Close: We want to see price close a bar over the line to confirm the signal. This provides extra confidence and reduces the chances of it being a failed signal, however you also risk missing the move and for price to take off without you.
Multiple Closes: Some
analysts use 2 or 3 closes to confirm
the pattern. Whilst this provides even greater
confidence you again risk the chance of missing the move for it to be profitable enough
(for your reward/risk ratio)
Throwback: A
throwback is my preferred style if trading
the pattern. This is where price breakouts out or closes to confirm the pattern, but then returns
to the breakout line. If this level
then holds as either support or resistance
it can provide an excellent entry with greater
confidence and precision to achieve a much better reward/risk ratio. However the downside to this approach
is you are much more likely to repeatedly miss moves if it doesn’t
quite return to the breakout
line.
I would not say that one method is not
particularly better than the other,
but it is important to use a method
which suits your trading style and personality. For example an aggressive day-‐trader who must be in the markets as
much as possible may not have the patience
to wait for a throwback (in fear of missing out) so a breakout
approach may be better. Similarly and End of Day trader with more patience may be
better suited to the throwback.
Good knowledge,🙏👌
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