Home Trading Strategies Flag Pattern Trading Strategy: A Simple But Powerful Chart Pattern That Works

Flag Pattern Trading Strategy: A Simple But Powerful Chart Pattern That Works

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Flag Pattern Trading Strategy: A Simple But Powerful Chart Pattern That Works

hey hey what’s up my friend so in this video you’ll learn how to treat the flag pattern specifically you learn what is a flag pattern and how does it work when is the best time to train the flag pattern because not all flag pattern are created equal and I only share with you the two best times right that you should be looking for if you want to treat this pattern and then write how to treat the flag pattern a simple trading strategy that you can use to tree so moving on right what is a flag pattern so I define a flag pattern right using these two criteria number one a strong trending move right usually shown by large body candles or large range candles on your chart followed by a weak pullback usually shown by small bodied candles so here’s an example you can see over here this is a strong trending move followed by this wick pull back over here so this is this one over here is what I consider a bullish flag pattern right small body candles right it’s a very weak pullback this is also another example of a flag pattern right small body candles and you then you have this you know strong trending move you know just before this week pull back the curse okay so this is a an example of a bullish flag pattern bearish flag is just the opposite right strong trending move lower a we pull back right something like this okay so moving on when is the best time to trade flag pattern in my opinion right there are two times right which I find favorable to be trading these patterns number one is when the market just break out so for example let’s say the market is in a range okay and then you finally broke down when it breaks down right the best time then you wanna trade the flag pattern is on the first pullback when you see a bearish flag pattern that is forming right this is the best time to create the flag pattern when the market just break out why is that it’s because number one traders who miss the move right will be waiting for a pullback so you can be sure that when the market pulls back when this flag pattern is being formed there are traders or looking to shot this market right having misty earlier move so they’re trying to catch the trend right so this is why you know I personally write like to create the first pullback or the first flag pattern right when the market just break up alternatively right you can treat a flag pattern in a strong trending market so in a strong trending market you have a no trending move and if the pullback trending move or pullback so really when the market is trending strongly right trading above the 20-period moving average these are possible opportunities to trade the pullback right in the form of a flag pattern okay so I’ll share with you a few examples but let’s start Mario how you can go about you know trading the flag pattern so first and foremost right let’s talk about the long side of things right let’s say for example you want to go long on a bullish flag pattern number one right you can look to go long on the break above the heights you can wait for a candle to close or you can go along with a buy stop order there’s really no no best approach right which ever approached it you’re more comfortable with right to stick with it stop loss I typically you know set my stop-loss 180 are below the the low of the flag to give it some buffer so I don’t get no stop top prematurely and they exit right you can use a moving average 2 trillion stop-loss or you know use structure of the markets higher highs higher lows to trail your stop-loss for flight pattern I would suggest that you try to write the trim because flag patterns typically occurs just after a breakup or in a strong trending market so for me personally I like to trail my stops to write the move as much as possible when I treat the flag pattern so this means that I don’t have you know fixed target profits or whatsoever so just to show it share with you know schematics to how it looks like so let’s say you have a market just break out let’s see breaks out from a flag pattern you can go along on a break of the highs your stop-loss or let’s say the market trade higher break up of the highs can go along your stop-loss will be 180 are below the stuff like low sold from here to here just 180 are let’s say your stop-loss is somewhere here SL right here to here will be the distance is 180 are I just pull out your average true range indicator see what is the value and then just minus the value and you have your stop loss level over here so let’s say for example one ATR is let’s say $10 and let’s say this value here is somewhat let’s say $200 so 200 minus $10 your stop-loss will be at hundred and ninety dollars very simple and then your exits right you can either use a moving average to trail your stop-loss or as the market makes you know higher highs and higher lows you just truly you in the previous look so with that said right let’s have a look at a few examples so now this is the chart of crude oil right sometime in 2014 2015 you will notice that crude oil basically has been in the long term range right for a good one or two years right high so for about 118-120 and the reloj of the range is somewhere around one hundred and five hundred and four dollars so you can see that the crude oil broke this area of support and they form a potential flat pattern right again two ways you can look to enter this trade you can place a sell stop order below this low or you can wait for the market to break and close below this low which it happened on this candle over here so let’s say your entry got triggered you go short right stop-loss would be 180 are above this high so let’s see I don’t have the indicator right now but let’s say one ATR is somewhere here so this will be a stop-loss SL and this will be your entry trilling and stop-loss right again I say that you can use moving average or structure of the markets right to anticipate that you could catch a potential trend so let’s say we use a moving average like the 50 period moving average right and you can see that in this case right you would pretty much write the entire move towards the downside right and only exit sometime over here when the market breaks in close above the 50 period moving average so a disclaimer right this is obviously a cherry pick examples you won’t regularly catch such a huge move right so this is more of something that you shouldn’t expect to occur regularly right but once in a while you will do you do catch you know huge moves like this right so this is something that I want to point out it’s not a regular occurrence so don’t think that you know every trade will be something like this okay so this is for crude oil but alternatively if you don’t want to you know use the moving average you can use the no structure of the markets right now when you when shot you know and here right trailing the previous high previous high previous sign previous time previous high and then this market actually basically you know breaks and close above this previous high this is where you exit your trade so again different ways you can use to drill your stop-loss another example so this one is more for not a break or example but you know in a strong trending market you can see that you know sugar is pretty much in a strong trending market forming a series of higher lower highs and lower lows so there is a few bearish like pattern then you could have trade you could have traded this okay you could have traded this or even this again the concept the principle is the same right go shot on the break of the lows your stop-loss would be 180 are above this high so maybe somewhere here for this right for this most recent example right cool shot on the break of this low stop-loss 180 are above this high so let’s say somewhere here right stop-loss entry again if you want to trill with your 50 period moving average you can buy in this case right you can see that the market pretty much break and close above the 50 period moving average and this would have been a losing trick right nothing wrong with the setup rights a valid set up but it just happens to be a losing trade so one last example before we conclude today’s lesson another one it’s a euro dollar you can see that this market pretty much in the range over here it break out of the range right then you form this a flag pattern over here could have got along on the break of the highs stop-loss 180 are below this low say somewhere here even if you’ve missed this move right I’ll see there were opportunities over here and over here okay so how could you have you know trade at this market right you could have gone along on a break of the highs right depending where they enter here here or here like I said right if the market just brings out the best flag pattern to trade is the first pullback right this would be the best best pattern to trade of course right if you missed it there’s always opportunities that come later but you’ll be entering naturally at the higher prices so let’s say for example right you you didn’t catch this move over here you got in at the second one which is this second flag pattern right this is your entry again stop-loss 180 or below this low again just for the sake of a completion right I’ll just pull out the ATR indicator just pull out hit average true range right you can use 14 period I typically use to any period ok just tip it please SMA click ok so at this point what you want to see is that what is the 8 here right right not eight year values for 80 pips right and see right 0.

