Trading Strategies on Corrective Patterns
Updated
There are two trading strategies on above Mentioned corrective patterns.
1. Entry before breakout, this strategy based on bullish divergence and RSI and other Oscillators may help to know when correction period is about to end. Look always for oversold
2. Entry after breakout, this strategy simply based on breakout of corrective pattern
3. Stop Loss, stop loss will be behind the corrective pattern for both
4. Target , target is start of the next correction
Entry before breakout, is called risk taking entry rather than the entry after breakout because tight stop loss is used for entry before breakout but risk reward ratio is good rather than entry after breakout.
Entry after breakout, is called risk averse entry rather than the entry before breakout because wider stop loss is used for entry after breakout and breakout confirms trend continuation. This is the reason why most traders trade on breakout but risk reward ratio is not good enough rather than entry before breakout.
1. Entry before breakout, this strategy based on bullish divergence and RSI and other Oscillators may help to know when correction period is about to end. Look always for oversold
2. Entry after breakout, this strategy simply based on breakout of corrective pattern
3. Stop Loss, stop loss will be behind the corrective pattern for both
4. Target , target is start of the next correction
Entry before breakout, is called risk taking entry rather than the entry after breakout because tight stop loss is used for entry before breakout but risk reward ratio is good rather than entry after breakout.
Entry after breakout, is called risk averse entry rather than the entry before breakout because wider stop loss is used for entry after breakout and breakout confirms trend continuation. This is the reason why most traders trade on breakout but risk reward ratio is not good enough rather than entry before breakout.
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Stay one step ahead from the market, Look at the examples.Note
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entry before breakout with the help of RSI best https://example.https://www.tradingview.com/x/wacjUA70/Note
s3.amazonaws.com/tradingview/snapshots/n/nchg8fyG.png Here is the entry point for risk taking entryNote
s3.amazonaws.com/tradingview/snapshots/g/gYHIoLUc.png why it is risk taking entryNote
s3.amazonaws.com/tradingview/snapshots/x/XDy21pc6.png we can see entry point and stop loss point inthis example. why this is risk averse entry because price has confirmed breakout and why we use same stop loss for this trade setup is because in case price do not continue trend and reverse back in correction then we may close our trade as much close as our entry point for money management but in risk taking entry we hope for the breakout and keep open our trade for breakout and do not have enough time for money management until we got hit our stop loss. hope this will helpNote
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