Strategy Description
The initial phase of the BRK strategy necessitates the use of a sophisticated charting program, essential for analyzing market trends on 15-minute or 1-hour timeframes, depending on the specific market conditions.
Our primary tool for visual analysis will be candlestick charts, renowned for their effectiveness in delineating market patterns. A key focus will be on identifying the ABC pattern, which is recognized as a corrective pattern within the market’s movements.
To complement our pattern analysis, the Bollinger Bandwidth indicator is an indispensable tool. It plays a crucial role in gauging market volatility, a vital factor in our strategy. The procedure begins with pinpointing the corrective phase, ensuring it aligns with the ABC pattern. This involves drawing a line that connects the start of the pattern (point A) to point B. The line should be drawn below the pattern in a downtrend and above in an uptrend.
A critical aspect to monitor on the BB indicator is a ‘squeeze’ in volatility that coincides with the pattern. Ideally, a pronounced squeeze at point B, extending through point C, is indicative of favorable conditions.
The subsequent step is to wait for a breakout of the line formed by the ABC pattern. Confirmation of this breakout is crucial and is determined by a subsequent candle opening beyond the breakout point. This is the signal to prepare for trade execution.
In summary, the strategy involves a meticulous process: identifying an ABC pattern that corrects the main trend, coupled with a Bollinger Bandwidth indicator that signals a volatility squeeze commencing from point B through point C. The final action is taken upon the confirmation of the breakout, marking the optimal moment for executing the trade.
Trader’s Mindset:
Learn to focus on the information that helps you spot opportunities to make a profit, rather than focusing on the information that reinforces your fears. Being prepared and gaining a thorough understanding through experience will help you to overcome your fears and the problem with the way you think.