We have covered quite a lot of tools in our school of trading and finances.
And right now it is time to unleash (yes, just like the Kraken) another tool which can be extremely useful in the future.
Chart patterns. Even though our real lesson is really going to start tomorrow, today I wanted to look closely at what exactly is a chart pattern in the first place?
Well. A chart pattern can be used to tell us when the market is going to explode. And we, unlike the cool guys in the movies, really NEED to look at the explosion, even though it may take our breath away for a second.
Knowing how to spot future explosions may be extremely helpful in order to start making money even before everyone else in the market knows that something is about to go down.
Think of the chart pattern as a graph that can be seen as various forms – cup with a handle, triangle, head and shoulders and double bottoms, for example. And yes, these are all the names for the real pattern that we are going to discuss this week.
Why would we do such a thing? Well, as I already stated several times, the real art of trading is to see a future trend before even the markets can know it is going to happen.
Pattern can be useful in seeing and identifying whether the trend is going to go down or is it going to continue.
That is going to help us understand whether we need to apply another trading strategy or we need to stick to our current one after all.
As the first taste here is the list of the trend that we are going to talk about.
- Double Top and Double Bottom
- Head and Shoulders and Inverse Head and Shoulders
- Rising and Falling Wedges
- Bullish and Bearish Rectangles
- Bearish and Bullish Pennants
- Triangles (Symmetrical, Ascending, and Descending)
We are going to try and see each one of them as simply as possible.
Right now I am going to leave you with your thoughts and the real school goes into session tomorrow!