The Power Of Chart Patterns In Trading  Part One

The Power Of Chart Patterns In Trading Part One


hello traders it’s samurai trader here
today I’ll be presenting a lesson called the power of chart patterns I’m going to
be doing this over two separate videos otherwise it may drag along I think of
is around 30 slides in this particular recording today that I’ll be given and
I’ll be covering a great deal of information some oh but recommend that
you have a pad and a pen handy now if you’re watching this on youtube if you a
new user to YouTube of course if you go down to the left hand corner here you
can expand this to fill the screen just make a little easier and looking at some
of the things I’m going to be talking about it’s now 9:15 a.m. here in
Australia where I’m recording this today I’ve been up since around 2:30 or so AM
trading the US markets so if I sound a little weary or announce something
incorrectly please forgive me it’s been a great morning a long morning
particularly when you’re looking at the screens for some hours and as I always
say my video is always very real and direct so I must also mention the risk
in any form of training trading there is risk never trade with money that you
can’t afford to lose attending the sessions having me coach you is your
success coach and by investing in my trading programs etc the whole idea is
that you don’t lose money and one of the ways that we learn how to trade
correctly of course is by gaining the right education and by gaining screen
time I can fast track your career by giving you the best over the world’s
best day trading setups that’s easy but one thing I can’t give you traders is
screen time that’s something that you need to gain over a period of time and
of course when it comes to learning to trade I have to say this there are no
magic bullets you are going to make mistakes you are going to have losing
trades the whole idea is is to become what I call a sniper most of you that
know me I classify myself my trading style is one of the sniper
that is one shot one kill I’m very selective on the trading that I do and
actually after the session I’m going to be recording just a video on some of the
trades I’ve taken over the last couple of days for my members and potential
members and clients so if you watch that you’ll have an idea and once again on
YouTube I’ve got a lot of videos there now moving on our one thing I forgot to
mention which I mentioned at the bottom of the previous slide is that very soon
I will be launching and I’ll be talking about this doing this for three or four
months now launching a live trading room will be limited to 50 members only
and the reason it will be limited is just with the amount of emails and
questions that I get the whole idea of the trade room is that we do some
profitable trading and I don’t know about you but I tend to get distracted
and I found when I trade I really need to be focused for an example last night
before I retired for the evening I took a trade and you’ll see this on this
video I’m about to record the next one I was watching TV as I quickly took a
pivot bouncing T at T89 now T89 with the pivot bounce is a highly accurate
trade I mean it’s generally if you do it right it’s a good 90 percent trade and I
have a standard 13 tick profit target set up when I’m trading the NQ 133 now I
really should have gone for this particular case at least 18 ticks
because my target was the 89 EMA which was 18 ticks below sure I got filled it
was great I got 13 ticks out of it I was very small stops it was a great risk
reward trade however I was distracted so very very important thing is to remember
distractions and that’s one of the reasons why I’m not going to have too
many people in the room because I’m in this to make money from trading besides
giving you the world’s best education I want to make money from trading as well
so getting back to this chart patterns footprints of smart
anticipating price patterns what we do know is that there are literally
thousands of traders around the world all they do is patent trade for example
if we take down here Dan is famous for making 42 million dollars in 23 months
these are audited figures so it’s not just some pie-in-the-sky figure but he’s
plucked out with it’s very well-known in the industry he’s made of course many
millions of dollars as a trader he’s someone to really sit back and to
study and look hey how does he do it now he does not use indicators uses volume
and chart patterns alone he mainly trades stocks that some he is a market of
choice now I love researching and studying traders because I practice
something very actively called modeling model success look at what the best of
the best are doing and model what they’re doing traders if you’ve watched
some of my previous videos you’ll hear me talk about the five percent Club to
truly succeed as a trader that is we know that over ninety percent of traders
over time will lose their capital we have to be in the five percent Club the
top five percent interesting thing that Dan says here I never give up I never
ever give up the only way you can ultimately lose in trading is by giving
up remember persevere so when it comes to chart patterns because there are so
many different types of chart patterns what I’d like you to do is to learn to
focus on one or two patterns and master them now as you’ve heard me previously
say when it comes to trade setups I always promote become a master at one
setup one trading strategy become profitable that before you move on you
cannot move on into your master that one now a lot of the patterns that I show
work beautifully in conjunction and they are patterns with them within themselves
with the strategies that I teach so find a pattern that you like a setup
that you like and become very very good at that before you move on to the next
one now this is a photo I took just before I
started recording this this morning I just thought I would um just show you
this on my trading desk over very large desk that I have nothing on it it is
