A huge problem for the new trader, the one that stops them from getting from 0 – 1, is that they can’t see the opportunity in the charts. People talk about it like it’s easy or obvious to see. But for the new trader the chart is just a mess of green and red bars.
Because of this, the new trader can’t get out of the starting gate to begin their trading journey. So I have put together 3 trading setups that you can use to help identify important opportunities.
First up is the Ascending Triangle pattern. This one is great to learn first because it tends to be a continuation pattern that puts your trade on the right side of the trend. But be aware that knowing when to enter and where to place your stops will still be challenging. It will take practice to get good but well worth the effort. Go back through your chars on the daily time frame and plot as many instances of this pattern as you can find. I have used the BTC 1 day chart for examples.
The Descending Triangle is usually a continuation pattern that breaks to the downside. But it can also show a break from the downward trend to the up side. (as seen below ) When plotting this one on your chart you will see price breaking down a lot ( the opposite of this example ) but plot it anyway.
The third pattern that you want to learn is this impulse move pattern. Price breaks down fast on crazy high volume. After a while it works its way back up to the beginning of the move. This opportunity is usually easy to identify due to the fast selloff and high volume. Go and plot this one on your charts and work on how you could take advantage of this pattern in the future.
The more you plot on the chart the more you will see that most price action can be understood in the context of familiar frameworks. A study of these three patterns on your charts will help you find entry points, stops, invalidation and expected take profit points.
If you are new, it is important that you focus exclusively on these patterns and ignore anything else until you have learned the lessons that these patterns have to offer. These three patterns are not all that you will need to learn, they are stepping stones that will help you see potential opportunities.