Trading Insights

Trading Insights

UNDERSTANDING THE PATTERN 5 IN NASDAQ

Trading Insights
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When I purchase WARP, predictive software, I have two main objectives.

The first one two reduce my indecision to opening trades and the second one when to close the open trade. There are different techniques you can apply to reach those goals, and are based in your account balance, appetite to risk, and number of contracts used.

It’s important to understand the way this predictive software works. Therefore, you have a manual for that, a pdf file that explain the system.

When I start trading with this software y just focused on easy patterns above or below the 120 EMA, it means buy and sell, if the dot timestamp signal appears above or below the EMA. I become an expert to know when to open and close the trades based on times. But today I want to explain an advanced pattern, and it’s the pattern 5. You can get good entries with a reduced stop loss if you understand it.

In the picture the first trade appears after 8:29, the time ends, the red (ATR) level is drawn and the candle in minute 31 make a puncture over passing and closing over the red line validating the long trade. But in Nasdaq I like to open trades after 3 or 4 minutes after the opening bell, so I avoid that trade, is just my preference. So, my next time stamp it’s at 8:36. It’s a buying dot but, I do not open the trade under these criteria:

  • The bars at the left of the dot, are making higher highs
  • The candle that closes at 8:36 make a new higher high

The concept is simple, and I follow the next steps in my mind to open the trade:

  1. Wait that the candle closes and start to be drawing the ATR dotted line (in green)
  2. Option one: put a buy limit 1 tick above the green dotted line, if is activated I put my stop loss below the EMA or in the last swing low at my left
  3. Option two: The “U” turn shape. Wait until one buying candle appears and close above the green line and activate the trade manually, the stop loss is under that candle or in the last swing low at my left.

If you have just one contract you can:

  • Take profits in the last high at your left
  • Or move your stop loss under the medium candle the crosses the reversal high and hold it until 8:56

I trade with 4 contracts:

  • My first two contracts are covered in the reversal line
  • I move my Stop loss under the last swing low (when says “partial profit” in the picture.
  • Move the stop loss under the closed candle at 8:56 am and get stopped out.

Juan Fernando Vega

Mechanical Engineer

Bogotá-Colombia

Spanish – Support

Skype: juanvegam