totally devoid of anything else but my notebook for taking notes you can see on
the right hand side there with my highlighter I have them you just can’t
see that my trade entry journal I have this right here hopefully you can see my
mouse moving around here this is my trading real book and the trade setup so
here I’ve got my trade setups that I’m looking for and I’ve got rules and other
notes typed up now when learning to trade traders and in a video recording
I’m going to be doing in a few along from this recording I’m doing currently
I’m going to be covering extensively your trading plan and your trading
journal and your trade rule so what to have in front of you now I have a lot of
information on those two sheets when you first start if you are and you traded
watching this or if you’re relearning how to trade that is it hasn’t been
working out list is best you don’t want to have much in front of you but the
critical thing I want to bring up here in front of it with you right now is
these two folders here two folders that I have just on chart patterns now quite
often as we know we may be in a very very quiet time we may be an oak and
consolidating market or maybe just waiting for my alarm to go off to let me
know that that I have a trade about to trigger and I’ll review my chart
patterns during that time and I have various things here highlighted I take
notes as I have successful trades I’ll take snapshots if it’s interesting well
then save that and sometimes print them out so I have six or seven of these
folders this is my main work with my trading journal my notebook where I have
literally dozens of these folders of these notebooks and
every day I would do at least one or two pages or notes now when you’re taking
notes what the notes really do I’m going to go back and review them they remind
me of things that I may have forgotten about or good ideas things I’ve noticed
etc I practice what I call can I constant and never-ending improvement
something could Tony Robbins talks extensively about and I really believe
that as master traders we need to be sharpening our skills on an ongoing
basis now very quickly before we talk about the chart patterns when I talk
about chart sharpening my skills I don’t mean moving from one strategy to another
is there a better way is there a better way of trading this particular setup so
let’s move on the chart patterns some of the classics we have head and shoulders
which we’re going to be looking at duck today double tops and bottoms price
channels and I’ll go across live just have a look at a couple of channels from
this morning triangles and wedges and within that and the flags and pennants
comes the famous wolf wave so I’m going to do these on a separate video I’ll
probably record this learn it in a day or two so you can also consider some ago
I love is the wolf wave which is very very famous the wolf wave but it fits
within triangles and wedges now if we look at the language of charts fact
prices tend to move in trends as you’ll see on some of the slides which I’ve
been teaching for close to 20 years now you’ll see some of the dates and the
charts might be one or two years old four or five years old it doesn’t matter
that the timeframe the patterns have been here for 50 60 years and will
always be here and doesn’t matter what time frame what chart what market so
what they’ll give you is a footprint of what’s happening with your Sharp money
with the smart money let me get that right now this is something that I think
fractals is one of the best-kept secrets in trading now if you don’t know
what a fractal is I talk a lot more about fractals in my training course in
the fast track program and they’re a great way and I have an indicator by the
way the plots on my chart a black dot when I have a fractal set up because
when it comes to drawing patterns in using trend lines or looking for
patterns on my chart I use fractals and Tom Demark
if you looked and read his books on trading the new science of technical
analysis on how he draws trend lines and his patterns it’s very very fractal
based and of course Bill Williams he’s written a trading chaos and some other
excellent books he trades fractals perhaps in a different way that I use I
like to get him a little earlier before the move is over but please our study
fractals it’s a great rule that greatly assist you as time goes on so head and
shoulders so there are four elements to trading head and shoulder patterns a
left shoulder a head a right shoulder and a neckline now what I’m going to
quickly do is not spend too much time explaining you can stop the video here
and read this in detail but let’s have a look at some charts here so we can see
here we’ve got the left shoulder of a head the right shoulder and this is
where our trend lines come in now using our strategies of a fast track program
as you recognize a lot of these points here you would have super scalper points
appear in here and fractals as well so you would have at a fractal there
here-here-here fractal here you would have had a fractal point here here here
enduring these trend lines when you understand how a fractal is formed it
makes drawing these a lot more accurate and it gives you a great deal more
confidence now well you’ve got here into short on the
break of a neckline the best way to gain confidence on drawing these is to go
back and study chance doesn’t matter what I show you here right now you
really need to go back and draw them up yourself and spend time studying these
setups it’s a bit like reading a book on learning how to swim
of course it’s totally different when you read a book on how to swim but when
you jump in a pool and start to pedal like wise in driving a car now another
thing in learning new setups and some of these patterns remember when you learned
how to drive a car if you learnt by using a stick shift and manual down here
in Australia by the way we call the manuals in America of course as a stick
shift you know you started to drive and you
