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“Simple as ABC” Trading Strategy

The following ABC trading strategy isolates turning points, as well as gets you into trending trades. The trade setup is quite simple, yet highly effective, and with a little practice you’ll see the pattern often. It can be used on any time frame, and takes advantage of the natural tendency of markets to move in one direction for several price swings before reversing and swinging in the other direction.

Figure 1 shows a basic ABC pattern for taking a long position. There is a low, marked A, then the price moves higher, marked B, then price pulls back and is marked C. The pullback at C can never reach point A, otherwise progress isn’t being made and it is not an ABC pattern.

The aim of this pattern is to show that the price has moved higher, pulled back less than prior move higher, and will now likely continue higher.

Figure 1. EURUSD 15 Minute Chart – ABC Buy Pattern

Figure 2 shows the ABC sell pattern. It is just flipped upside down. There is a high point, marked A, then a move lower, marked B, and then a pullback (up) marked C. C cannot move all the way back to A.

The sell pattern occurred right after the buy pattern, so it could have been used to capture profit on the way up and the way down.

Figure 2. EURUSD 15 Minute Chart – ABC Sell Pattern

Figure 2 shows relatively large ABC buy and sell patterns. If you look closely you will also see some smaller ABC patterns on the chart.

An entry occurs as soon as we can reasonably assume C is in place and the price is now moving in the anticipated direction. At the very latest we can enter near point B.

Figure 3 is the same ABC buy pattern shown in the previous chart(s), but here it is shown on a 5 minute time frame. The area for trade entry is marked with a white box.

Figure 3. EURUSD 5 Minute Chart – ABC Long Entry

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The closer the entry to C, the more chance of entering prematurely while the price is still dropping. Yet, the potential reward is greater and risk smaller. Entering closer to B makes it much more likely the price is moving favorably in your direction, but the risk is slightly larger and profit potentially smaller (some of the move has already been missed).

Figure 4 shows the entry area for a sell pattern.

Figure 4. EURUSD 5 Minute Chart – ABC Short Entry

Reading Trading the Mini-Channel Breakout may help isolate entry points when the pullback takes the form a small channel.

ABC Stops and Targets

If you are trading binary options you won’t need to concern yourself too much with stops and targets since your risk and potential profit are known at the outset of the trade. For those trading other markets, you’ll need to control risk and have a profit target to lock in profit.

For a buy pattern the stop is placed just below point C. For a sell pattern the stop is placed just above C.

Targets are based on a couple different methods. My preferred method is simply make my profit target 1.6X my stop. So if the stop is 10 pips, I am looking to make 16 pips. If the price is moving aggressively toward the target is will move it a bit further in order to catch a few more pips. But usually I just take the profit and then look for another setup.

Many traders also like to use a Fibonacci Extension tool for exits. It can be applied to any price swing and help indicate where the market is going. See Use the Fibonacci Extension Tool to Find Targets and Likely Reversal Points.

If an ABC patterns occurs in the opposite direction of your trade, take your profit immediately and don’t wait for the price to reach your target, since it likely won’t. If you are feeling particularly aggressive, when this scenario occurs you can exit your former trade and take a new trade in the direction of the new ABC pattern.

The ABC is a simple pattern that can be used to spot reversals and trade with trends. It can be used to capture both upside and downside moves on all time frames. When a buy pattern occurs it signals a strong likelihood that there is another move higher coming, whereas a ABC sell pattern indicates another move lower is coming. No strategy works all the time, but it can help you stay on the right side of the market, and also spot when it is turning against you.

STOCK TRADING AS SIMPLE AS ABC?

What does it take to be a consistently successful stock trader? I would say it takes a clearly defined trading methodology AND the discipline to follow it. The AND is key here as there are a multitude of high probability trading strategies yet few successful traders. The reason? Little to no discipline. AND how do you master discipline? The answer to this question gives us what is the most important quality of a consistently successful trader. The answer is in the following formula:

If A + B + C, then D.

The answer is patience. In this equation, or one much like it, we just may find the answer to impatience. For instance, let’s assume D is a high probability trade opportunity and A, B, and C are the factors that must be present to produce D. If there is no A, B, and C then there is no D. Notice I did not say A, B, OR C, nor did I say not A BUT B and C: I said A, B, AND C. There’s that word again. We cannot be tempted to replace the word AND with any other word, especially OR or BUT. If we do then we open ourselves up to any number of trading errors based solely on our inability to practice patience.

There is an A + B BUT no C.

Here we fall victim to not wanting to miss something, or what we refer to as the fear of missing out. We rationalize, allow our ego to convince us that we should not miss this opportunity, and we enter the trade knowing full well that our trading edge is not as sharp as it should be. We say to ourselves: “A + B looks really good so why wait around for C? What if C never comes? Then I risk missing a great opportunity. I would really hate to miss the move while waiting on C.” Wrong! We impatiently pull the trigger, breaking our rules.

There is an A or B or C BUT no A + B +C.

Here we rationalize and jump the gun believing that maybe, just maybe, our analysis is missing something, maybe it is flawed. Maybe we do not really need A + B+ C THIS TIME. Maybe A will tell us what B and C are going to do BEFORE we get B and C. We say to ourselves “A is setting up just like it did on the last trade and B and C soon followed, so I know it will do the same thing this time as well. I will get in before B and C and get ahead of the game. I will make more money. I will outsmart the market.” Wrong! We impatiently pull the trigger only to find that A by itself rarely ever produces B and C. If it does we have fooled ourselves into believing that we KNOW what the market is going to do next. We stake our analysis on a low probability prediction instead of a high probability opportunity.

There is an A + B + C then D BUT no trade.

Here we question our entire analysis because we fear that this time the trade may not work. This most oftentimes happens after a string of losses using the same edge. We again listen to our wonderful know-it-all ego who whispers in our ear and says, “maybe you should wait a little longer before you get in. You need more confirmation. This did not work the last two times so are you willing to lose again? What if you lose three times in a row?” We then decide to wait and by the time the charts have confirmed our original analysis the trade has already moved 10% in our anticipated direction. We either are frustrated and walk away, laughing if off or we pull the trigger just as the move has come to an end. The latter, of course, being the dumb, emotional thing to do. Our ego, unfortunately, wins again. And our trading account suffers the third straight loss-the very thing we were trying to avoid in the first place!

Trading is difficult enough as it is. Why do we make it even more so? When we have done our analysis and the opportunity arises, when A + B + C triggers D, what are we waiting for? Anything can happen in the market but nothing will happen with any consistency as long as we make trading decisions based on anything other than A + B + C. To do so would be to practice impatience and exhibit a lack of self-trust. Neither of which equals D.

Binary options simple strategy

You can make more money than with any other strategycompared to other strategies, a 60 seconds binary options strategy generates have an abundance of trading opportunities.

SIMPLE BINARY OPTION STRATEGY WITH 85% SUCCESS RATE. MUST WATCH

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Trading vix derivatives: trading and hedging strategies using vix futures, options, and exchange traded notes (r rhoads 2020)4.

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Although you have to accept a higher percentage of losing trades, if you still manage to make a profit, a 60 seconds binary options strategy can help you make a lot of money in a short time.

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Instead of only a few seconds, all other binary options types use expiries that range from 15 minutes to a few hours or, in the case of long-term options, even a few months.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Broker!
    Perfect for beginners!
    Free Demo Account! Free Trading Education!

  • Binomo
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