forex trading for beginners: understanding the myths of market trends and patterns

7/22/2019 Forex Trading for Beginners: Understanding the Myths of Market Trends and Patterns

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C%&C re'$ired disclimer: &rding foreign exchnge on mrgin crries high level of ris"# nd

my not !e s$it!le for ll investors. &he high degree of leverge cn wor" ginst yo$ s well

s for yo$. (efore deciding to invest in foreign exchnge yo$ sho$ld cref$lly consider yo$r

investment o!)ectives# level of experience# nd ris" ppetite. &he possi!ility exists tht yo$

co$ld s$stin loss of some or ll of yo$r initil investment nd therefore yo$ sho$ld not invest

money tht yo$ cnnot fford to lose.

C%&C *+,- .1 / ypotheticl performnce res$lts hve mny inherent limittions. No

representtion is !eing mde tht ny cco$nt will or is li"ely to chieve profits or losses similr

to those shown. n fct# there re fre'$ently shrp differences !etween hypotheticl

performnce res$lts nd the ct$l res$lts s$!se'$ently chieved !y ny prtic$lr trding

progrm. ne of the limittions of hypotheticl performnce res$lts is tht they re generlly

prepred with the !enefit of hindsight. n ddition# hypotheticl trding does not involve

finncil ris". ri!les s$ch s the !ility to dhere to prtic$lr trding progrm in spite of

trding losses s well s mintining de'$te li'$idity re mteril points which cn dversely

ffect ct$l rel trding res$lts.

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Content

Introduction

Overview 4

Section 1 – Trends

&he 5yth f 5r"et &rend 6

ow &o ncrese &he Profit!ility f Any 7ystem 8

ow &o 9etermine &he &rend 10

ht s A &rend 9rwdown 13

Protecting Aginst oltility 1

-xercise 16

&he +ltimte 7ol$tion 18

Section 2 – Patterns

ow &o 9rw &rend ,ines 1;

-xmples: <ood &rend ,ines s. (d &rend ,ines 20

=&ringles# %lgs# edges...> 22

ow &o &rde Chrt Ptterns 2

-xercise 28

*ecogni?ing Chrt Ptterns 31

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Introduction

&his report ws written to ill$minte the top mis$nderstood %orex res nd

help %orex trders s$cceed nd sty profit!le. &he informtion is presented in

red!le wy for !eginners s well s dvnced trders tht wnt to t$ne $p

their trding pproch nd increse their s$ccess rte. @o$ will lern !y

stressing the common mist"es nd often reveling o!vio$s !$t $nderestimted

trding techni'$es.

5ost trders strt !y s"ing the correct '$estion: =hts the c$rrent mr"et

trendB># !$t then most of them fil to determine the trend correctly nd lmost

ll trders miss the next importnt '$estion: =ow reli!le is the c$rrent

trendB>

f yo$ dont t"e the trend into cco$nt# yo$ will often !e tric"ed into plcing

low winning/pro!!ility trdes. &rend is yo$r friend. (y following the trend it

cn only !e !etter. ($t yo$ hve to disting$ish !etween the rel trend nd very

tempting price ction tht wnts to ply with yo$r emotions.

@o$ will lso $nderstnd the !sic principles !ehind chrt ptterns# how to drw

strong trend lines# how to recogni?e the ptterns nd how to trde them. e

lwys "eep trding simple nd therefore we foc$s only on the most reli!le

chrt ptterns. ith the following "nowledge# yo$ will !e !le to spot theptterns leding to explosive price movements nd then trde profit!ly with it.

-n)oy

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Overview

e will cover two different !$t close res tht ll s$ccessf$l trders hve

mstered:


• &he =!$y nd hold> strtegy is ded tody. 9o mr"et trends existB

• &he common pproch in ll trend following systems

• &r$e story: simple trding system tht mde fort$ne for one fmo$s

trder nd his investors

• ne =tric"> tht will m"e the difference !etween losing Dor !re"ing/

evenE nd winning

• &he common mist"e: seemingly =strong $ptrend> is followed !y hrd

fll

• ow to identify the rel trend $sing p$re price ction

•

hich trend is more reli!le nd how to comp$te the trend reli!ility• Another common mist"e: 7top ,oss not reflecting the c$rrent mr"et

voltility

• hich mr"ets to void nd how reli!le trends increse s$ccess rte


• &he g$idelines to drwing good trend lines. (re"ing thro$gh strong

trend line res$lts in mssive nd profit!le move.

