Five Basic Patterns.pdf

8/17/2019 Five Basic Patterns.pdf

1/31

Five Basic Patterns with Trade

anagemen ra eg es

Copyright © 2009

Linda Raschke and LBRGroup Inc.

LBRGroup.com


2/31

• This presentation is copyrighted:

© 1996 – 2009 LBRGroup / Linda Raschke.

All Rights Reserved.

• Certain chart images are copyrighted © CQG

Copyright (c) LBRGroup 1996-2009. All Rights Reserved. 2


3/31

Corrective A-B-C

trend)

- -

Momentum Divergences in range

Copyright (c) LBRGroup 1996-2009. All Rights Reserved.

3


4/31

STRUCTURE

Structure dictates the context for a trade setup orchart formation.

Elements of structure consists of:

. eways nes aso nown as vaue areas ,

“trading ranges”, or accumulation/distribution)

.

lack of momentum.

.

structure for retest functions. These most visible

chart oints indicate where revious bu ers or

sellers came in.

LASTLY: is there volume or is it a noise


4

environment!


5/31

unc ons:Entry Method: Limit orders, market orders, buy/sell

sto s…or a combination of limit order with sto entr also

known as OCO (One Cancels the Other)Init ial stop placement: fixed stop amount such as dollar

,

absolutely swing high or low or a few ticks beyond. (not

going into time stops for this presentation).Exit Strategy: Small target (.5 –1 ATR), large target,

Trailing stop, scale out function. Large target or trailing

Big Win. We will go over the patterns that lead to Big Win.


5


6/31

Bunds….active rhythmic market with volume. Chart formations are

“ pleasing” . Breakout from converging trendlines and Power Buy (A-B-C)

Copyright (c) LBRGroup 1996-2009. All Rights Reserved.6


7/31

Canadian Dollar: illiquid noise market



8/31

Sideways line - Lower high - Simple bear flag The first flag after break from

sideways line –play for bigger target. All other simple flags –small target only.



9/31

The power of the sideways line followed by new momentum lows. The first short

op may have gotten stopped out but there was no lower high in place yet.

A certain % of trades will always get stopped out due to human error, marketnoise, or lack of follow-through.



10/31

Bear flags late in the swing: small target ONLY.



11/31

Corrective A-B C or “Power Sell” in a downtrending market. Note

momentum move after break from sideways line. Play for new lows.



12/31

Corrective A B C or “Power Sell”. The first is at the end of a swing. The

second comes after a fresh break from a sidewa s line.



13/31

“Failed” A-B-C or trend reversal point. Trail a stop.



14/31


15/31

Momentum divergences are best for entry into corrective

, .



16/31

Breakout from converging trendlines (wedge): Trail Stop



17/31

Upside breakout from sideways line: Get the trade on. Trail stop.



18/31

SP E mini 800 tick chart – “structure”



19/31

SP E mini 800 tick chart – resolution!



20/31

Buy Anti vs. Buy Div……both play for fixed small target only.

both must use tight absolute stop.


20


21/31

U-turn follows “Failure Test”. Overall structure is downtrend. (note a b c up is

corrective)…Trade management –absolute stop at high, scale out.


21


22/31

Daily EC: Failure test followed by U-turn. Aggressive traders enter on lower high,

conservative traders enter on sell stop. Scale out to take profits. Stop at absolute high


22


23/31


24/31

No perfect way to trail a stop. Tighten to just above the high above the

previous swing high.


24


25/31

Corrective A-B-C: enter after you see your stop point,

Play for big win (more then 1 ATR) or new highs or lows, if in

trending market. If in range, scale out for small win.

with limit order or market order, play for small win (.5 to 1

ATR)a e - - ren reversa : ner on uy or se sop,

play for big win or trail stop.

Momentum Divergences in range: Enter with limit order

or market order after market turns, scale out.Breakout from converging trendlines. Enter with buy or


25

, .


26/31

Damon Pavlatos FuturePath TradingSummary of what I learned over the last 30 years as a Trader and from

working with other Professional Traders

• Common mistakes made b even the best

• How to manage risk

•

• Making a plan or strategy and executing it

•


26


27/31

This is a basic Trading Page that consists of a trade matrix on the left and on the right

stacked horizontally starting from the top there is a quote box, open orders, executed

, .


27


28/31

Multiple trade matrix's. The lower right onw shows open OCO orders.

• .. .


28


29/31

OCO’S showing on the charts and on the Matrix simultaneously

• .


29


30/31

When to use bracket orders

• .. .


30


31/31

Trailing stops

• .. .


31

Documents

Five Basic Patterns.pdf