What if you could recognize the next great trade before the catalyst of that trade even occurred? What if I told you that trades like this happen repeatedly?
What if you could recognize the next great trade before the catalyst of that trade even occurred? What if I told you that trades like this happen repeatedly?
What is Pattern Recognition?
The tug of war between price and volume movements is always ongoing. These movements correspond to some form of a pattern, which keeps occurring in various cycles. The ability to identify these patterns is called pattern recognition.
Patterns Worked, are Working and Will Work in the Future
Trading patterns are recurrent across all time frames through which you identify price movements. Studying deeply the various patterns that have occurred in the past will help you apply this knowledge to the present price structure.
Patterns are Manifested via Cause and Effect
The price and volume movements are not arbitrary. They are a direct cause and effect of how the professionals are manipulating the market. Professionals have always done it, and amateurs can use their footprints to their own benefit. You can rely on the patterns of movements that have transpired previously by pros and understand how the market is behaving at present.
Patterns Give You Control
As mentioned, if you learn to recognize the various market patterns, you will have a range of possible predictions for market behavior. With practice and situational analysis of patterns, you can estimate with reasonable precision how the markets will move in the future.
Ultimately, you will grow to have more accuracy in your trading.
Is it Possible to Develop Pattern Recognition Skills?
Of course it is. Like with all things, continuous and intelligent practice can help you learn the skill of pattern recognition. If you consult the charts, the patterns occur on it like pictures that communicate a thousand words.
How?
Study historical charts until the trades literally jump off the page. This will train your brain to recall and apply the patterns you studied on a continuous basis. For nothing can replace constantly practicing what you learned.
Here’s What to Look Out For
Do not be discouraged if your forecasts at first turn out wrong. Mistakes are part of the learning curve. After trading analize all your trades, winners and losers. What did you do correct and incorrectly! ? determine what went wrong, like the pattern was valid, but either you entered too soon or your stop loss was too tight.
Prospective traders need to be aware of how to recognize certain chart patterns in order to predict where the market will move. This practice is essential if you wish to convert your losses into gains. This is a skill that develops and improves with practice. As you’ve read here, pattern recognition is obviously a skill worth learning.
If you liked what you read, why stop here? If this article intrigued you, you will love my book The Definitive Guide to Price and Volume where you will obtain an even more thorough knowledge of trading patterns. You can purchase my book here.
I also offer the Prosperity Trading Course distilling my 30+ years of experience in the trading and charting business. It is an even more fool-proof process if you wish to succeed in trading all markets, across all time frames. Check out the course and all else that’s offered in it on this link.
