7 Perfect Pattern Trades in One Afternoon

7 Perfect Pattern Trades in One Afternoon – 19.75 SP Points

This chart developed on 9/06/13 in the afternoon starting just after 2:00 PM EST. The maximum favorable excursion was 19.75 points for 7 different pattern trades!!!  The total adverse excursion was just 4 ticks, with no losing trades.

7 Perfect Trades for 19.75 S&P Points
7 Perfect Trades for 19.75 S&P Points

What is a Perfect Pattern Trade?

A perfect pattern trade is when the market is performing logically and forming tradable patterns.  The first hour of patterns involves 4 short trades shown below.

4 Perfect Short Trades
4 Perfect Short Trades

The short trades start with an exhaustion pattern that marks a top as it is intended to do.  You will also note TICK divergence.  The previous high TICK was 782 and the divergent high was only 470, with price trading 4 ticks higher.  The exhaustion trade has no adverse excursion and is good for 2.75 points.

The next trade is both a Reversal and Exhaust Trend pattern.  We have a lower low TICK of -471 and a lower high of just 446.  In addition the was a Euro Divergence signal.  That trade was good for 2.25 points.

The next trade is a trend trade, with a lower tick low of -477 and a lower tick high of 374.  Again we see Euro Divergence also and a trade good for 2.25 points.

The next trade is also a trend trade, with a lower tick low of -719 and a lower tick high of 336.  Again we see Euro Divergence also and a trade good for 4.25 points.

There is something very important to note with ALL of the trades.  That is the importance of having a trading plan and using the statistics.  The important chart is shown below.

ZoneTraderPro Statistics
ZoneTraderPro Statistics

This chart is telling me that when I have an (eSignal) countertrend trade (which occurs when the market trades a blue countertrend zone) there is a 50.1% there will not be adverse excursion. So what does that mean here? It means that if you set a target at or below the blue countertrend zone there is only a 50% chance that you get filled. The other 50% of the time the market retraces and you lose at least 6 ticks that you just earned.  Only 1 of the 7 trades exceeded the blue zone.  It is easy to get into a pattern trade, but do you use the power of the pattern to exit?

Countertrend zone
Countertrend zone Excursions

 

What follows is a bottoming pattern and ZoneTraderPro again calls a bottom with an Exhaustion Trade.

90613 3 Pattern Trades
90613 3 Pattern Trades

First we start with an Exhaustion pattern trade that is again has a higher low TICK divergence of -842.  This trade is good for 2.5 points.

The next trade is an Exhaust Trend pattern trade that has a higher tick high of 328 and a higher TICK low of -500, which is exactly what you like to see.  This trade is good for 2.25 points. Notice that after you would exit the trade that a trend trade pattern does not form at support, because the tick filter (the little red dot) keeps you out of the trade and is a signal the market is going lower.

The market going lower sets up the last reversal/trend pattern trade worth 3.75 points.  We have a lower tick low of -806 and a lower TICK high of 303.

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