In today’s trading tutorial we are going to discuss one of the easiest reversal patterns you can use in any market around the world, called the ‘Trader Vic 2B Pattern’.
In his book, ‘Principles of Professional Speculation’, Victor Sperandeo (known as Trader Vic) discusses a very powerful reversal pattern he calls the ‘2B Pattern’ which has been used by professional traders around the world for over 2 decades.
|Trader Vic 2B Pattern|
“In an up-trend, if prices penetrate the previous high, but fail to carry through and immediately drop below the previous high, the trend is apt to reverse.” – Trader Vic
4 Simple steps to Trade the “Trader Vic 2B Pattern”:
Step 1: Find the Pattern
The key to finding the 2B Pattern is to find a new higher-high or lower-low on your chart, followed by a second attempt that does make new higher-highs or lower-lows but it quickly FAILS and goes back in the opposite direction.
Step 2: Find the Entry Trigger
The entry is triggered LONG when the price moves above the highs of the failed breakout candle that tried to make a new lower-low.
Entry is triggered SHORT when the price moves below the lows of the failed breakout candle that tried to make a new higher-high.
Step 3: Place your stop-loss
We always use a protective stop-loss, which is placed below the lows for a LONG, or about the highs for a SHORT.
Step 4: Place your Profit-target(s)
We use profit-targets to lock in profit on each trade, and we use swing-highs for a LONG, and swing-lows for a short. Find the next major swing-highs (long) or swing-lows (short) and use those as your profit-targets.
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