Trading Price Action Trends

Part IV

Common Trend Patterns

Trends days can be classified into specific types, and if you become familiar with the characteristics of each type, you will be prepared to spot specific trading opportunities as they are setting up. The names are meaningless because all that a trader needs to know is how to read the price action, which is the same for any pattern. On most trend days, features of more than one type of trend will be present, but don't look at that with confusion or disappointment. Instead, it is an opportunity because there will be more tradable setups once you become familiar with how each tends to develop.

With all trend patterns, the only reason to apply names to them is because they are commonly recurring patterns; if you recognize one as it is unfolding, you should be focusing on trading in the with-trend direction only and be more confident about swinging a larger part of your trade. The setups will be the same as during trading range days, but you should be trying to take every with-trend entry, no matter how weak the setup looks, and you should take countertrend entries only after a trend line break, only if there is a good reversal bar, and only if you are still able to take every with-trend signal. If you find that you are missing any with-trend entries, stop trading countertrend and focus only on with-trend setups. On the countertrend trades, you should scalp your entire position. Also, you should not find more than two or three countertrend trades in the ...