Hey, it’s time to trade like a pro! If you’re tired of looking at charts all day, here are 5 profitable chart patterns for beginner traders to help you be successful, quickly!
Profitable chart patterns for beginner traders:
Master Only A Few Trades
Did you know that you don’t need to master every trading set-ups and chart patterns for you to become a successful trader?
Don’t get me wrong…
You can and you should learn as many chart patterns as possible. However, you can still make a huge profit by mastering a few.
You see, a fast and better way to learn and make a profit trading is to focus on the best ideas.
You should master the strategies and chart patterns that work with you best!
That said, we’ll discuss some of the most profitable chart set-ups for new traders and how you can use them to your advantage.
Check it out!
If you’re unsure how to read a chart, also check out ‘How To Read Trading Chart Patterns‘.
Trade the trend
As a woman, a trend is something that we always follow. From our clothes, hair, and every other thing we buy they are always trending.
Fortunately, the stock market is not an exception!
How to trade the trend…
The trend charts in the stock market will help you to spot the direction of the market and helps you to predict what the market is likely to do.
We can call it a glimpse of the future!
An uptrend suggests that there are more participants willing to buy than sell. As a trader, it can be a great idea for you to hold long positions because there’s more room for profit!
Trade the range
This one is for strategic ladies. If you like to have a plan that is well thought out with lower risk, this profit trading set-up is a good place to start. It suits swing and day traders, plus isn’t complicated making it a perfect profitable chart pattern new traders.
How to profit in a trading range…
The market has high prices that act like resistant levels which it can’t break through and lower price that acts as a support level. It tends to move sideways or horizontal.
To make a trade, you can enter the market using a series of methods. One of the most common and simplest methods is by using indicators– RSI or Bollinger Bands: This indicator will help you to track the price by mathematical calculations causing them to fluctuate around the centerline.
To make an entrance, wait for the market to reach extreme support or resistance zone and then execute the trade in the event momentum turns the price to the opposite side.
Related chart reading:
Cup and Handle
As the name suggests, the chart pattern looks like a teacup. And don’t get fooled by the name, this is a very powerful beginner trading pattern!
The chart pattern comes with two key points, support, and resistance: The chart bottom acts as the support area and the peak hand is the recent pint of resistance.
How to trade a cup and handle…
To make a trade, you are supposed to buy based on the recent area of resistance since that’s a testing ground!
Before you execute a cup and handle trade, consider how much strength the stock punch through the resistance and by what volume?
If it does in heavy volume, it indicates strength; investors are buying aggressively and therefore the stock is likely to go higher.
Remember to add 10 cents (or equivalent) to the peak of the handle in order to determine the buying point. This enables you to know for sure whether the stock is going through the resistance or not.
The conditions to execute the trade include:
- the prior trend should be an uptrend (in stocks and crypto, look for least 30%, in Forex can be lower)
- depth in cup (should be 15-30% in stocks and crypto)
- base length should shave gone at least 5 weeks
- the handle should be gone at least 5 days long
- At breakout, volume should be at least 40% or higher
Breakout from a flat base
You don’t need a lot of technical analysis to know how to spot this chart pattern. That is why it is perfect as one of the profitable chart patterns for beginner traders.
Plus, it’s a shorter pattern and takes around 5 weeks to form. Chart timescales can range from 4 hourly to daily.
It forms after the market has made a gain from a double bottom or cup with handle breakout that’s why it’s often referred to as “second stage base.”
How to trade a breakout…
When the market moves sideways within a trading range marked by resistance and support, the levels must be touched at least twice over a period of several weeks.
Therefore, the volume is not important in the pattern but it comes to play an important role on the breakout.
To lower the risk, always wait for the stock to pass the buying point.
This is a bullish pattern that begins with a wide top that contracts as the price goes lower. It forms a cone shape that slopes down as the reaction converges with the highs and lows.
How to trade profitably from a falling wedge…
Although this pattern is considered as a reversal pattern, the wedge slopes with the trend. This pattern is often used on smaller timeframes (not weekly and rarely daily), 4 and 6 hour timeframes work well.
Thats why, when lower lows and lower high form, security remains on a downtrend. They spot the decrease in the downside momentum and you can easily sport potential trend reversal.
Remember, although selling pressure may be diminished demand does not win until the resistant is broken. So before place a trade, you must wait for a breakout. Stop losses should also be placed at the bottom of the wedge so on any downside breakout risk is minimised.
When you first started out, what were your most profitable chart patterns as a new trader?