You can see that sugar is pretty much in the strong trending market forming a series of higher highs and lower lows. This one is more of not a breakout example but in a strong trending market. It's not a regular occurrence so don't think that every trade will be something like this.Īlternatively, if you don't want to use the moving average, you can use the structure of the market where you went short, and then trailing the previous high. So, this is something that I want to point out. This is more of something that you shouldn't expect to occur regularly.īut once in a while, you do catch huge moves like this. You won't regularly catch such a huge move.
Let's say we use a moving average like the 50-period moving average.Īnd you can see that in this case, you will pretty much ride the entire move towards the downside.Īnd only exit when the market breaks and close above the 50-period moving average: Stop loss would be one ATR above the high.Īnd your entry is when it closes below the bearish Flag!įor trailing stop loss, you can use moving average or structure of the markets to catch a potential trend! Or you can wait for the market to break and close below the low.
You can place a sell stop order below the low of the Flag. We can see that the crude oil broke this area of support.Īgain, two ways you can look to enter this trend. You will notice that crude oil basically has been in a long-term range!Īnd the low of the range is somewhere 105, and 104 Dollars. This is the chart of crude oil sometime in 2014 to 2015. With that said, let's have a look at a few examples: Or as the market makes higher highs and higher lows, you can just trail it using the previous low! So, $200 - $10, your stop loss will be $190.Īnd then your exits, you can either use a moving average to trail your stop loss. This means that I don't have fixed target profits or whatsoever.Īnd let's say the value is somewhat $200. So that I don't get stopped up prematurely.Įxit: Moving average to trail your stop loss or use the structure of the marketįor Flag patterns, I would suggest that you try to ride the trend.īecause flag patterns typically occur just after a breakout or in a strong trending market.įor me, I like to trail my stops to ride the move as much as possible when I trade a Flag pattern. I typically set my stop loss 1 ATR below the low of the flag to give it some buffer. Stop loss: 1 ATR below the low of the flag Whichever approach you're more comfortable with, stick with it. You can wait for a candle to close or you can go along with a buy stop order. These are all possible opportunities to trade to a pullback in the form of a flag pattern!įirst and foremost, let's talk about the long side of things: Entries: Break above the high It's usually when the market is trending strongly, trading above the 20-period moving average. In a strong trending market, you have a trending move and you have the pullback trending move or pullback. This is why I personally like to trade the first pullback or the first flag pattern when the market just had a breakout. You can be sure that when the market pulls back when this flag pattern is being formed, there are traders looking to short this market having missed the earlier move. It's because the traders who miss the move will be waiting for a pullback. When you see a bearish flag pattern that is forming, this is the best time to trade the Flag pattern. When it breaks down, the best time that you want to trade the Flag pattern is on the first pullback. Let's say the market is in a range, and then finally it broke down. In my opinion, there are two times which I find favorable to be trading these patterns: When the market just had a breakout So, moving on… When is the best time to trade Flag pattern Strong trending move lower, and a weak pullback. Small bodied candles and it's a very weak pullback. This is what I consider a bullish flag pattern. You can see over here, this is a strong trending move followed by a weak pullback. Followed by a weak pullback, usually shown by small-bodied candles. A strong trending move, usually shown by large body candles.Ģ. I define a Flag pattern using these two criteria:ġ. Let’s get started… What is a Flag pattern
REVERSED FLAG PATTERNO HOW TO
And then how to trade the flag pattern, a simple trading strategy that you can use to trade.I want to share with you the two best times that you should be looking for if you want to trade this pattern.When is the best time to trade a Flag pattern, because not all flag patterns are created equal.What is a Flag pattern and how does it work.In this video, you'll learn how to trade the Flag pattern.
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