Trading US stocks becomes very easy when using the strat trading methods. The strat pattern strategy helps analyze the stock easily and then trade with the higher timeframe trend using repetitive market patterns.
In the strat strategy, we first filter the stocks that have the same trend direction on multiple higher timeframes without any consolidation. Then we predict the market using strat patterns on the lower timeframe such as 2-1-2 continuation, 1-2-2 reversal, etc. Then we open trades based on the rules taught by the strat strategy and make it more effective by using PMG and TTO patterns.
This is a simple and proven strategy. In this post, I will apply this strategy to Apple stock, and you can learn how to trade using the strat. So read the full post and don’t skip any step to avoid confusion later.
01. Identify the timeframe continuity on higher timeframes
This is the first step of the strat trading strategy. In this step, we will identify the best time to trade in the market. We cannot always trade in the market. We have to wait for the best time and a suitable trending environment. Then we will enter the market.
This step helps to stay away from choppy market conditions and only enter when there is a trend.
I will trade on the 15-minute timeframe, so I will choose the following higher timeframes to identify the timeframe continuity:
- 8 hour
- Daily
- Weekly
However, if you are not a conservative trader, you can also check only the first two timeframes. It all depends on the risk. You can even use up to four higher timeframes to determine the timeframe continuity in any financial asset.
I will be using the strat patterns indicator, so it will show the timeframe continuity automatically in the table in the bottom right corner.
As you can see, all the higher timeframes are showing a bullish trend in the continuity table.
Now let’s move to the next step.
02. Find strat pattern on lower timeframe
As the previous step is fulfilled, and the market environment is clean and trending in the bullish direction, we will have to trade only in the bullish direction on the lower timeframes. That’s why on lower timeframes such as 15 minutes, we will only trade the strat patterns that are predicting the bullish direction and will skip the patterns that are against the higher timeframe continuity.
In trading, you cannot generate profit if you are trading against the market. So a wise decision is to trade with the trend only.
For example, in Apple stock, I have opened the 15-minute timeframe and I am seeing a 3-2-2 bullish reversal pattern.
In live trading, when a 3-2 pattern forms, we will wait for the price to break the high of the “2” candlestick. As soon as the price breaks the high of the “2” candlestick, the 3-2-2 bullish reversal pattern will confirm. Now we will open a buy trade instantly.
Next after few candlestick a 2-2 bullish reversal pattern forms aligning with timeframe continuity.
This is the simplest way to open the trade.
03. Find the stoploss and take profit level
The final and important step is to determine the stoploss and take profit levels.
Let me first show you how to determine the stoploss.
The simplest way to add a stoploss on the intraday timeframe is to place it just below the previous candlestick (in case of a buy trade). In the Apple stock example, we can add the stoploss just below the low of the “1” candlestick. If we go a bit deeper by opening further lower timeframes such as 5 minutes, we will see more candlesticks. On this lower timeframe, we can add the stoploss by identifying the swing levels. This will help us get high-reward trades from the market. However, it’s a bit risky and requires more experience with price swing levels.
Now let me show you how to determine the take profit levels.
In trading, the price always breaks the previous highs and lows. So the first target will always be the previous high/low of a candlestick. However, we will use the concepts of Pivot Machine Gun (PMG) and Triangle They Out (TTO) to forecast the take profit level.
Another method is to trace the TP level until the price forms any reversal strat pattern on a higher timeframe such as the 8-hour.
The bottom line
Trading US stocks with strat patterns is one of the easiest and most logical methods. It’s not just based on market patterns, but also on universal natural rules — that’s why the strat trading strategy works.
However, I recommend learning the PMG and TTO from our blog in detail, and also learning to place stoploss below/above the swing levels. Then you will be able to trade in the real market.
Don’t forget to practice these patterns because practice will help you understand different real market scenarios that cannot be taught in web posts.
If you have any questions, don’t forget to comment below. I will try my best to reply with the best answer.
Happy trading.