• 7everl exmples of good nd !d trend lines nd the common mist"es

• =&ime !om!s> constr$cted !y trend lines

• &he definite strtegy to enter n order# plce yo$r 7top ,oss nd t"ing

profit

• +sing the =Pro)ection 5ethod> to determine the =&"e Profit> Point

•

ntelligent softwre tht cn recogni?e strong trend lines nd chrtptterns

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The myth of market trend

&rend following hs !een the !est style of trding for the pst 30 yers. &here

were times when trders mde fort$nes )$st !y following the trend or following

simple system !sed on two moving verges crossover. &he =!$y nd hold>

strtegy tht ws so pop$lr !y trders !o$t decde go is ded tody.

,oo" t the -+*F+79 chrt from Gn$ry 2001 $ntil G$ly 200H. &he $ptrend ws

pretty strong most of the time. f yo$ p$shed the =($y> !$tton# yo$ wo$ld win

most of the time even with poor trding system. &he consistent rise of the

e$ro over the dollr ws giving yo$ cler sense of the overll trend.

7ince G$ly 200H# it loo"s li"e everything hs chnged. &he trend direction is

$ncler# no!ody "nows wht is going to hppen next nd people re serio$sly

prepring for the coming collpse of the single -$ropen c$rrency. (y the wy#

for $s D%orex trdersE it wo$ld !e nothing !$t nother opport$nity to m"e

profit# so "eep smiling.

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9oes it ll men tht mr"ets re not trending todyB f co$rse they re

trending &rends exist nd they cn !e trded $p nd down for profit. &here will

lwys !e short/term trends in ny mr"et# the only '$estion is when 7o# the

!ig '$estion isI>how do we find the !est trending mr"et nd not miss the

opport$nity of t"ing trding signls in the direction of strong trendB> @o$ will

find definite nswer soon.

&he !elief tht trend following is n o$tdted trding techni'$e is only prtilly

tr$e. t is tr$e tht there is hrdly ny mr"et with cler overll trend direction.

@o$ co$ld follow the temporry trend only if you are able to determine the

trend correctly. &his is the point where so mny trders fil. A pir moving $p

on 30/min$te time frme cn ct exctly contrry on n ho$rly time/frme.

-ven if yo$ find rre coincidence – c$rrency pir moving in the sme

direction on ll time frmes – yo$ still need to "now =how well” the market

is trendin to void very short/term trends. &he sol$tion is smrt nd simple.

!ow to increase the "rofitability of any system

(efore yo$ discover the most simple nd effective method to determine the

trend# lets see wht itJs good for. All the trend following systems re !sed on

one common pproch:

=($y the dips in n $ptrend nd sell the rllies in downtrend.>

,ets revel one simple trding system tht ct$lly mde fort$ne for one

fmo$s trder nd his investors. &he system =9onchin 4 K 20> is nmed fter

him. ere is the set/$p.

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n the chrt !ove# yo$ see two indictors L the !l$e line nd the red line. &he

!l$e line is the indictor 75A 4 Dstnds for simple moving verge with period

4E nd the red line is 75A 20 Dsimple moving verge with period 20E.

9onchins ide ws very simple:

1# $uy when the blue line crosses the red line u"wards

2# Sell when the blue line crosses the red line downwards

-ven 4/yer old child co$ld do this Act$lly# there is nothing specil !o$t

this system. All trend following systems re li"e this. 7ome systems re more

dvnced# with more sophisticted indictors# !$t the common pproch is to

!$y the dips nd sell the rllies .

If everyone could do this% then what&s the money makin secret'

&he nswer is tht 9onchin $sed this system in strong !$ll mr"ets. @es#

trending mr"ets &his importnt note is the "ey to consistent profits s

ill$strted in the chrt !elow.

