Which Trading Pattern Works Best?


Jeff White Image Jeff White Founder, TheStockBandit.com

Jeff White talks about why finding the right chart pattern for your personal style and the current market environment is what counts.

Cup and handles, head and shoulders, breakout patterns, trend lines; sometimes we become masters of all kinds of trades and not really great at any one single type of trade.  Jeff, what would you recommend a trader do when focusing on all these types of patterns that are available out there?

You know when I got into trading I started studying up on everything I could.  I read everything I could.  I followed as much information and just absorbed whatever I could so that I could learn this and become good at it as quickly as possible.  What I found was it’s easy to become overwhelmed, especially just even taking a technical approach, aside from the fundamentals and trying to study any of that.  I understood that there were lots of chart patterns and different setups that I wanted to learn, and so I would go in and I would try a couple of them on a particular day and the next day try something different, and it was just kind of a matter of…

Everyday something different.

Right, throwing out random types of plays.  What I’ve really learned over the years is that I need to be focusing on honing my skills on the trades and the types of plays and setups that are working right now.  The market conditions change continually.  What’s working right now may not or probably will not work in a month or two.  I need to be understanding that right now we’re in a market correction, for example.  I need to be skilled at trading the short side.  I need to be watching for failed bounces, and so those are the plays I need to focus on.  I can deal with breakout momentum types of plays later when the market is rewarding those.  It’s really a matter of getting my skills improved when the current conditions are rewarding them.

Are you a two-time frame chart-type trader when you look at these things?  Are you looking at one-time frame chart for the trend or the correction and then going down to a lower time frame chart to get an entry?

Often times I will do that.  I really pay very close attention and I give the most importance to a daily chart.