How To Find Profitable Day Trading Patterns in 2022 and Beyond

Just how important is it to find the “right” kind of patterns in day trading?

Well, if you’ve followed my Investing for Beginners series or my YouTube channel, you know how important I find patterns. My aim when I created this series was to provide you all you need to succeed in this exciting world of day trading — about what does and does not work.

So before we go further, let me break it to you: the patterns you find online do not work.

It is highly possible that you have already read long, tedious lists of day trading patterns on other websites (and still have no clue which ones actually work).

Well, save yourself some time because they don’t!

Traders who succeed in day trading are the ones who have put in countless hours in studying, practicing, and working with a mentor. All of this doesn’t come by knowing and using patterns that are already out there. It needs enough experience and skill to create your own.

For 2022, this is more true than ever!

As we have discussed in some of my previous articles, 2022 is a year like no other. The world of trading has undergone a serious transformation and what worked earlier may not work now.

So in today’s article, let us discuss how to find profitable patterns in 2022 (and beyond).

Keep this article handy as it will be a big help in your day trading journey.

A Day Trading Pattern is a shape within a chart that shows us what might potentially happen to a stock’s prices next (based on what’s happened in the past).

These “predictions” are based on historical data.

As human beings, we’re constantly looking for patterns in real life.

Finding the “right” patterns boosts your confidence and allows you to trade the “right” way during volatile markets.

Based on patterns that kept recurring over and over – sometimes up to 60 times in a year – I made my own. This is how I transformed an account of $27,000 into over a $11+ million portfolio.

One of the stocks I traded in December 2020 helped me earn $250,000 with a gain of 50% of what I invested. The stock ticker I traded was WNW, which is a stock for a company called Wunong Net Technology Co Ltd (which trades on the Nasdaq).

The pattern I used for this was shorting into an overextended gap down. This kind of pattern has about a 70-80% win ratio and usually has a return of 26%. It happens around 20 times a year.

For my trade, the return was twice as high as the average of this particular strategy.

This is how important recurring patterns are.

How to recognize patterns is an important skill for anyone in the world of trading, especially for beginners because just like in any other aspect of life, history *can* and will repeat itself.

This repetition of history is what leads to the creation of “patterns”.

The ability to identify patterns can help you build confidence and a sense of security in your trading. The ability to recognize and create patterns can put you years ahead of your peers.

This requires practice. Just like everything worth knowing.

It is something I have discussed in this video. So before we go further, be sure to watch it and bookmark it — you find it extremely helpful going forward.

Here are some steps to identifying and creating patterns in 2022 and beyond…

Tracking samples with similar behavior should be on your list of things to do while finding patterns. You need to track at least 150 samples to find an average winning percentage for this specific action.

You cannot really consider it a pattern yet because a pattern needs to show consistency in the last 2-3 years at least. It needs to have shown it’s consistently profitable.

Due to the volatility of 2020 and 20210 we do have a lot of samples and a lot of outliers.

My recommendation is to track the entirety of the previous year to see if you can get profits from an action to call it a pattern and eventually use it. Sometimes a pattern works in the first half of the year and not in the second half (or vice versa).

Looking at my own performance of 2020, I would want to go into low float stocks to see if it’s worth it to place trades on these low floats. Analysis of this nature is imperative to understanding your performance and actions for the future.

Therefore, track the entire year and see if you have positive net profits from any specific pattern before you choose it.

Going forward in 2022, I would suggest the following steps:

Categorizing patterns into different spreadsheets makes it easier to compare them and check if they’re consistently profitable or just seasonally profitable.

For instance, divide patterns you see potential in as pattern A, pattern B, pattern C, and so on.

Once the patterns are categorized, compare their win rates.

I deem a pattern to be effective for new traders ONLY if it generates profits more than 65% of the time. Without experience, patterns with less than a 50% success ratio could wipe out your account.

So keep this in mind when you compare the win rate.

Divide the float according to the float size as follows:

Once you’re done dividing based on the float, separate the different patterns under these floats to check which conditions work the best.

For example, pattern A might work best with a mid float, pattern B might work best with a high float, and so on…

Categorize the stocks in the patterns based on the similar float, cap, action, and volume.

After you have built this tree of statistics and have filtered it out based on viable factors, you will be able to zero in on a pattern that can work (and will be profitable).

Since patterns that are available freely online DO NOT WORK, you yourself will have to put in the work to create and identify successful day trading patterns.

If you’re presented with day trading patterns in a free article or video that claims this is all the information you need, be skeptical. Don’t forget that the internet is full of false information and it is up to you how you make sense of it.

Follow the steps I have illustrated above and you should be in a position to produce a very profitable pattern.

Going further into 2022 and beyond, volatility is going to continue, and therefore we’ll get a lot of samples to test.

It’s good practice for beginners to track all the important statistics I mentioned above. To illustrate with a comparison, back in 2015-16, there were not enough samples to track so you had to go back at least 2-3 years to analyze.

Take full advantage of the high volatility of 2022 and make this the year you take your trading to the next level.

While an article like this one is insightful, helpful, and can give a boost to your career by giving you valuable information on profitable patterns, it cannot give you the one-on-one guidance and experience you need.

That is why I created my course: The Freedom Challenge — where I discuss in detail how to use patterns to your advantage.

The talent to understand patterns is not gained overnight and definitely not from a list of patterns you find on Google. You need real experience and mentorship.

This year, make that mentorship your priority. Consider the Freedom Challenge as an investment you will make for yourself, your growth, and your career.

I also invite you to take a few further steps with me:

Next steps.

It’s time you stop wasting time, missing opportunities, and losing money due to platforms that only give you access to part of the process. The mechanism is simple, effective and fast.

Speed and efficiency are two of the main things we focused on while building StockCraft. To make the most of watchlists and choose the best stocks possible, join the StockCraft family and get access to our powerful watchlists (and many other amazing features). Get access to our sophisticated screening software so you can track and follow the right stocks. Also, create your own Watchlists and get access to some of the ones we personally use. The time to make a mark in trading is NOW so the sooner you get started, the better. All you have to do is follow this link and choose the plan best for you and your trades.

And if you’re keen to learn more day trading tips, check out this Investing for Beginners series. I’m devoted to mentoring beginners in order to make day trading your primary source of income. I also invite you to take a few further steps with me:

Join The Freedom Challenge. This is my flagship program for traders who want to level-up and turn Day Trading into their primary income stream.

Subscribe To My Youtube Channel. This is where I share practical day trading tips and training on how to trade, as well as behind-the-scenes insights into the trades I make.

Join My Newsletter. I write these emails for people who want to learn the basic Day Trading Tips and the practical steps they should take to get started.

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