ABCD pattern trading
ABCD pattern trading
Stock Scalpers LLC.
A-B-C-D Pattern
April 20, 2020
A-B-C-D Pattern
April 20, 2020
The Pattern
The ABCD pattern is extremely easy to follow and is great because so many traders still follow it. In this method a trader is simply doing what all the other traders are doing, because trading with the trend increases probability.
The beginning of the pattern starts with a sharp and strong upward price movement. From point A to point B traders are actively and aggressively buying the stock. New daily high after new high. A trader shouldnt enter the trade between A and B, they would be chasing the trade with no accurate method of placing a stop-loss.
At point B the price is already VERY overextended. After the high of point B, traders who bought the stock early begin to sell and the price drops slowly down. It is still not the right time to enter the trade, though. As the selloff of B starts there is no clear indication of a bottom. Only once support is found, at point C, should the trader start planning the trade.
The space between point B and point C is the best range to buy once an uptrend begins. The new support at C can be used to set a stop-loss.
Once the uptrend starts the trader can sell their position at any point D. Point D is generally derived from the first red candle in the 5-minute chart after an uptrend commences. It is normally a sign buyers are running out of gas.
Once the uptrend starts the trader can sell their position at any point D. Point D is generally derived from the first red candle in the 5-minute chart after an uptrend commences. It is normally a sign buyers are running out of gas.
Summery
This chart is from the first time I traded WORX.
1) I missed the initial breakout, and so I was watching the run to point B happen.
2) After the surge from point A to B I waited to see if new support would form ABOVE point A, as in the support formed at point C.
3) Once I saw the support forming I planned my entry and exit strategy. Enter as close to point C as possible and sell at the initial point D or higher.
4) Using C as support, I set my stop-loss just BELOW the price at point C. If following this method it is important to buy as close to point C as possible to get the most out of the stop-loss.
5) As the price moved higher (from initial entrance at point C) I took partials at the first point D. The second point D I secured the position, using the red candle in the 5-minute chart as my signal.
6) It is imperative to be aware of buyer and seller sentiment following this trading pattern. A trader MUST exit the trade as sellers begin to win the price action and drive the price down. We’ve all seen a supernova fall just as fast as it rose!
7) The stop-loss moves up with the price once in profit.
© Stock Scalpers LLC. 2020
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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MamboJambo : Is this Stock in the first D or last D
xierongliang : thank you for the layman explanation. are we looking at volume to find out which counter to monitor more closely for any given day? or is it a case of 'see you if I see you'?
your insight.
Plus Ultra Gains : please make more posts like this, moomoo needs post like this
Bunnx : Is the playout of ABCD over?