How to Choose the Best Chart Pattern for Your Needs

[] And a special gift — my biggest of the year! [] [Roger Scott]( [] [Roger Scott]( [] Date: June 6, 2023 [] How to Choose The Best Chart Pattern for Your Needs Everyone needs a few different chart patterns to focus on when they first start out trading. Most people learning how to trade start with what I call an “indicator fascination.” They dive right into advanced analysis methods that confuse and oftentimes discourage them from continuing to trade. When I first started out, I was under the impression that more difficult methods would produce a higher probability of winning trades. I purchased several books and magazines that discussed Gann Lines, geometric calculations and Elliot Wave Principles that required a Ph.D. in physics to understand. I can promise you the only thing I learned after following these methods was to stay as far away from them as possible. [] Why Chart Patterns Should Be Simple Fortunately, I met a few professional traders who mentored and showed me some simple chart patterns that got me on the right track. [] [Pro tip: Go here to learn about my favorite patterns.]( [] And, more importantly, they made me understand that trading isn’t all about complex and confusing strategies… It’s about finding methods that match our emotional make-up and risk tolerance. So today, I’m going to show you a few basic chart patterns that should help you get started on the right track. [] Always Begin With Daily Chart Patterns The most fundamental mistake beginners make is searching for chart patterns that use intraday time frames. I always encourage traders to begin their analysis with a daily time frame, and then move on to the intraday time frame right before they’re getting ready to enter the trade. There are some markets, such as E-mini S&P 500 futures and forex, that you can begin analyzing using hourly or shorter time frame bars. However, most financial instruments respond best to daily chart analysis to begin with. You can see just that in the symmetrical chart pattern setup below… [] I want to wait for the initial breakout to occur so I can day trade if the stock’s momentum continues after the breakout. Usually, after a tight symmetrical triangle, the stock is wound up and ready for strong momentum that can last two to five days. You’ll also notice that I completely relied on the daily chart for my analysis, entry and exit. I watch the intraday chart while I’m in the trade, but I mostly focus on the daily chart to make sure the pattern is developing. In the next case, the triangle breakout continued its upward momentum and closed near the high of the day. I would use a simple market-on-close order to liquidate the position at the end of the day. What I like about triangles is the inherently limited risk due to the general lack of volatility while the pattern is setting up. This is one of the reasons why triangles are good low-risk, high-reward chart patterns. [] The next low-risk, day trading chart pattern I want to show you is the bullish flag pattern. It’s similar to the triangle pattern, but it has a slightly wider channel range, and typically slopes down a bit more. [] Notice the risk level is equal to the size of the bars that make up the flag. I would look for a strong breakout day outside of the flag for an upside entry. Flags are congestion patterns that tend to explode with good momentum once the congestion phase comes to an end. You’ll notice how low the risk level can be when the bars are consolidating before the breakout, and have a tight trading range. These are the type of patterns you want to isolate for day trading. The risk is small compared to the profit potential… And because you’re entering right after the consolidation stage, the market is primed for volatility. The profit on this trade was close to $3, and the risk level was around $1. Risking $1 to make $3 is the type of odds I like. Day trading, unfortunately, doesn’t provide opportunity for huge gains because you’re limited to how much time your position has to develop. You should look for setups that provide you with a 2-to-1 risk opportunity at a minimum. [] Things to Keep in Mind Start out with simple chart patterns that make sense. Avoid difficult formulas or calculations that involve geometry or statistics. Look for opportunities that provide high-potential reward and low risk so the size of your winners are at least twice the size of your losers. The way I trade chart patterns now is completely different. I only focus on five that backtesting shows work best… [Go here to learn about my favorite patterns]( [] Senior Strategist [] P.S. Have you heard the big news!? I’m handing out my BIGGEST gift of the year! [] [>> Go here to find out what it is! <<]( [] Date: June 6, 2023 [] How to Choose The Best Chart Pattern for Your Needs Everyone needs a few different chart patterns to focus on when they first start out trading. Most people learning how to trade start with what I call an “indicator fascination.” They dive right into advanced analysis methods that confuse and oftentimes discourage them from continuing to trade. When I first started out, I was under the impression that more difficult methods would produce a higher probability of winning trades. I purchased several books and magazines that discussed Gann Lines, geometric calculations and Elliot Wave Principles that required a Ph.D. in physics to understand. I can promise you the only thing I learned after following these methods was to stay as far away from them as possible. [] Why Chart Patterns Should Be Simple Fortunately, I met a few professional traders who mentored and showed me some simple chart patterns that got me on the right track. [] [Pro tip: Go here to learn about my favorite patterns.]