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&he first trde ws profit!le !ec$se it ws mde in the direction of the strong

trend. &he next trdes led to losses s the mr"et ws t$rning $p nd down

witho$t cler direction. Profits mde in the first trde wo$ld !e t"en !c" in

series of losses.

ow 9onchin delt with it ws smrt. e ignored ll trding signls when the

red line ws not going $p on t lest 4 degree ngle. e wo$ldnt t"e ny

losing trdes fter the first trde !ec$se the red line is not trending t ll. t is

in so clled choppy ?one . 7o why ws 9onchin !le to m"e fort$ne from

s$ch simple system while others co$ld notB (ec$se others wo$ld throw this

system wy s not profit!le &he only =tric"> ws to follow good trend nd

not t"ing ny other trdes.

(hat is the lesson from this story'

f yo$ "now how to determine the mr"et trend correctly# it co$ld m"e

difference !etween losing or !re"/even nd winning. 9onchin $sed simple

moving verge to determine the trend nd filter trding signls.

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1. hen the mr"et ws trending# he t$rned his system on.

2. hen the mr"et ws in choppy ?one# he t$rned his system off nd

ignored ny trding signls.

ht yo$ cn do is )$st the sme with ny trding system or ro!ot.

9etermining the trend $sing simple moving verge cn !e replced with

more sophisticted# verstile techni'$e tht yo$ will lern in the next pges.

!ow to determine the trend

7ome people lern from their mist"es# !$t smrt people lern from other

peoples mist"es. 7o lets strt with exmples of wrong !$t very common

pproch to mr"et trend nlysis.

ht yo$ see in this chrt is explosive price movement tht is $s$lly the res$lt

of news relese. All !ro"ers# pltforms nd vrio$s c$rrency tools re

indicting =strong $ptrend># tempting people to )$mp in nd m"e profit.

ht hppens next is# t !est# choppy ?one# or hrd fll.

ht is ct$lly in the chrt re few consec$tive long green cndlestic"s. &his

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is not rel trend# !$t immedite price ction# tempting trders to initite

trdes nd experience costly nd pinf$l exercise. &o void flling into this

trp# yo$ need to foc$s on longer trends. &his is wht rel trend loo"s li"e:

&he price is consistently rising with no s$dden chnges or explosive

movements. @o$ cn expect tht this trend will contin$e nd yo$ sho$ld t"e

only !$llish signls. !vio$sly the trend wont lst forever nd yo$ cn even

hve !d l$c" !y entering the mr"et t the end of the trend# !$t the odds

work for you. t simply cnnot !e !etter. &here re 100s of free or proprietry

indictors to identify the trend !$t !elieve or not# no indictor is !etter thn the

h$mn eye. As Al!ert -instein sid:

=5"e things s simple s possi!le# !$t not simpler.>

Now lets revel the esy !$t the most effective method to identify the trend.

1. Moom the chrt inFo$t to show !o$t 200 !rs. Notice tht 200 !rs on

dily chrt Dor 200 trding dysE correspond to 1 yer.

2. Connect the lower left corner with the $pper right corner. f the line

overlps with the price !rs severl times Dthe more times# the !etterE#

yo$ hve fo$nd reli!le $ptrend. 7ee the exmple !elow.

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3. Connect the $pper left corner with the lower right corner. f the line

overlps with the price !rs# yo$ hve fo$nd reli!le downtrend.

As yo$ see# the mr"et is li"e se wve nd it "eeps on going $p nd down.

7ometimes the dips re too deep to consider it reli!le $ptrend# or the rllies

re too high to consider it reli!le downtrend. nowing the =trend reli!ility>

is the "ey to discover the real and reliable trend. 7o# how do we determine if

the trend is reli!le# or whether it is !etter to sty offB &he !est wy is to forget

ny lgging indictors# !$t to $se p$re price ction.

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(hat is a trend drawdown

&rend drwdown is comp$ted from p$re price ction nd so is the !est wy to

determine the trend reli!ility. t simply tells yo$ how deep the price went

ginst the c$rrent trend. @o$ will pprecite this method in the next prgrph

=Protecting ginst voltility>.

