trading methods.
By , I had not only become proficient in trading them, but I had also developed the intuition necessary to identify the most profitable formations — something that can only be had after years of practice. While you can trade these on the 4-hour time frame, in my experience the most lucrative trade setups form on the daily time frame.
Wedges tend to play out relatively quickly compared to something like the head and shoulders pattern. However, they also allow for an advantageous risk to reward ratio , especially the larger structures that form on the daily chart.
This combination allows you to secure a nice profit in a relatively short period of time. The first and perhaps most prevalent is trying to force support and resistance levels to fit. As I always say, if a level is not extremely obvious, it should be ignored. The second mistake I see among traders is attempting to trade a wedge on a lower time frame. Last but not least is the issue of timing.
As you may well know, timing is a key factor if you wish to succeed in the world of Forex. And when it comes to wedge patterns, timing is everything. This retest offers the perfect opportunity for an entry, however it does take patience to achieve.
Be careful of entering on the first closed candle outside of the pattern as you will likely get a retrace of some sort. The bull or bear flag is another name for a channel. So as you might expect, it is most often traded as a continuation pattern.
Like the head and shoulders, flags often form after an extended move up or down and represent a period of consolidation. I feel confident in saying that you could literally trade nothing but bull and bear flags and make very good money in the Forex market. This, of course, assumes that you have become a proficient price action trader. There are a few reasons, but mostly due to the fact that these formations occur quite often.
This is true even if you are trading the higher time frames. That said, you only need one profitable trade each month to make good money as a Forex trader. The measured objective in this case often allows for several hundred pips on most currency pairs.
Combine that with a precise entry and a well-placed stop loss that is 50 to pips away, and you have a recipe for a profit potential of 3R or better just about every time. Like the other patterns above, there are a few things you should watch out for when trading this formation. The first is perhaps the most obvious — never cut off the highs or lows in order to make the channel fit.
Calculating the measured objective also tends to give traders fits. Doing so will only slow the learning process and also send you chasing trades in every which direction. Becoming a successful trader is about finding an approach to the markets that fits your style, defining your trading plan and then refining those rules as you gain experience.
N ow that you have the knowledge of the three powerful price patterns you are steps closer to becoming more confident trader! Triangle patterns are a charting tool that rely on sound trading methods.
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