thought what I’ve got to watch the road use the indicators I’ve got three pedals
and I and I’ve got to learn how to change these gears once again after a
month or so it becomes second nature after a period of time of studying these
sorts of patterns it becomes or you will develop what I call reflect reflects
action and that’s the stage you really want to get to now getting back to what
I mentioned earlier on you know there’s so many patents you can trade you want
to really find one that resonates well with you or fits within some of our main
trading strategies that we teach once again master one setup before you move
on to the other now in my fast-track program by the way I provide a complete
set of these in a PDF for my students so moving on here we can see here taking
before we are looking at necklines or there on the right you can see going
short so shorting the market here then over here we’ve got of course going long
now here we’ve got a lower low so classically this our upper set up we
probably would have had divergence on our MACD or in our platinum here you
probably would have had divergence here for the long side so these sorts of
patterns your trend lines and these patterns are great confirmation to
confirm your other trades walking up fractals once again you would have had a
fractal pattern here black dot appearing and another one here so in drawing a
trend then applying a channel fractals make it a lot easier you would have had
one here here up here here but walk so fractals I’ll move on stop talking about
them now we’ll look at those in more detail at a later stage so double tops
and bottoms I love double tops and bottoms particularly when it’s with the
trend I use the 89 EMA and the 200 to give me a longer-term view of where
price action is heading of course some of the popular ones and I use a channel
a an EMA channel as well which is a much lower time frame 34 EMA is very popular
so find a style that suits you for newer students or those that are
re-establishing themselves as traders please use the 89 a slightly young
longer-term EMA but double tops and bottoms great indications of where the
market is heading now spend some time in ready knees once again stop and have a
read but I want to move right on because I didn’t want to make this video too
long but we can see here a double top formation now this is where you’re quite
often see double tops or double bottoms at at support and resistance levels that
is at our pivot levels I should say sorry lots of words here I was looking
for at pivot level so your s1 is your s2 your s3 etc where you get a double top
or a double bottom at these levels it increases their accuracy
incredibly so where I get those at a double bottom double top you’ll quite
often see me and I think I had one yesterday where I actually entered a
double entry that is I had two trades on that is I went in there and it started
to move it come up tested the resistance then it continued down our incident
another 10 contracts you’ll see me quite often do that now when I do that as I
explain that I’m always doing it within my risk parameters as you know with all
of my positions on at any one time I never risk any more than 2% ideally
0.5% per trade increasing up to 1% with two trades up to a maximum four trades
on multiple markets if I’m trading quite often the I am over black gold of the
oil at the same time as the NQ now so double tops are fantastic now here with
these breaks we see these are also called your ABC patterns one two three
patterns we would have been in quite often on this candle or on this entry
here because if you’re waiting for some of these other entries quite often we’ve
given back as a day trader a lot of the profit that we would have taken here an
aggressive entry well this here would have been a typical can’t remove a t1
here and at t1 here and where we get these moves where they move up like this
quite often these are what we call T89 s a t89 is an 80-85 percent accurate
trade where we’re moving away from the means with fantastic trades to take and
watch my videos you’ll see me take them every day for a very highly accurate
trade so double tops and bottoms or a great trade for us to take we see a lot
of this happen to we got there you’ll hit resistance will come down will
bounce and up we go again and we all bounce again now on this point here
if you have what we call a t89 move here quite a 4cm move down will go up people
try to push it back up buyers will push it back up again before it fails once
again if you look at your Mac to you if you’re using that paps for divergence
you’ll see that quite often on your second move here on the second top
you’re crossing the zero line on your Macd or about to you’ll see they’ll see
that a lot and a natural fact you see a lot of traders they use a zero line
cross on their MACD as an entry to take a trade I use it as if I should say a
trading strategy so we can see here and I’m sorry I apologize I haven’t been
talking about that for timeframes but the time frame really isn’t relevant
because whether we’re trading our minute charts range charts if you go back and
look at some of these daily charts they appear in all time frames and all chance
now I really want to get in and yes you can trade these breaks and your longer
term traders and even the day traders will trade these we like to get in to
some of these trades a lot earlier so we can see here a double bottom and once
again go back on a chart find the time frame that suits you now in my
particular case and this isn’t a situation this is most of these there’s
a few ym trades but a lot of these but based on Forex this is an 8 range chart
a smaller range chart now on the euro usd i love the 5 range but you see
these patterns appearing every single day you’ll see these now over here by
the way this formation was probably caused by a spike by a news announcement
some of these are not quite tradable that is when you catch these breakout so
move that quickly but this usually is coming to pact ever shorter and this