( [] And, more importantly, they made me understand that trading isn’t all about complex and confusing strategies… It’s about finding methods that match our emotional make-up and risk tolerance. So today, I’m going to show you a few basic chart patterns that should help you get started on the right track. [] Always Begin With Daily Chart Patterns The most fundamental mistake beginners make is searching for chart patterns that use intraday time frames. I always encourage traders to begin their analysis with a daily time frame, and then move on to the intraday time frame right before they’re getting ready to enter the trade. There are some markets, such as E-mini S&P 500 futures and forex, that you can begin analyzing using hourly or shorter time frame bars. However, most financial instruments respond best to daily chart analysis to begin with. You can see just that in the symmetrical chart pattern setup below… [] I want to wait for the initial breakout to occur so I can day trade if the stock’s momentum continues after the breakout. Usually, after a tight symmetrical triangle, the stock is wound up and ready for strong momentum that can last two to five days. You’ll also notice that I completely relied on the daily chart for my analysis, entry and exit. I watch the intraday chart while I’m in the trade, but I mostly focus on the daily chart to make sure the pattern is developing. In the next case, the triangle breakout continued its upward momentum and closed near the high of the day. I would use a simple market-on-close order to liquidate the position at the end of the day. What I like about triangles is the inherently limited risk due to the general lack of volatility while the pattern is setting up. This is one of the reasons why triangles are good low-risk, high-reward chart patterns. [] The next low-risk, day trading chart pattern I want to show you is the bullish flag pattern. It’s similar to the triangle pattern, but it has a slightly wider channel range, and typically slopes down a bit more. [] Notice the risk level is equal to the size of the bars that make up the flag. I would look for a strong breakout day outside of the flag for an upside entry. Flags are congestion patterns that tend to explode with good momentum once the congestion phase comes to an end. You’ll notice how low the risk level can be when the bars are consolidating before the breakout, and have a tight trading range. These are the type of patterns you want to isolate for day trading. The risk is small compared to the profit potential… And because you’re entering right after the consolidation stage, the market is primed for volatility. The profit on this trade was close to $3, and the risk level was around $1. Risking $1 to make $3 is the type of odds I like. Day trading, unfortunately, doesn’t provide opportunity for huge gains because you’re limited to how much time your position has to develop. You should look for setups that provide you with a 2-to-1 risk opportunity at a minimum. [] Things to Keep in Mind Start out with simple chart patterns that make sense. Avoid difficult formulas or calculations that involve geometry or statistics. Look for opportunities that provide high-potential reward and low risk so the size of your winners are at least twice the size of your losers. The way I trade chart patterns now is completely different. I only focus on five that backtesting shows work best… [Go here to learn about my favorite patterns]( [] Senior Strategist [] P.S. Have you heard the big news!? I’m handing out my BIGGEST gift of the year! [] [>> Go here to find out what it is! <<]( [] [Instagram Icon]( [TikTok Icon]( [YouTube Icon]( [Twitter Icon]( [Facebook Icon]( [] [Instagram Icon]( [TikTok Icon]( [YouTube Icon]( [Twitter Icon]( [Facebook Icon]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. WealthPress provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Wealthpress LLC are for your informational purposes only. Neither Wealthpress nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Wealthpress is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit www.wealthpress.com/terms-of-service for our full Terms and Conditions. [] Sent to: {EMAIL} [UNSUBSCRIBE]( This email was sent by: [WealthPress]( 495 Town Plaza Ponte Vedra, FL, 32081, US [www.rogerscott.com]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. WealthPress provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Wealthpress LLC are for your informational purposes only. Neither Wealthpress nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Wealthpress is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit www.wealthpress.com/terms-of-service for our full Terms and Conditions. [] Sent to: {EMAIL} [UNSUBSCRIBE]( This email was sent by: [WealthPress]( 495 Town Plaza Ponte Vedra, FL, 32081, US [www.rogerscott.com](