Day Trading Patterns: What Are They and WHY Are They Important ?

Day Trading Patterns: What Are They and WHY Are They Important ?

Day Trading Patterns: What Are They and WHY Are They Important ? 1024 546 Steven Dux

Whenever anyone first enters the world of day trading, one of the first phrases they hear of, and potentially look up, is “day trading patterns”.

Intro.

You’re here because you did the same. You’re curious about what these patterns are and how they can help you catapult your career to the top. More than likely, you reached here because you have already read long, tedious lists of day trading patterns on other websites, and still have no clue which one actually works. Here’s a secret: the ones that you have already read about, do not work. There, I said it. 

Welcome to a new piece

in my Investing for Beginners series.  

I have designed this series so you have all you need to succeed in this fascinating world of day trading, you can have the unfiltered truth about what works and what doesn’t. 

Today we will talk about day trading patterns. Keep this bookmarked and I guarantee it will be a massive help in your day trading journey. It’s true that you need to learn to recognize certain day trading patterns and make decisions based on them. So then why do I say the tons of patterns you found on Google don’t work? Today we will get to the bottom of that. Most people who succeed in day trading are the ones who have put in hours and hours of studying, practicing, and learning with a mentor.

Success doesn’t come by knowing patterns that are already out there.

It involves having enough experience and skill to create your own patterns. Then why does this information exist out there, if it does not work? A few simple reasons:

It makes for easy content.

People who put informative articles on trading are always striving to create content for their blogs and websites. It may not necessarily contain useful information.

Odds are better for serious traders.

More and more people increasingly entering the world of day trading means there’s more money in the market. It means many of these beginners do not know what they’re doing, making the odds better for those who have access to patterns that actually DO work.

There are traders out there who...

…put some very basic strategies and patterns online for beginners. Beginners start playing with these strategies and patterns using real money, leading to them losing this money. And the traders who did share this information readily for free, end up making money.

There are traders out there who put some very basic strategies and patterns online for beginners.

Beginners start playing with these strategies and patterns using real money.

This would lead to them losing this money. And the traders who did share this information readily for free, end up making money. Because the information they’re supposedly sharing isn’t what really works. I fell into the same trap when I started. I read all the websites; I devoured all the books… and I still felt a lot was missing. I could have ended up being a part of the 94% new traders who fail. The internet is a breeding ground for “experts” with flashy websites promising that you can make money from home instantly by day trading. That they are sharing all the important information for free, and anyone can be successful if they just followed this advice. 

With gimmicky language, they make it seem easy. If it sounds too good to be true, it is.

If you are finding all-important day trading patterns in a free article that claims this is all the information you need, be very wary. Always remember that the internet is full of ineffective information and it is up to you how you make sense of it. I also came across so much ineffective information when I first started and if my gut hadn’t told me otherwise, I would have followed that advice and failed. I was struggling and got disheartened. When I look back at that time now, I realize it was all an opportunity. If you have found this article, this is an opportunity for me to set the record straight for you and tell you to not blindly follow the day trading patterns you find on the internet for free.

What are

Day Trading Patterns?

A Day Trading Pattern is a shape within a chart that implies what might happen to a stock’s prices next based on the past.

They’re like “predictions” based on historical data. We’re all constantly looking for patterns even in real life; that is just an aspect of human nature. Hence patterns are an important part of your trading psychology. Patterns are things I have found to be extremely valuable in having the confidence to trade day in and day out in such a volatile profession. After I learned about strategies and identifying patterns, I started making my own based on these patterns that kept recurring over and over — sometimes up to 60 times in a year, and that would generate 25% returns about 75% of the time. Understanding the psychological elements behind these patterns is something I thoroughly enjoyed.

Recognizing patterns is a valuable skill in the world of trading, because just like in any other avenue of life, history *can* and will repeat itself (which leads to the creation of “patterns”).

As seen in a previous article about your day trading platform of choice,

…they will show you certain charts (link here). Charts are used to visually demonstrate the price action of a stock. When a price action repeats itself time after time, it can form a pattern that can be projected based on history. Getting used to identifying these patterns can help you build confidence in your trading. An awareness of these patterns can put you years ahead of your peers. Recognizing these patterns means you don’t have to start fresh every day you trade. You can make decisions based on what has happened already. It definitely takes practice.