almost certainly is a t89 I can almost guarantee you had a t89
which which basically was a great winner you get two and this is virtually
conceive a slingshot formation they’re great trade setups
so let’s have a look here we’ve got here an 89 tick so this is a futures
market so we can see here we’ve gone back to futures 89 tick now
just on this point on trading the ym because you have lower volume during the
main trading session I love the ym the 89 tick on the NQ the
89 tick is is a great marker but sometimes it moves too quick that’s why
I usually will trade the 133 tick now during the Globex session on the NQ
I usually will trade the 55 tick referring to the 133 now double tops um
double bottoms you can just see these trades here so learn these charting
patterns now going back to my trade books what I do and what I’ve done I should
say is I’ve printed out my favorite trade patterns just as a reminder as a
visual reminder remember as traders there’s so many different things that we
need to remind ourselves about on an ongoing basis to just by looking at the
charts on a regular basis just as a reminder for an example this trade that
I took last night but I’m doing a recording I’m very soon after I finish
this one I think it’s about 8:38 8:50 I just can’t remember the exact time now I
took this trade it was a as I mentioned earlier t89
pivot bounce I’d like to and I didn’t do it last night because there was a visual
thing I quickly looked at my screen saw this setup and I jumped in I like to
quickly review my trading rules as I’m trading and before I trade particularly
after a weekend as a reminder by printing out these chart patterns having
them in a folder as you’re trading during the day you’ll whole of an
evening you’ll have quite times you just go back and just as a visual reminder
remembering the rules now price channels I love trading channels particularly
when using and I should have mentioned this
earlier too in using anchor charts now I am going to be doing a trading lesson I
think I would have booked down in four sessions from now this is why you should
subscribe to my youtube channel or purchase invest in my program because
anchor charts are an essential part of every professional traders arsenal and
when using price channels I love price channels with anchor charts because
you’ll see bounces off the channel and there they just give you these brilliant
entry signals so I love price channels so if we look here at price channels now
this is on the 8 range there once again if you’re trading an anchor chart you’re
going to have a much higher time frame than a range chart now one thing just
why I think of it here there’s every professional trader has an opinion and
even those traders that are professionals or perhaps but keep losing
have opinions on how you should trade now some people say you should only
trade price channels or anchor chance I should say with time well I don’t agree
with that I love range and tick charts even with
anchor to me it’s irrelevant I just wanted to mention that because these
price channels will work on all time frames let’s quickly flick across that’s
going to pull TradeStation up and let’s have a look at some channels from this
morning so what I’ve got here is is TradeStation this is this morning’s
action or today for those well you don’t know what that it is probably so it’s
the 2nd of June down under it’s the 1st of June in the US and this is the NQ 133
tick so what I’ve got here is marked up a number of that trades here but here we
can see here I’ve got some I’ve gone short here now let me just clarify that
I was still in bed at this stage but I would have shorted up here now by the
way here’s a classic case a small t10 that I would have been stopped on
because my stop on a-133 is two ticks above this would have been a losing
trade for me winner winner winner winner now that one there for those at Nova
setups which were not going to cover today you wouldn’t have been in that
because of their zero lag but we then fight off three or four winners in a row
and basically would have just about been finished for the day
so let’s have a look here getting back to drawing channels let’s have a look
here right now what I’m going to do here is extend this right so because here of
course you don’t know what’s going to happen down here so I look like to look
here and we can see these black dots that I have let me actually just remove
that again so see these black dots here these are for fractal points now all
they are is showing me that I’ve had two candles up to the left and two candles
up to the right now I like to have at least two or more which give me a great
point for drawing trend lines so let’s just say here I’m here on the action at
this stage this is not formed so ignore all of this over here what I’m going to
do here is now extend my line to the right and bingo now what I now want to
do here is do a parallel line now look at this here isn’t this amazing so I’ve
drawn it here what’s the market gonna do bang bounces off here now here it
doesn’t quite go up and reach there now as you get more formations you then pull
this in once again this is not exact close enough is what I call good enough
when it comes to channel trading so we can see here of now we’ve now had this
one forum I might pull this in a little bit more just to tighten up this channel
this one here I’ve extended the variety as well and what happens here I’ll just
pull it in a bit my channel you can see this channel you can see how price is
generally contained within a channel now we then come down here we’ve broken
out of a channel but what are they then god I’ve got a beautiful
it’s a t89 I won’t go into whites a tree t89 on this channel on this video
recording and I’ve got a great pivot bounce bang we come up the other channel
bounces down then we have a breakout and continues now what we’ve got over here
is a long-term rising my long-term Stoke is rising I’ve got a t1 formation and a