Now# t"e loo" t the chrt !elow.

&he !l$e line indictes the deepest move ginst the c$rrent trend. n this

exmple it is 233 pips. &he whole move in this chrt is HH2 pips.

&he trend drwdown is:

233 F HH2 O cc 26

Not !d. Conservtive trders wo$ld prefer the trend drwdown to !e !elow

20 s it is more reli!le. &he Q!ig dogsJ prefer trends with drwdown even

!elow 14. 7$ch trends exist lmost every dy in t lest one %orex chrt.

&rends with drwdown !elow 10 re very rre# !$t when they pper# they

re gold mines L yo$ cn esily chieve winning percentge !ove ;0.

&he lower trend drwdown O the more reli!le trend O the greter s$ccess rteO the more consistent profit

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One more im"ortant note)

ow mny !rs sho$ld we $se to define the trendB e hve $sed 200 !rs in

the exmples !ove. t is compromise L not too m$ch# not too little. f yo$

were to $se only 20 !rs# yo$ wo$ld ris" entering the short/term explosive

mr"et movements which re not rel trends s we hve explined !ove. f

yo$ were to $se 400 !rs# yo$ wo$ld hrdly find ny c$rrency chrt with trend

drwdown !elow 20. (efore we show yo$ how to systemticlly pic" the !est

trending pirs nd time frmes every dy# lets loo" t how to $se the trend

drwdown in the most importnt spect of trding L $sing 7top ,oss

Protectin aainst volatility

,oo" t the chrt !ove. &he trder who plced the 7top ,oss right fter

entering the mr"et deserves gret ppl$se !$t the pro!lem is# the 7top ,oss

is too tight <ive the mr"et eno$gh spce to !reth or the 7top ,oss will !e hit

very '$ic"ly.

7ome trders $se fixed n$m!er of pips# something li"e 40 pips or 100 pips...

this is !d 7top ,oss hs to reflect the c$rrent mr"et voltility. As" yo$rself:

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=when did the price go s deep s my 7top ,ossB> f it hs hppened severl

times in the c$rrent chrt# why wo$ld yo$ thin" yo$r 7top ,oss will not !e hit

nowB

The ideal Sto" *oss should be reater than the trend drawdown#

,isten to the mr"et# not to the pips. n the exmple !ove# the 7top ,oss

sho$ld !e t lest 233 pips. &oo m$chB ell# $se smller lot si?e. f yo$ trde

1 minilot nd R233 is !ove yo$r ris" tolernce# then $se microlots. r dont

t"e the trde. &he worst thing yo$ cn do is $se smll pip vl$e )$st !ec$se

yo$ wnt smll ris". Act$lly# yo$ wo$ld ris" more !ec$se if yo$ dont give

the mr"et eno$gh spce to !reth# the 7top ,oss wo$ld li"ely !e hit regrdless

of how good yo$r trding system Dor reli!le the trendE is.

@o$ wo$ld do well if yo$ wo$ld $se the trend drwdown S 1 pip s the pip

vl$e for the 7top loss D233 S 1 O 23 pips in the exmpleE. f yo$ wnt to

increse the s$ccess rte !$t on the other side# increse the ris" when

compred to the profit potentil# yo$r 7top ,oss sho$ld !e set t m$ch sfer

1.4 x trend drwdown.

Sto" *oss + 1#, - trend drawdown + 1#, - 2.. "i"s + cca .,/ "i"s

7ome trders wo$ld prefer even 2 x trend drwdown O 66 pips. 7$ch 7top

,oss wo$ld !e sfe eno$gh from the wild mr"et. ts ll !o$t sttistics.

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0-ercise

Now its time for little exercise. ere re two chrts with o!vio$s $p nddown trends.

&he mxim$m drwdown indicted !y the !l$e line strts from the high t8H.66 nd ends t the low t 8H.1H. &he trend drwdown in pips is:

#33 – #1 + /#4 54 "i"s6

Now lets clc$lte the percentge drwdown. &he visi!le $ptrend strts from

the low t 86.06 nd the mxim$m high is t 8;.40.

