If you saw some YouTube or Insta videos where people showed you a trading chart pattern and you tried using that pattern but kept losing trades and money, then this article is for you.
Everywhere on video platforms, you will see people teaching chart patterns as a way to trade. When I started trading, I too saw these videos and shorts, and I would go ahead and try trading with that pattern because it made logical sense when they taught it.
However, I kept losing money all the time. Only after that did I realize the biggest lie these so-called YouTube and Instagram traders were selling us. Let me explain with an example. By reading this entire article, you will also realize this lie and save years of pain and agony if you take it to heart.
I have always seen a pattern being promoted a lot and that was the triangle breakout pattern. When the videos are shot they show the charts and it works so perfectly and we will be stunned by how it works.
When we trade there are 4 major outcomes to the pattern and then there are supplimentary outcomes too. Let me tell you what happens during these 4 major pattern formation.
Scenario 1 is where the trade goes like the pattern. The price rises and then consolidates for some times and forms a narrow consolidation level as the time passes by thus forming a triangle and then it breaks out and goes up. When this happens and you take a trade at the breakout area you would end up making good money. For most new traders they are always risking more so they probably earn more. So as a new trader you will feel like that you know trading and you have easily earned that much money and in a short period of time. You will be jumping up and down since you earned that money so easily.
Scenario 2 is where the trade creates the same pattern and instead of breaking out and going up it starts going down. If you were expecting the market to continue and you placed a trade even before it breaks out you would be looking at a huge loss. If you already made money by trading and you had scenario 1 then you are gonna think that market is going to go in your direction and so you keep holding the position for longer and you might even hold a position till all your profits from your previous day is wiped out and you are gonna say its only the profits and you keep holding till you lose more and then exit. Most times you exit the trade and the price rises again and also sometimes it will go past your own trading level. This will make you think that you should have held on to the trade a little longer.
Scenario 3 is where the market creates the pattern and the market starts breaking out. It breaks out of the trendline and you are being extra careful and you enter trade after the breakout. However the price goes up a bit more and then it starts falling down. People have called this as a false breakout pattern. You might keep holding it since it broke out or if you learned a lesson, you are going to exit the trade. Either way you lose money. Sometimes the other supplementary scenarios play out too. Since the price broke out already it may come back to the trendline and then rise again or else its gonna continue going down. I have seen these scenarios play out too. Every single time you are going to learn a lesson but you will never know what is gonna happen when. So you keep expecting a different result all the time thus losing more money in the process.
Scenario 4 is where the market breaks down from the traingle and since you have already seen the 2nd scenario you take a trade to short it. It goes down a bit more and then starts climbing again. It goes past the upper breakout area and keeps climbing. You are either gonna hold till you lose more or you are gonna exit when it seems to be breaking out. Either way you lose money. Now there are other scenarios as well where the market climbs back to the same level again and then comes crashing down or it continues to climb after it gave a false breakdown.
Now these are just some of the scenarios that might happen so how in the world are we supposed to trade. Lots of new traders have lost so much money trying to trade the candlestick patterns. If I explained every scenario, its going to take a long long time.
Patterns can help you make a decision but it should not be relied on as the only trading factor. In the scenarios I explained if you take just the major ones and you trade with a stop loss on all, you will lose money since you are gonna get it right only 1 out of 4 times. If you add the supplementary scenario you are gonna lose way more times than winning. Also the market does not create the same patterns in the same order as well. So the losing pattern can happen 10 times in a row or the winning pattern 10 times in a row. So you are not gonna earn more money since the market is not predictable with just chart patterns.
Emotions also join the party with the trades adn you end up losing more and more. You might have some wins but losses will be high. The only way to overcome this is to realize this and train yourself to handle any situation without emotion. Training yourself is much harder since you dont really have all the scenarios that could happen. If you understand this make sure to follow this blog for more insights into trading to help you become better.
Alternatively, You can take my 30-day training to get trained in trading to be consistent and earn a good income. Without training to control your impulses, your rage, your greed and more you cannot win. You can definitely learn them on your own if you are able to control yourself or else you need to train yourself by learning from others. People are willing to learn themselves by losing a lot of money and they are also ready to spend money and be ok if it never comes back. It is strange that people dont want to learn from others who have walked the same path before to speed up their process. The trading industry has a lot of scammers and that might be a reason.
If you want to change your trading life and become consistent and succedssful then you should sign up for my training. To show you how confident I am in making you a profitable trader I am giving a 100% money return guaranteed if at the end of 30 days you are not profitable. My goal here is to teach the right things to as many people as possible. When I started 5 years ago I didn’t get any help and went through hell to get back up. I wanna help you become better and make a consistent living by trading.
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