confirmation here and this is basically a double bottom and away it goes until I
get my 289 which is a beautiful winner now but let’s go back to trading
channels so let’s have a look at this here so of course I want to get to this
stage we don’t know what’s happening across here remember this is all blank
over here we’ve got no idea so what I’m going to do is do a trendline and I want
to extend it right again look at this here I had two or three
points once again a little more width here so I had this one and this one
ignore the white paint bars but I got my free little fractal points I extended it
right look at this bang a bounced come down
and bounce and it bounced again now I don’t know about you traders but I just
find it fascinating these patterns appear in the market every single day
now let’s now go into a parallel line let’s go up here and look at this all I’ve
done this is just an identical line to this one gone up here then to these
points here okay remember I only had these I extended that I then drew off
this point moved it up to here bang bang bang before finally a break now traders
this is why you need to learn how to trade using parallel lines channels
double tops double bottoms etc so you’ll see these patterns every single day and
you can see what happened then down here we then had a slight breakthrough before
we had a bounce up at when we had another bounce went up there this here
now I have a fair amount on my chart here so sorry if you’re getting lost
here when you’re learning to trade these setups you know you want to minimize the
information of course is on the chart I get to read this I know this well but
look at this extension of this line here so we went up and we bounced off it
again with a small bounce before we had a t2 and we continued for a t89 which is
a lovely trade up here so hopefully which just gives you an idea of the
power of learning these trading patterns are extremely powerful now getting back
to learning these if you are a new trader perhaps just found me on YouTube
and you’re wanting to learn how to day trade you learn these over a period of
time I’d say period of time 30 to 90 days treat it as a 90 day apprenticeship
or internship within 30 days you have all these massive aha experiences that
is you start to mark these up on your charts as you see them and even going
back and marking them up and if you put in just 2 to 3 hours a day now I know
what some of you are thinking I can’t find 2 to 3 hours a day become them to
become a master traders you have to find at least two hours a day get home don’t
watch the turn TV off unplug it go and sit in front of your charts this is
trading is going to make you wealthy there is nothing like it in the world
you know come along and trade with me and you’ll get to see the excitement of
it I love it it’s my passion it’s my lifeblood and it can be yours too it’ll
change your life but you do need to invest at least 2 hours a day learning
this stuff it’s not difficult trading is rocket science so what we can then see
is price channels where we’re range bound and we can see this happen quite
often of a support trendline we see on the bottom here might be a pivot level
with this bounce around bounce around and we see this virtually every night
trading the European market leading into the opening of the New York market quite
often will go into a period of resistance or support where we just have
what we call a trading range and so then we’re waiting for a breakout
now these breakouts that we want and so when we look at these boxes and of
course you’ve got the diverse box and lots of other people teach all sorts of
things when it comes to trading these boxes I love to see a break out of them
and come back and retest why you’ll have professional traders will break out that
will run the market take it over stops then I’ll run back down again so you’ve
got to watch out for your false breakout so what we like to do is see a breakout
come down test and then continue and these are quite often what we call T10 or t2 setups very very easy to recognize over a period of time once
again practice drawing these trend lines channels and putting the parallel line
so you can get to draw them out you’ll see you’ll just be amazed now in my next
video I’m going to continue with chart patterns and cover triangles wedges and
the famous Wolfe Wave I love the Wolfe Wave now the Wolfe Wave
there’s nothing more than a than a triangle an ax or a wedge depends which
way you look at it but it’s also great for putting in what we call measured
moves that is it gives you a higher return to target you can go for two two
to one so for every dollar you’re risking you can target two dollars into
there a great pattern quite often it’s a changing trend pattern but an incredible
pattern you really want to learn so hopefully over this 35 minute video traders you’ve taken some notes or started to get some ideas please go back
and re-watch it stop it take notes trade is it’s absolutely
critical that we gain an education as we say formal education will make your
living self education will make you a fortune the trading industry is untapped
for most people because they don’t get serious about learning how to trade is
that trading is not difficult as you heard me talk about before it’s not
rocket science anyone can learn to trade as long as
you’re willing to put some work into it take notes study and become a specialist
Thank You traders I will see you in my next video

5 Comments

  • Adam Ph

    August 23, 2016

    Thank you.

    Reply
  • Mamunur Rashid

    April 7, 2017

    Thank you…

    Reply
  • LinkWave

    April 22, 2017

    Great video

    Reply
  • Mese Szabó

    May 29, 2018

    Great video! Thank you so much for this content! I start practicing patterns immediately 🙂

    Reply
  • I Am A Day Trader

    October 22, 2018

    "Get the Competitive Edge Now!
    https://www.iamadaytrader.com/2018-check-out-the-day-traders-fast-track-program"

    Reply

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