Pattern trading rules are clear and simple, that simplicity encourages a lot of people to think seriously about the possibility of making money by just following pattern trading rules.
The theory is simple: define the start, end and bulls backs using Fibonacci levels, make a 2 or 3 pips stop loss, then open your positions in the reversal price levels, and get the profit, but does it work like that in practice?
Not really, it’s not that simple, there are some points must be considered before start working as a chart pattern trader, these points as follows:
- Your Fibonacci levels measures must be very accurate.
- You must be aware of the price fake moves, sometimes the price makes a sudden up or down moves then it resumes the normal move again, these move could mislead you to wrong Fibonacci numbers.
- Don’t make a tight stop loss, give the price a space to move, many traders loss a profitable trades for using a tight stop loss.
- Look at the big picture; you have to study the moves in the bigger time frames, seeing the big picture helps you to know which direction the price will take.
- Give a priority to the pattern in the higher time frames.
- When the price moves to your favor, take some money, if you didn’t, the price could reveres at any time and you’ll get nothing.
Most rules above must be followed by Forex traders, it’s essential rules for successful traders in general. Adding chart pattern knowledge will improve your trading skills, by the time you’ll find your way as a Forex pattern trading.
Find how to make successful Butterfly pattern trading trades
You can can get more information charts pattern trading at his website Forex Chart Pattern.