008 so what you do is just calculate this low – 80 pips and then it will be your stop-loss ok so how do you actually trillion stops as I said all right you can use moving average let’s use the 50 period moving which and you can see that you would have you know right this move until the market breaks and close below this low over here okay so so that is our three examples for you so let’s do a quick recap the more on the more on write a flag pattern is a weak pullback of an existing trend right usually shown in a form of a small bodied Kendal’s number two the best time to trade a flag pattern is after breakup or during a strong trending market and to trade a flag pattern you can enter when the market breakup of the highs we’ve stopped loss 180 are below the look and if you don’t know you know exit you’re winners or maybe you know maybe a winner or losing trade but if you’re not trailing stops you can consider using moving average in the example I share with you using 50 period moving average or you can use the structure of the markets right if it’s in an uptrend right you can trill it using the previous low to trill your stop-loss okay so with that said right if you want to learn more go down to my website trading with Rainer comm right over here I share with you know practical actionable trading knowledge that you can use to improve your trading results right I would highly recommend it recommend double doing this to trading guides the ultimate trend-following guide and the ultimate guide to price action trading this one will be the trend following that is to help you know right big trends in the market and to learn everything there is to know about trend following and the ultimate guide to price action trading is about entries exits and know how to better read the price section of the markets so just click this blue button right and I’ll send it to your email inbox okay so with that said if you’ve any questions feedback just let me know below and I’ll get back to you so we that’s it I wish you good luck and good trading out you

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