But everything takes practice. In the beginning, you can recognize a thing or two.

…but most people will always miss a few key pieces of criteria. So, to be able to include all the criteria it actually takes a lot of practice to recognize whether something is an actual pattern. Often, we can see patterns and yet we get emotional and continue to make mistakes. It is human nature to go off our intuition over hard facts and statistics. Patterns are based on past facts so they’re based on logic. Unlike our intuition which has no guarantees. This is what causes a chain reaction of losses. If your focus is all over the place, this chain reaction gets aggravated and that is something you need to be aware of.

If your focus is all over the place, this chain reaction gets aggravated.

That is something you need to be aware of. When I trade, I try to remove emotions as much as possible to ensure that I obtain the highest reward and suffer minimum losses. It is not possible to completely remove emotions. We’re not robots. And this is why it’s important to have a plan and to identify successful day trading patterns. There won’t be patterns every single time of course and this is not an exact science. But it is something that gives a trader an edge. Markets will change, behaviors will change and so will patterns.

That is why it’s important to stay updated and continue to learn (plus lots of experimenting). There are a lot of opportunities out there; the key is to catch them.

Long:

To “go long” means to buy a stock and expect to sell it later at a higher price.

Short:

Short” is when a day trader owes stocks to someone and sells them before actually owning them.

Bullish and Bearish:

Markets are usually said to be bullish or bearish depending on the general price movements being positive or negative. Prices rise or are likely to in a bull market, whereas they drop in a bear market. Some patterns are well-matched to a volatile market.

In order to know more about patterns, be familiar with some of these terms.

Understanding these important terms is critical for a trader to find their way in the different market conditions.

Support:

Support is the level at which prices are supported from not falling any further. When prices are around this level, buyers buy in larger quantities, protecting the price from falling below this level.

Resistance:

Resistance is the opposite. When prices are around this level, sellers sell in larger quantities, preventing the price from going up above this level. A resistance zone is created when at that price, as there’s more supply than demand. Market psychology plays a huge role here as traders go by what happened in the past and react to price changes accordingly.

How to Find Day-Trading

Patterns that work

While it is good to be aware of their existence, it is equally important to be aware that these patterns listed DO NOT work.

You yourself will have to put in the work to create and identify successful day trading patterns. This takes time and experience. And although you can find successful patterns from other people, you’re unlikely to find these for free.  This is a huge reason why I created the Freedom Challenge. The students who sign up for my program are serious about their day trading and know that the most valuable information they need cannot be found with a quick google search. Even this article only scratches the surface of how important patterns are. It doesn’t give you all the answers you need. But no article will.

This is why it’s important to find a mentor who will guide you through the process. Not only will such a mentor give you access to patterns that actually work… they will also teach you how to identify your own. A lot of people rely on many well-known patterns, some of which we looked at above. These patterns and indicators are known to almost every trader who enters the market. And as we have already discussed, 94% of new traders fail during their first year. There are a few reasons why these people fail, but one of the main ones is that they blindly follow patterns like these.  

How to Find Day-Trading

Patterns that work

While it is good to be aware of their existence, it is equally important to be aware that these patterns listed DO NOT work. You yourself will have to put in the work to create and identify successful day trading patterns. This takes time and experience. And although you can find successful patterns from other people, you’re unlikely to find these for free.  This is a huge reason why I created the Freedom Challenge. The students who sign up for my program are serious about their day trading and know that the most valuable information they need cannot be found with a quick google search. Even this article only scratches the surface of how important patterns are. It doesn’t give you all the answers you need. 

No article will. This is why it’s important to find a mentor who will guide you through the process.

Not only will such a mentor give you access to patterns that actually work… they will also teach you how to identify your own. A lot of people rely on many well-known patterns, some of which we looked at above. These patterns and indicators are known to almost every trader who enters the market. And as we have already discussed, 94% of new traders fail during their first year. There are a few reasons why these people fail, but one of the main ones is that they blindly follow patterns like these. The elemental thing about the stock market is, you have to think outside the box while basing your decisions on fundamental knowledge.

An article like this one is helpful and can advance your career by giving you valuable insight and information on profitable patterns, but not one-on-one guidance and experience.

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