The Strat Patterns Trading Strategy

The strat strategy provides a very structured approach to learning about market movements. By understanding the strat strategy step by step, we can predict the market movements accurately. 

The beauty of strat strategy is that it’s very simple because it’s made up of candlestick patterns. Every market movement can be seen within these patterns. 

The technical analysis is made up of three market scenarios explained simply in the strat patterns trading. That’s why it doesn’t matter whether you are a beginner or a pro trader. Still, you can easily grasp the concepts of strat patterns, which will help you a lot in trading to predict the market. 

I will explain the strat patterns trading strategy in detail in this article, so read the full article without skipping any steps. 

Components of Strat Trading Strategy 

The Strat has categorized strategy into different components. Each component has a role in the strategy. For example, the pivot machine gun concept of Strat Trading helps to identify the take profit level, which results in high-risk reward trades. In the same way, other components help to build a solid trading system. 

However, the most important components of the strat trading system are the following:

1. Timeframe Continuity 
2. Actionable Signal
3. Entry, Stoploss, and Target level

We will always apply the strat strategy in the above sequence. First, we will identify the timeframe continuity in a specific stock or share. If timeframe continuity is valid on higher timeframes, then we will look for actionable signals on lower timeframes based on strat patterns. After opening a trade, we will look for the price target to keep holding a profitable trade to maximize the profit potential. 

Besides this, we will also use TTO, Pivot machine gun, shooter and hammer, etc., patterns to get high probability trades only in the strat patterns strategy. 

Strat trading is a complete trading system that guides profitable trading. 

Now let me explain each component with examples to simplify trading using the strat strategy. 

1. Identify Timeframe Continuity on higher timeframes

I have explained the timeframe continuity in the previous articles. If you haven’t read those, I recommend you first read them to understand them thoroughly. 

In the strat trading strategy, the first step is to filter the stocks or financial assets that meet the criteria of timeframe continuity. You must skip that financial asset if there is inside bar formation in any higher timeframe. 

The higher timeframes are also different for different types of traders. For example, you should choose 30M, 60M, and 4H timeframes for Intraday trading to look for timeframe continuity. All these higher timeframes should point in one direction, either 2U or 2D. Then, in lower timeframes, we will trade only in that direction. 

For example, I checked the S&P index, which met the timeframe continuity criteria. All the higher timeframes are making 2 up patterns. You can also see in the image below. 

2. Find Actionable Signals on lower timeframe

After identifying the timeframe continuity, we will look for an actionable signal on the lower timeframe. 

We are narrowing down our approach to pick only high-probability setups from the crowd in the market. For example, if you are trading 50 US Stocks, then after applying timeframe continuity, you will select only 4 to 5 stocks. Next, we will check the formation of actionable signals on these stocks. 

Actionable signals are the strat patterns that predict the reversals or continuation in the market. for example, 2-1-2, 3-1-2, 1-2-2 etc. 

Remember that we cannot use the simple 2U, 2D, 3U, and 3D patterns as actionable signals. These patterns will be used only on higher timeframes for continuity identification. You can also use them to hold a trade longer by trailing the stop-loss. 

In the previous heading, we have identified the 2U timeframe continuity in the S&P index. Now, we will look for bullish reversal or bullish continuation actionable signals. As you can see in the image below, a 2-1-2 continuation pattern, 1-3 pattern, and 2-1-2 pattern are forming. 

3. Specify Entry, Stoploss, and Take Profit levels

After forming an actionable signal, we will open the order once it becomes in-force. A pattern becomes in-force once it breaks the actionable pattern. For example, if a 2-1 pattern is formed on the chart, then a 2-1-2 pattern will be confirmed once the price breaks the high of the inside (1) candlestick. So, on the breakout, it becomes an in-force pattern. 

That’s why we will open the trade once it becomes in-force.

Next, add a tight stop-loss level after opening a trade. We always use small risks on the first trade with tight stop loss. Then, we will add more to the winning trade to make more profit. So, to add tight stop loss, switch to an even lower timeframe and then look for any other strat patterns for stop loss placement. You can also place a stop loss below any swing low in a lower timeframe. 

Next, the first target level will always be the patterns high/low or upcoming high/low. Then, we can trail the stop loss or use the next two highs/lows to take the profit level. We can also use the pivot machine gun pattern to identify the take profit level.

You can also use the TTO to get the next price target. 

The bottom line

I hope you can start trading using the strat patterns now. This is the best method for technical analysis in trading. I have also mastered the supply and demand trading method but found that the strat patterns strategy is the best trading strategy. 

I highly recommend that you backtest these three components as much as possible before trading on the live account. 

If you have any questions related to the strat strategy, remember to comment below.