Why Pattern Recognition?
A few months ago I wrote a blog on the importance of having a strategy. The blog was well received and garnered a number of very valuable questions. The most valuable question that came up was with respects to pattern recognition. So why is pattern recognition so important? Because being able to recognize a high probability pattern is key to a trader’s overall success. It’s key because it helps build the case for a GOOD trade. Of course, there are a host of other things that must be taken into consideration when trading, but for now we’ll stay focused on trading patterns.
As you may know by now, my personal primary go-to strategy is day trading volatility. I’m not long or short bias. I simply look at key levels and high probability patterns. Based on all the variables being in my favour, I’ll put on a position. With that, there are only 2 patterns that I trade. Whether a position is long or short, I trade the same two patterns. The 2 patterns are relatively similar nature, cousins if you will, they are Flags and Triangles. Both the flag and the triangle are high probability patterns that have a better chance of following through vs head-faking you out. Of course, you must ensure that ALL of your variables are in place before you trade those patterns. With that said, there is a lot of value in both therefore those are the two patterns that I trade daily. For anyone that holds a Lifetime Membership with J. Lewis Trading they know that based on the content in the Video Library, all I do is trade those two patterns. It is still important to remember that there are a few other key factors that weigh in on my decision making before I buy or sell, BUT 9 times out of 10 I’m only trading 1 of 2 patterns. The Flag or the Triangle.