The chart pattern trading strategy is mostly designed for advanced traders. The trade can be executed in favor of the trend or you can trade the key reversal using the chart pattern trading strategy. Knowing the different chart patterns and using it efficiently is a very hard task. Even the intermediate traders often mess things up in the chart pattern trading method. Before you start trading the chart pattern, stop memorizing the patterns blindly. Try to find some of the common features by which you can identify the bullish and bearish chart patterns. It will help you to find some of the best signals in the market.
Using this technique is not enough. It is just a simple tip by which you can get a clear idea about the chart patterns. Now, we are going to highlight 4 major tips you can use to become a professional chart pattern trader.
Trade the continuation pattern
Being a new chart pattern trader, you should focus on the continuation patterns only. The continuation pattern is easy to find and it has a low-risk factor. Since most of the major breakout goes along with the trend, if you trade with the trend, the continuation pattern can boost your confidence level. First of all, learn to trade the rectangle and the triangle continuation pattern. Look for this pattern in the higher time frame. Once you have spotted the trade, execute the orders and try to make some big profit. But never make things overly complicated as no one knows which trade will hit the stop loss.
Trading the reversal pattern
If you want to learn a reversal chart pattern trading strategy, you should have a strong foundation on trading. Click here to learn more from the well-reputed brokers like Saxo. After having a strong knowledge of this market, it’s time to develop your trading skills by using the most basic concept of trading. That means you have to use the money management policy. With the help of the risk management plan, you need to focus on the reversal chart pattern. If you risk 2% in the continuation pattern, the risk factors need to be 1% in the reversal pattern. This will keep your capital safe and help you trade the market with more confidence.
Trading with the news
Do you know when the chart pattern breaks the major levels? In most cases, the breakouts are triggers by the key news. So, try to learn about the news analysis since it is by far the most effective way to spot the major breakout. Things might tough at the initial stage but once you learn to trade the news, you will think the chart pattern trading method is not all compelling. For this reason, the elite traders at Saxo often say without learning technical and fundamental analysis, no one can become a successful trader. So, if you want to boost the profit factors in trading, make sure you are not using aggressive methods.
Using the price action confirmation signals
To trade the major chart pattern you should use the price action confirmation signals. By using the price action confirmation signals traders can boost their profit to a great extent. If you are new to trading, make sure you learn to analyze the pattern in the demo account. Once you start using the candlestick pattern with the major chart pattern, you can trade with a very tight stop. Without using the candlestick pattern, the traders have to use wide stop and it also limits the profit to a great extent. So, thinking about the profit potential, traders should learn about the candlestick pattern trading method. By doing so, they can also improve their natural way of trading the support and resistance level. Most importantly, they will become confident traders in the Forex market.