Flash Pattern Strategy by Stock Alphabets

If you are keen to know about the Flash Pattern  and how to trade it then this Flash pattern Stock trading strategy will put you in the right direction.

I must warn you though: if you are a new Stock trader, trying to find a Flash Pattern on your chart may be quite difficult at first.

Why?

Because first you have to identify the XYZ pattern and then once that happens, next thing you need to look for look for is a Flash Pattern.

And a Flash Pattern only forms after the XYZ pattern.

That is what makes it confusing for many.

So if you are going to find it difficult, then try using this Flash Pattern .

What I am going to present here is the most basic form of Flash Pattern trading because If I were to write in detail about how to trade the Flash Pattern, it would be too much information and I don’t want to confuse the heck out of you.

Note:

Price Action Strategy

So What Is A Flash Pattern?

In order for you to understand the Flash Pattern, you need to know what a XYZ chart pattern is and in the XYZ chart pattern Stock trading strategy, I’ve explained that to an extent what that is.

This chart bellow shows what a Flash Patterns  in a downtrend and uptrend:

§  note that first comes the XYZ pattern

§  and second comes the Flash Pattern.

§  note that the violation candlestick is the candlestick that breaks past point 2 of the XYZ pattern.

Flash Pattern Simplified

Most explanations tend to make Flash pattern confusing but my explanation will take the confusion out once and for all.

Look at the Flash Pattern and can you see a similarity between it and the XYZ pattern? I you cannot, then have a look at the chart below:

§  first part is the XYZ pattern

§  then the second part is the Flash Pattern that I’ve marked as “Z-Y-Z.”

Here’s the thing:

the “a-b-c” is another XYZ pattern if you were to mark “a” with X, “b” with Y and “c” with Z.

So in simple terms, a Flash Pattern is another XYZ pattern that forms right after the first XYZ pattern…That’s basically what a Flash Pattern is: two XYZ patterns forming right after the other.

How To Trade The Flash Pattern

There are a few ways to trade the Flash Pattern but I’d like to show you the the most simplest one: trading the breakout of of Flash Pattern:

1.      place a pending sell stop order at least 2 pips below the low of the Flash Pattern which is marked as “b” on the chart below in a downtrend situation or for a uptrend market, place a pending buy stop order 2 pips above the high.

2.      there are two stop loss placement options: place above the high of the breakout candlestick or just above point “c” for a downtrend. Do the exact opposite for a pending buy stop order.

3.      for take profit targets, use a previous swing low as profit target for a sell order and a previous swing high for a buy orders. If these swing lows/highs can be found or they are too far away, then use the risk:reward ratio of 1:3 to calculate your profit target.

Disadvantages of The Flash Pattern Stock Strategy

§  notice that price has moved already after it made the XYZ pattern and you’d be jumping in a bit late if the start of a new trend was confirmed after the XYZ pattern.

§  can be a difficult pattern for beginner Stock traders to identify and trade.

§  if the distance “stretches” between the formation of XYZ pattern and the Flash Pattern, avoid trading it.

§  nothing is ever perfect in Stock trading, there will be false breakouts of Flash Pattern and your stop loss can get hit.

Advantages Of The Flash Pattern Stock Trading Strategy

§  Trading raw price action without the clutter of indicators.

§  a simple breakout trading with the same king of trading rules as the XYZ pattern Stock trading strategy

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