five basic patterns.pdf
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Five Basic Patterns with Trade
anagemen ra eg es
Copyright © 2009
Linda Raschke and LBRGroup Inc.
LBRGroup.com
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• This presentation is copyrighted:
© 1996 – 2009 LBRGroup / Linda Raschke.
All Rights Reserved.
• Certain chart images are copyrighted © CQG
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Corrective A-B-C
trend)
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Momentum Divergences in range
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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
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environment!
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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.
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Bunds….active rhythmic market with volume. Chart formations are
“ pleasing” . Breakout from converging trendlines and Power Buy (A-B-C)
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Canadian Dollar: illiquid noise market
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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.
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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.
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Bear flags late in the swing: small target ONLY.
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Corrective A-B C or “Power Sell” in a downtrending market. Note
momentum move after break from sideways line. Play for new lows.
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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.
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“Failed” A-B-C or trend reversal point. Trail a stop.
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Momentum divergences are best for entry into corrective
, .
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Breakout from converging trendlines (wedge): Trail Stop
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Upside breakout from sideways line: Get the trade on. Trail stop.
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SP E mini 800 tick chart – “structure”
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SP E mini 800 tick chart – resolution!
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Buy Anti vs. Buy Div……both play for fixed small target only.
both must use tight absolute stop.
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U-turn follows “Failure Test”. Overall structure is downtrend. (note a b c up is
corrective)…Trade management –absolute stop at high, scale out.
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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
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No perfect way to trail a stop. Tighten to just above the high above the
previous swing high.
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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
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, .
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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
•
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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
, .
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Multiple trade matrix's. The lower right onw shows open OCO orders.
• .. .
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OCO’S showing on the charts and on the Matrix simultaneously
• .
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When to use bracket orders
• .. .
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Trailing stops
• .. .
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