Stock Trading Strategy - Your 4 Powerful Trading Patterns

Do you have a favorite trading strategy of yours? Many traders love to use trading patterns as part of their stock trading strategy. There are many variations of patterns you can find on the chart. Most of these patterns offer a great risk reward ratio.

If you have been trading regularly, you will know that finding the best entry and exit points can be very difficult. However, you can trade with rather high confidence when using trading patterns.

There are 4 powerful trading patterns that you can use for low risk entry.

1) Inside Narrow Range bar
This happens when a current day bar is entirely covered by the previous day bar. This represents low volatility and a breakout is coming soon. Wait for the previous bar’s high or low to be exceeded. Once exceeded, you will take a position. Put your stoploss right below or above the previous bar’s high or low.

2) Breakout from Pullback in a Strong Trend
As a rule of thumb, you should never trade against the current trend. This setup is taking advantage of pullbacks from strong trend. Wait till the pullback finishes and start resuming its original trend. Once the earlier high or low is broken, you can place a trade. Place your stop loss at the lowest or highest point of the pullback.

3) Price showing Rejection from previous High or Low
Prices move in waves and you can see a mountain top or bottom forming. Once you see a price showing rejection at this mountain top or bottom, it means the majority of the traders are rejecting the current price. You can take a entry when this happens. Your stop loss would be at the mountain top or bottom. You will take a reverse trade if the mountain top or bottom is successfully broken.

4) Retracements at Significant Fibonacci points
This is a trading strategy that takes advantages of the majority sentiment. Most of the traders place a great emphasis on the 50%,38% and 62% of the Fibonacci points. You should watch out for the price action reaction at these levels. A opposite candle formation would means the majority of the traders are rejecting this price and it is time to trade with them.

You only need one powerful trading pattern to trade successfully. Each of this stock trading strategy is proven to work for decades. They are based on how human traders think. So try demo trading any of these strategy and have a feel on their predictive ability. You will soon be compounding your way to great wealth.

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