Pattern #1a

Entry
Stop Loss

Pattern #1b

Stop Loss

Entry
 Pattern #2a

Stop Loss
Entry

Entry
Pattern #2b
Stop Loss
Pattern #3a
Stop Loss
Entry

Entry
Stop Loss
Pattern #3b

Entry

Stop Loss

Stop Loss
Entry
 Stop Loss
Entry

Entry
Stop Loss
 Trading Patterns Template:
Patterns Summary!

Pattern #1a: This is what is known as consolidation. This is also

known as sideways trading, or range bound trading. It is kind of like
tennis, where the ball, price, bounces back and forth between 2
sides. This happens a lot in the markets and can be seen on most
any stock, forex pair, or crypto at some point or another. The way
these are traded is at the breakout to the upside. In regard to this
pattern, you enter at the breakout of consolidation, at the “entry”. In
good trading, you always must put stop losses in order to keep you
safe. Keeping your money safe, while profiting is the name of the
game.

Pattern #1b: This is also consolidation, just like pattern #1a. The
major difference is that in this case, you trade it to the downside,
expecting the price to move lower. In trading, you can actually
make money when price moves down. This is called short selling
and it is a very good tactic to have in your trade book. Once
again, stop losses are key, because you want to always have a safety
net protecting your money. The goal is to make money, not lose
money, right? Stop losses are a vital part of risk management. Think
of them as your money’s bodyguard in the markets. I also want you to
know that any of these patterns, not just the first 2, but any of the
patterns on this worksheet, can be found on all different timeframes,
whether you are using the daily chart, the hourly chart, or the minute
chart. (Different timeframes and trading styles will be talked about in
depth in the accompanying 7 Day Crash Course)

Pattern #2a: This is also a form of consolidation known as a

triangle pattern. You will notice something from here on out. All of
these patterns are breakOUTs of a range bound market. This is
because in trading, the 3 best ways to trade are breakouts, re-tests,
and reversals. If you can focus on those and master those, you will
have skills that last a lifetime. Think of consolidation this way: If you
have your dog in a dog run outside, he or she will probably play
around and pace back and forth in the cage, but once you come
home and your dog starts wagging his or her tail, you know that the
moment you let them out of the cage, they are going to dart across
the yard. Same concept here. Once price breaks FREE of the range,
there is a higher likelihood that it will continue higher or lower.
Anyway, back to the pattern. The way a triangle pattern is traded is,
once again, at the breakout. What you are looking for here is lower
highs, and higher lows, as it moves to the tip of the triangle. This
creates pressure between buyer and seller orders, and eventually one
side wins, causing the breakout. You want to be on that team. This
pattern broke out to the DOWNSIDE, which means we trade it using
short selling, so we can make money when price moves down.

Pattern #2b: Very similar to pattern #2a, the only difference is this
is traded the traditional way, to the upside. In regard to triangle
patterns, both 2a and 2b look identical until they breakout. This is
why it is key to wait for the breakout to take place before entering a
trade. This is known as confirmation, and it is a major difference that
separates amateur traders and pros. Pros wait until the market
SHOWS them what it is going to do, amateurs try to PREDICT it.

Pattern #3a: There are 2 ways to trade this pattern. This pattern is
known as a double top. This is an area where price has tested before
and has struggled to break higher. Remember how I said there are 3
best ways to trade: breakouts, re-tests, and reversals. Double tops
have it all. When a double top occurs, a price level, the top, is put in,
then price moves downward. It then comes up and RETESTS the
level. Now, 1 of 2 things can happen. The price can either REVERSE,
and continue lower, for a good short trade, or it can BREAKOUT and
move higher, for a good long trade. Double tops have all 3 elements
of a good trade.

Pattern #3b: This is known as a double bottom and it is traded

exactly like the previous one, just all in the opposite. Price tests a low,
and then moves higher before RETESTING. The 1 of 2 things will
most likely happen. It will either REVERSE, and move higher, or it will
BREAKOUT and move lower. See? Basically identical to the previous
pattern, just reversed… no pun intended.

Pattern #4a: This pattern may look very similar to patterns 2a and
2b, but look closely. What do you see? The bottom of the triangle is
flat. This is known as a flat bottom triangle and it occurs when there is
a level that is seen as a good price for buyers. Every time price
reaches that level, buyers buy, causing the price to move higher. But
every time it moves higher, sellers start to sell, each time with more
force from the sellers, and less resistance from the buyers. Eventually
price breaks the bottom, and sellers have won. The price continues
lower. (Note: this can also breakout to the upside, meaning that
buyers have won, but due to the lower highs and flat bottom, a
breakout to the downside is more likely. (This pattern is talked about
quite a lot in the 7 Day Crash Course. Make sure to watch those
lessons, as they REALLY breakdown in depth)

Pattern #4b: This is the more traditional sibling to pattern #4a. It

is identical, only in the opposite direction. In this case, there is a price
level that sellers see as an excellent price to sell, causing the price to
move lower. Eventually though, buyers gain control and breakout of
the level. Buyers have won, and price moves higher.

As you can see, these patterns are based on breakouts for the most
part. Always remember, in trading the 3 best ways to trade are
breakouts, retests, and reversals.

Hopefully this guide is super helpful in keeping trading simple

and understandable. I also hope that the accompanying 7 Day
Crash Course is VERY helpful in clearing up these patterns more
in depth. Make sure to keep an eye out for my emails as well. I
am CONSTANTLY sending valuable information, tips, tricks, free
live trainings, and trade recaps to help you better your trading.

This is Derek at Finance And Chocolate, and as I always tell my

Trading Mastery Students, Trade SMART.