THE KING OF THE HEAD AND SHOULDERS | How to find this pattern
⚡Zer0_Trader
The essence of the strategy is to search for the direct and inverted "Head & Shoulders" pattern
Shoulders" pattern with the simultaneous confirmation of its potential workout on
Zer0 Trader Indicator" indicator, which makes it possible to trade regularly,
minimizing the closing of trades by stops.
❌TRADING WITHOUT AN INDICATOR
We see the "Head & Shoulders" formation, enter the trade 🔜 the trade is closed by a Stop Loss⛔
✅Trading with the "Zer0 Trader Indicator" indicator
We see the formation "GIP", we see the confirmation of the result on the indicator, we go into
trade 🔜 trade is closed at Take Profit
As you can see from the examples above, it is absolutely not enough to find
only a formation because:
- Perfect formations are quite rare in the market, and full-fledged
it is necessary to trade regularly to make a full-fledged profit;
- Every trader tends to see or "complete" a formation where it is not
any trader has a tendency to see or "draw" a formation where it doesn't exist and this leads to an increase in loss-making trades;
- without additional confirmation of a potential working out of a formation your deals
form, your trades will be closed by stops more often and take unnecessary losses which
you could have avoided using the indicator.
📈 INDICATOR "Zer0 Trader Indicator"
In order to enter non-obvious but potentially profitable situations and
I created the "Zer0 Trader Indicator" indicator to minimize errors. Thanks to
which increased the percentage of profitable trades by 90%, and the percentage of trades closed
of trades closed by stop was reduced to 10%.
The signal to enter the trade, along with the formation of Head & Shoulders/reverse Head & Shoulders, are the reduction of
strength on the indicator, namely, descending peaks (divergence/convergence), as in the
examples below.
🔎EXAMPLES OF WORKOUTS
In the framework of the trading strategy with the use of the indicator all situations can be
can be divided into 2 types:
- Head & Shoulders/ reverse Head & Shoulders with a flat base
- Head & Shoulders/ reverse Head & Shoulders with diagonal base
🟢Head & Shoulders/ reverse Head & Shoulders with flat base
*ideal, but rather rare situation
🟢Head & Shoulders/ reverse Head & Shoulders with a diagonal base
*The situation you will deal with most often
✍️ STEP BY STEP INSTRUCTIONS FOR WORK
- Setting up a chart in TradingView
- Line" chart view
- logarithmic scale - Searching for the Head & Shoulders/ reverse Head & Shoulders pattern
- it is important that similar patterns draw several coins simultaneously
- on a downtrend, the chart and the indicator should be reversed (the scale should be inverted)
- you can look for a pattern by the indicator (divergence)
- the more ideal-looking is the pattern, the higher is the probability of its execution
- it is important that the pattern is drawn correctly not only on the line, but also on a candlestick chart
chart - Comparison of the chart and the indicator
The indicator must show a decrease in strength (three
divergence). - Searching for the entry point
TVX - entry point when the neckline is broken and the
of the candle behind it. It's important to have an identical pattern
on other coins as well. - Risk evaluation
Potential of the trade is measured from the top of the head to
the level of the neck line. We draw a line from the peak of the head to the
the neck line and re-position it to the potential breakout point.
We take the "Short/Long Position" tool and put
it in the TVX. Then we stretch out the targets by the level of potential,
and stop 3-4% above the head (on the candlestick chart). - Setting targets
Objective 1 (45%) - from the entry point to the middle of the breakout
Target 2 (45%) - till the end of analysis
Target 3 (10%) - to the moon, based on the previous extremums
*At achievement of the first target we move the stop to the Buy
☢️ THE MOST COMMON MISTAKE
Entering a trade in the absence of a pronounced divergence on the indicator
Such an error leads, at a minimum, to unjustified and useless losses, and, at a maximum, to
at most, liquidation, if there were no stops at all!
🔴THE MOST IMPORTANT SECTION
WHERE TO START TRADING?
You have read this tutorial, you understand everything and you are ready to fix the profit. BUT!
The first thing you need to start with is training on history and developing
observation of not just the chart, but the chart through the prism of this strategy. For
I strongly recommend each of you to do your homework.
Despite the fact that I've been trading for several years now, I myself regularly
myself on a regular basis.
HOW TO DO MY HOMEWORK?
1. You pick any coin and any year that has already completely passed.
2. Rewind the chart to January 1 and press "Market Simulator", which
will hide the chart movement from you after that date.
3. Choose a simulation speed of x10 and press the "Forward" button until you see the potential formation of the right shoulder,
until you see the potential formation of the right shoulder and head.
4. Next, you draw a potential neck line, a working pattern, and wait for
for confirmation of the formation. Additionally, see if a similar situation is drawn on other charts.
situation on other charts.
5. The deal worked out.
6. Make 2 screenshots (line + candlestick) and enter the results in the table
"Home" in your worksheet.
7. You save the screenshots in the folder with the name of the coin and drop them into the chat room, where I will
give comments.
Disclaimer
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