&he overll move in the c$rrent chrt is:

7#,/ – 3#/3 + .#44 5.44 "i"s6

&he percentge drwdown is:

4 8 .44 + cca 149

No do$!t# the trend with drwdown !elow 14 is solid. Plce the 7top ,oss t

lest ; pips !elow the initil entry point.

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n the next chrt# there is downtrend.

&he trend drwdown in pips is:

1#./3, – 1#27,, + /#/11/ 511/ "i"s6

Now lets clc$lte the percentge drwdown. &he visi!le downtrend strts

from the high t 1.32H3 nd the mxim$m low is t 1.26H2. &he overll movein the c$rrent chrt is:

1#.2. – 1#232 + /#/3/1 53/1 "i"s6

&he percentge drwdown is:

110 F 601 O cc 1H

&he trend reli!ility is moderte. Plce the 7top ,oss t lest 111 pips !ove

the entry point.

The ultimate solution

9iscipline nd ptience re the two "ey points to s$cceed in the %orex mr"et.

7top h$nting the mr"et for every potentil trde. Prepre !efore trding.

7cnning few c$rrency pirs on ll time frmes cn t"e yo$ !o$t 14

min$tes# !$t the conse'$ences re invl$!le. Pic" only the !est trending

c$rrency pirs nd time frmes nd ignore ll other $npredict!le movements.

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&rde less# profit more. A few g$idelines:

1. Trade only if the trend drawdown is below 2/9#

Dprefer!ly !elow 14E.

2. If the trend drawdown is below 1,9# yo$ cn !e consistently

profit!le even with simple trding system s$ch s =9onchin 4 K 20>

Dpge 6E.

3. If the trend drawdown is below 1/9# yo$ hve fo$nd gold mine

@o$ cn simply enter the mr"et in the trend direction with ;0

s$ccess rte.

&he :ore- Trendy $ltimte sol$tion scns 3 %orex pirs on ll time frmes for

yo$ every second. t clc$ltes the trend drwdown for ech chrt nd shows

the most reli!le trends sorted !y reli!ility !sed on yo$r preferences.

Clic" here to wtch video how it wor"s

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!ow to draw trend lines

5ost trders thin" tht drwing trend lines is ll !o$t connecting vrio$s highs

nd lows. itho$t proper "nowledge K experience# yo$ wo$ld see them

everywhere# however not ll trend lines sho$ld !e considered. f yo$ follow the

g$idelines to drwing good trend lines# there is high chnce tht the price will

respect yo$r trend line nd get repelled !y it# or it will !re" thro$gh the trend

line res$lting in mssive nd profit!le move. ,ets strt with some !sics.

1. &he u""er trend line D!l$eE connects t lest two lower highs# so it is

sloping down.

2. &he lower trend line D!l$eE connects t lest two higher lows# so it is

sloping $p.

3. &he red trend line in the chrt is little controversil when it comes to

disc$ssion. t is o!vio$sly n $pper trend line Dconnecting two highsE#

!$t it is sloping $pC 7$ch trend line lone is not vlid $nless we del

with =edges> nd =%lgs> s yo$ will see in the next pges.

*emem!er: n $pper trend line is sloping down# while lower trend line is

sloping $p.

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0-am"les) ;ood Trend *ines vs# $ad Trend *ines

hen the price !re"s thro$gh strong trend line# it goes f$rther# offering yo$

gret profit potentil. @o$ cn drw mny trend lines in one single chrt# !$t

there re severl g$idelines to choose only the strongest trend lines:

1. Prefer trend lines with more than two touchin "oints#

D&rend lines !ecome stronger the more times they re testedE.

2# The touchin "oints should not be too close toether#

3. *oner trend lines are stroner than shorter trend lines# ,onger

trend lines re lso seen on the $pper time frmes# so more trders re

wre of them.

n the exmple !ove the to$ching points re very close together forming n

$nreli!le trend line. &here is no other to$ching point on the rest of the trend

line.

n the next exmple !elow# the two to$ching points re not so close together#

!$t the trend lines re too short. < ood trend line should be at least ,/

bars lon. &here exist m$ch !etter $pper nd lower trend lines in this chrt sshown in the previo$s pge.

