Monday, March 10, 2014

Trading with Flag Price Patterns;

In today's video we take a look at one of our favorite price patterns, the FLAG. This is a VERY powerful pattern that, when traded correctly, can bring in some VERY solid profits! 

This can be traded on any time frame and any chart type and is a very versatile pattern that any trader can add to their repertoire!

We love to use simple price patterns in our Live Trade Room so that new students can easily follow along and become success traders in only a few short weeks.

One of my personal favorites is the ‘flag’ price pattern, which shows up on every market and every chart timeframe you can possibly imagine, making this an excellent way for anyone to make profit in day trading.

"Flags" are continuation patterns representing a small pause in the market trend. They can be easily spotted as they appear right after a sudden and quick burst from a trading range.

In dynamic and quick markets, Flags form as prices “pause” and move in the same direction as the prior trend after a clear breakout. Flags are known to be very reliable patterns.

"Bull Flag" patterns can be spotted when the market breaks out from a range and makes "lower highs" and "lower lows" in a tight formation.

The trend lines connecting these highs and lows are near parallel.  Also, tight and well defined "flags" perform better than short and zigzag "flags."

Trade it:
After a series of "lower highs" and "lower lows," connect prices with two parallel trend lines.

Wait for a clear breakout to the upside. Price closing outside the upper trend line is the first sign of a breakout.

Enter a "long" trade one tick above the high of the breakout bar. Another clear signal of a "Bull flag" breakout occurs when prices trade above the recent "swing high".

Set your Profit-target:
Measure the prior distance from the "swing low" at point A to the "flag" formation at point B.

Targets are placed at the 50% and 100% length of the A to B move, starting at the C point.

Place your Stop-loss:
Place a "stop" order below the "low" of the "flag."

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