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4 Ways Of Employing Trading Patterns For Success

All stock markets have various trading patterns in them, as long as they have some level of volatility. Even in stabilized markets, you can observe a few patterns, if you know when to look at the market parameters. It is difficult to enjoy considerable success if you cannot deduce significant stock trends from the available stock patterns. Here, we first describe these patterns, and then present a number of ways to utilize them to achieve success.

What are Trading Patterns?

A trading pattern can be best described as a collection of the values of important financial parameters. This collection allows you to deduce the movement of a stock, which you can then use for stock trading. Different patterns can be viewed by setting the right time intervals. Technical analysts draw line charts and candle sticks to help understand the effect of market forces on future stock prices.

1. Using the Cup and Handle

This is a bullish trading pattern which is observed when a stock is moving upwards. It is produced after a stock consolidation and offers a high chance of success. High volume stocks can be predicted with accuracy and you can buy the stocks that will shoot up once they break the handle. Success is reduced with lower stock volumes in this way.

2. Using the Head and Shoulders

It is also one of the prominent trading patterns that you can use to your advantage. It contains two lower peaks mentioned as the shoulders and one high mentioned as the head. This is a perfect measure if you want to judge stock trends that represent a failing stock. You should quickly sell your equity if a particular company drops below its shoulders, because they mark the highest resistance point.

3. Using the Volume Spread Analysis

This is a powerful method which you can use to find out stock trends and other trends in securities and market derivatives. It uses the parameter of moving average, which is spread over a number of days of weeks, according to your particular timeline requirements. A trend change can be detected when the current average is below the simple moving average. Opportunities between the trend changes can be significantly understood through the complete chart and you can achieve considerable success, when performing day and swing trades.

4. Using Pullbacks

Pullbacks are also important trading patterns. There are simple as well as complex pullbacks. These situations present a situation where the market is correcting itself towards the stabilizing position. The right knowledge allows you to quickly perform day trades that can bring you profits within a few hours. It is always better to take the advice of the experts when assessing pullbacks for investments. You can also find future stock trends by looking at the past pullbacks on a particular stock.

Swing Alpha is a great partner for you if you wish to understand the different trading patterns that appear in the stock market. You can achieve success by employing a number of ways through the tools offered by us. To get more day trading alerts sign up on our website.