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=ow let&s see some ood trend lines>

&he trend line !ove hs 3 to$ching points nd cn !e considered s m$ch

stronger thn trend lines in the previo$s exmples. &he points re evenly

distri!$ted nd the trend line is long eno$gh. All three g$idelines re met

perfectly.

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Now this trend line is monster t is long eno$gh with 4 to$ching points. @o$

my notice tht there re two gro$ps of two points tht re too close together#

!$t this is not pro!lem s long s the other points meet the g$ideline. Treat

a rou" of close "oints as one ?bi "oint”#

?Trianles% :las% (edes###”

Now tht yo$ "now how to drw trend lines# yo$ re one step wy from

discovering the oldest mr"et phenomenon: chrt ptterns. @o$ re !o$t to

lern incredi!ly reli!le price formtions tht hve time nd time gin provided

$s with consistent profits.

&he $pper nd lower trend lines re forming trianle s seen in the next

chrt. As the price is oscillting !etween the two !o$nding lines# the !$yers nd

sellers re in t$g of wr# nd event$lly the price will !re" thro$gh one of the

lines L no!ody "nows which one n the next pges yo$ will lern how to

prticipte in this explosive move.

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:allin wede is li"e tringle# !$t !oth trend lines slope down. *ecll tht the

!ottom line lone wo$ld not !e vlid trend line. @o$ !egin !y drwing the

$pper trend line nd then yo$ complete the wedge or tringle Dit depends on

which line hs more to$ching pointsE.

ne importnt note: the u""er and bottom trend lines must convere so

that the "rice is bein s@ueeAed#

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&he flg pttern is encompssed !y two prllel lines. &he price is not s'$ee?ed

!y the trend lines# !$t it is moving inside the chnnel formed !y the trend lines.

:las are usually seen as the market "auses after a bi move before

continuin its main trend#

All the presented ptterns !ove re in n $ptrend. &he $ptrend does not need

to !e perfect# the price !efore the pttern is )$st rising. Chrt ptterns fter

downtrend re similr. e will foc$s only on contin$tion ptterns # tht is#

!$ying in n $ptrend nd selling in downtrend. @o$ my her !o$t reversl

ptterns # !$t trding ginst the trend re'$ires lot of experience. 5ny !n"s

hve crshed nd mny fort$nes were lost !ec$se of st$!!orn trders trying

to pic" the tops nd !ottoms. &rend is yo$r friend# so "eep it simple

!ow to trade chart "atterns

Now its time to revel the definite strtegy to enter n order# plce yo$r 7top

,oss nd t"e profit# so yo$ dont need to wtch the mr"et nd yo$ dont let

yo$r emotions control yo$r trding.

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The best way to enter the market is by

usin ?Sto" Orders” and ?*imit Orders”#

hen the orders re plced# they re locted on the !ro"ers server# so yo$ cn

sfely leve yo$r trding pltform. &his !rings yo$ freedom from trying to spot

the !est entry point.

&he entry r$le is simple:

1. f yo$ trde pttern in n $ptrend# "lace a $uy Sto" Bust above the

u""er trend line# here exctlyB @o$ my wnt to plce it 4 pips

!ove the trend line to spot the rel !re"o$t. &he dvnced pproch is

to reflect the mr"et voltility s we will disc$ss it lter.

2# Place a Sto" *oss Bust below the lower trend line#

3. f yo$ trde pttern in downtrend# yo$ do )$st the opposite L plce

7ell 7top order !elow the lower trend line nd 7top ,oss !ove the

$pper trend line. 5ore in the -xercise.

&he interesting prt is when to &"e A Profit. 5ny trders enter the trde

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!lindly witho$t ny ide where to exit Notice tht the 7top ,oss !elow the

trend line reflects the c$rrent mr"et voltility. t is not Dnd never sho$ld !eE

fixed n$m!er of pips. &he sme sho$ld hold for the &"e Profit. @o$ cnnot )$st

decide tht 40 pips is eno$gh nd yo$ wo$ld exit the position. 40 pips is very

different on min$te time frme nd dily time frme.

