What are the best day trading patterns for beginners? The easiest to learn patterns are the falling wedge, rising wedge, bull flag breakout, and cup and handles. The cool thing about trading patterns is they happen over and over and you can fall in love with them, even marry them. Regardless, if you’re new to trading, you’ll quickly realize there are more patterns to trade than sand at the beach, so you need to pick your favorite. What is one to do? Well, if you’re not a floor trader and are just starting trading, here are a few of the best day trading patterns for beginners.
Table of Contents
- The Best Day Trading Patterns for Beginners
- The Best Stock Chart Patterns for Day Traders
The Best Day Trading Patterns for Beginners
Candlesticks and What They Mean
Before you can start to identify the best day trading patterns for beginners, you need first to understand what makes up the patterns in the first place.
Just like every human has different DNA, every pattern has different candlesticks. Some DNA combinations result in blue hair, others in red hair.
Likewise, combinations of candlesticks show us patterns so we can make educated trading decisions. Here are two of my favorite candlesticks that help me in my trading decisions; the hammer and the engulfing candlestick pattern.
The Hammer Candlestick
The hammer is a candlestick where the wick’s considered to be twice as long as the body. Also, at times, there can be very little or even no wick at all above the body!
A hammer candlestick is typically found at the base of a downtrend or near support levels. We traders like hammer candlesticks because they’re a sign that a reversal is about to happen in the price direction of a stock.
Reversals can be by themselves or apart of the best trading patterns for beginners. As a result, look at the big picture too.
The Engulfing Candlestick Pattern
In simple terms, the Engulfing candlestick pattern is when the second candle’s body covers the whole body of the previous candlestick. I
t’s important to remember that both the body and wick of the previous (first) candlestick must be covered by the Engulfing candle.
Without a doubt, the bullish engulfing candle is one of the best candlestick patterns to signify a reversal in the market. When spotted, either the buyers or sellers have been been aggressive enough to bring back the price to a level beyond the extreme level of the previous day.
What is crucial to realize, however, is that not all Engulfing Patterns mean something. For starters, for a bullish Engulfing Pattern to signal a reversal, it must appear after a significant drop in the price.
Likewise, for a bearish Engulfing Pattern to be considered valid, it needs to appear after a large increase in price.
As mentioned above, candlesticks come together to form a pattern. And it’s your job to identify the best day trading patterns for beginners so you can make money.
The Best Stock Chart Patterns for Day Traders
- Bull Flag patterns
- Harami patterns
- Pennant patterns
- Falling wedge patterns
- Bottom patterns, i.e. double and triple
- Top patterns, i.e. double and triple
- Cup and handle pattern
- rising wedge stock pattern
You can find the best day trading patterns for beginners on both intraday chart setups and all other timeframes.
The Bull Flag Pattern Is One of the Best Day Trading Patterns for Beginners
A bull flag is probably the easiest pattern to learn. It’s probably the most popular too. It’s considered a bullish continuation chart pattern and a sign that the market is likely to move higher. In no uncertain terms, the bull flag pattern is one of the most common patterns found on charts.
Here’s how to spot one:
- Look for a strong move up on high relative volume. In this scenario, the range of the candles is more bullish than usual, closing near the highs.
- A “break” and consolidation near the top of the pole, forming the flag.
- A “breakout” of the consolidation on high relative volume, continuing the trend up.
What I like about bull flag patterns is their versatility; you can use them on any time frame for any type of trader.
For example, scalpers might use the 2 and 5-minute time frames to catch quick price fluctuations. Alternatively, swing traders can use the bull flag pattern on the daily chart as well.
In my experience, the best time to trade the Bull Flag Pattern is when it occurs just after a breakout.
Furthermore, they are the perfect patter for new traders because they are easy to spot and trade once you understand the ins and outs of them.
My Final Note
The main thing to look for in any pattern is volume. Volume confirms major moves and the likely hood that a breakout or reversal will be sustained.
Furthermore, periods of high volume tell us people are interested in the stock, which means that more traders are trying to take positions. And this beehive of trading activity allows the stock to make bigger price moves.
As (day) traders, we look to capitalize on these significant moves. It makes no financial sense to focus on stocks that are range-bound due to their limited trading activity (i.e. low volumes).
Curious to Learn More About the Best Day Trading Patterns for Beginners?
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