There are two reat methods to find the Take Profit level)

1. ProBection method L esy

2. :ibonacci method L $sing severl &"e Profit levels# little complex#

!$t !etter

,ets foc$s on the first oneT The ProBection ethod.

1. 5es$re the gretest width of the pttern.

2. &his pip vl$e will !e $sed for the &"e Profit.

+se the sme method for tringles# wedges# flgs or single trend lines. As the

mr"et !re"s from the choppy ?one# it normlly trvels t lest the pro)ected

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distnce.

ne note !o$t the flas and wedesD

As the price trvels !etween the !o$ndry lines# it hppens tht the trend line

is not !ro"en nd the pttern !ecomes deeper# or even no more vlid. n s$ch

cse cncel the order nd plce new one to reflect the c$rrent sit$tion.

7ometimes the sit$tion is not going s yo$ hd plnned nd the price !re"s

thro$gh the other trend line. &hen simply cncel the order nd forget the

pttern. *ther not t"ing the trde thn t"ing !d trde is the "ey of

s$ccessf$l trding. &here will !e plenty of other opport$nities

eep in mind tht chrt ptterns cn pper nd dispper# or morph into

nother ptterns. An emerging pttern is not confirmed $ntil the relevnt trend

line is !ro"en.

0-ercise

%irst# lets loo" t the clen chrt !elow. &here re severl significnt highs nd

lows tht cn !e connected with trend line. (efore the choppy ?one we see

minor $ptrend# so we re going to complete the pttern nd plce !$y order.

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&here is )$st one wy to drw the two trend lines tht meet the g$idelines.

&hese trend lines re forming tringle pttern.

1. Place a $uy Sto" order Bust above the u""er trend line.

2# Place a Sto" *oss Order Bust below the lower trend line#

3. &he distnce of the highest high nd the lowest low of the pttern is ;3

pips# so this is the pip vl$e for the &"e Profit.

As the pttern contin$es to grow# yo$ cn replce the ($y 7top order !it

lower to the trend line# !$t its not necessry. %inlly# the $pper trend line is!ro"en# the ($y 7top order is exec$ted nd the &"e Profit is hit

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<nother e-am"le)

A minor downtrend is preceding some pttern. &he lower trend line is o!vio$s.

ht !o$t the $pper trend lineB ts not completely o!vio$sT there re severl

wys to complete the pttern into tringle# wedge or flg. e wo$ld prefer

flg !ec$se tringle or wedge wo$ld !e too wide nd the &"e Profit wo$ld !e

too fr D$nless yo$ $se more complex %i!oncci techni'$e for severl &"e

Profit levelsE.

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Now the well/"nown techni'$es re mde in the opposite direction:

1. 7ell 7top order !elow the lower trend line#

2. 7top ,oss !ove the $pper trend line#

3. Pro)ected &"e Profit.

&he trend line is !ro"en# the 7ell 7top order is exec$ted nd we m"e money in

downtrend $ntil the &"e Profit is hit. As we $se single &"e Profit level# the

downtrend contin$es witho$t $s... let it o>

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EeconiAin chart "atterns

Professionl trders $sed to nly?e chrt fter chrt to find reli!le ptterns on

dily nd even intrdy time frmes. &ody# comp$ting power comes into ply.

:ore- Trendy is softwre sol$tion !le to recogni?e chrt ptterns on ll

chrts every second

.4 :ore- "airs - 7 time frames + ./3 charts>

t hs n intelligent lgorithm to recogni?e strong trend lines nd discover the

most reli!le chrt ptterns t the c$rrent time. @o$ will lern more techni'$es

!o$t chrt ptterns in the mem!ership s$!scription:

• +sing %i!oncci techni'$e for m$ltiple &"e Profit levels

• &rding =p$ll!c"s> !y $sing ,imit rders for !etter entry point

• ow mr"et voltility is $sed to filter flse !re"o$ts

• And more s$pertips

Clic" here to wtch video !o$t $tomted chrt pttern recognition



http://sharedthis.fxtrendy.hop.clickbank.net/?video&patterns&exit=0





forex trading for beginners: understanding the myths of market trends and patterns

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