ABCD Pattern Trading
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  1. #1
    naughtypip's Avatar
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    Default ABCD Pattern Trading

    Ok so here I will be documenting my ab=cd trades. My plan is to share with you my trades in order to inform this method to anyone looking for a simple but hopefully effective way to trade. I am new to forex (probably been learning about it for well over a month now) but feel I have gained enough to share something for the people that maybe are just starting out.

    Also this would be a great place for experienced traders to maybe discuss on improvements to the method i am using and share ideas.

    So here is my trade today:



    After the abcd pattern forms I trade the retracement that occurs. From point D.

    I trade 2 separate lots. Once the first target is met (fib level 38.2) i exit 1 trade and take the profit from this trade. Then the stop loss for the remaining trade is set at the breakeven point (the point I entered the trade plus the spread) to lock in the profit so far and essentially making the remaining trade risk free.

    My targets here as labelled were actually .382 and .618. I withdrew at .382, but then decided to withdraw at .500 as I was happy with the pips i had made. I was also worried that the retracement might begin to weaken as from zooming out I was in a large downtrend.

    My profit for this trade was:

    lot 1 = 34 pips

    lot 2 = 58 pips

    92 pips overall (Thats $560 in my back pocket........... haha i wish. Demo trading only for now!)

    Ill post another link later with how the trade continued after my exit.......

  2. #2
    shandy's Avatar
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    Quote Originally Posted by naughtypip View Post
    Ok so here I will be documenting my ab=cd trades. My plan is to share with you my trades in order to inform this method to anyone looking for a simple but hopefully effective way to trade. I am new to forex (probably been learning about it for well over a month now) but feel I have gained enough to share something for the people that maybe are just starting out.

    Also this would be a great place for experienced traders to maybe discuss on improvements to the method i am using and share ideas.

    So here is my trade today:



    After the abcd pattern forms I trade the retracement that occurs. From point D.

    I trade 2 separate lots. Once the first target is met (fib level 38.2) i exit 1 trade and take the profit from this trade. Then the stop loss for the remaining trade is set at the breakeven point (the point I entered the trade plus the spread) to lock in the profit so far and essentially making the remaining trade risk free.

    My targets here as labelled were actually .382 and .618. I withdrew at .382, but then decided to withdraw at .500 as I was happy with the pips i had made. I was also worried that the retracement might begin to weaken as from zooming out I was in a large downtrend.

    My profit for this trade was:

    lot 1 = 34 pips

    lot 2 = 58 pips

    92 pips overall (Thats $560 in my back pocket........... haha i wish. Demo trading only for now!)

    Ill post another link later with how the trade continued after my exit.......
    Interesting naughtypip, and kind of how i trade, except i look to trade from the C, and to exit at D. I've seen a couple of methods for entry at D i.e. looking for the retrace, what method are you using the actually enter the trade i.e. what made you enter at the price you did?

  3. #3
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    Quote Originally Posted by shandy View Post
    Interesting naughtypip, and kind of how i trade, except i look to trade from the C, and to exit at D. I've seen a couple of methods for entry at D i.e. looking for the retrace, what method are you using the actually enter the trade i.e. what made you enter at the price you did?
    Hi Shandy,

    To find point D I drew the fibonacci levels from point B to point A. At this point I would look for price action near the 1.27 or 1.618 levels. D happened to land right on the 1.618.

    I should add that CD acted as an extention of AB, meaning that the CD leg was fairly longer than the AB leg. Which is not a classic abcd pattern.

    In a classic abcd pattern the legs of ab and cd are nearly the same in length, and very symmetrical. The way I would find D in this pattern would be to draw the fibonacci levels from B to C and hopefully find point D somewhere around 1.27 or 1.618.

    In the case of my trade, the price action was not landing around the fibonacci levels of B to C. Also the bars that proceeded point C seemed fairly long and bearish, which gave me a hint that the cd leg could possibly be an extension.

  4. #4
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    Ok so here is what happened after the exit of my trade earlier today:



    So we see it creeping up all the way to 100% on the fibonacci levels... Haha, thats double the level i closed my trade at, and could have been another 60 pips roughly. But im quite happy with this still, im new to this method and I think it is good not to be too greedy with your profits.

    Lets see if my upcoming trades can secure a better percentage of profit. I will do my best to make a trade each day, although some days this may not be possible due to work. Ahhh work, dont you just HATE it.

  5. #5
    ThePipPunisher is offline Banned Junior Member
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    Yes, I hate work and avoid it.

  6. #6
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    Ok so I traded against the trend today. Was quite a steep trend so I decided in advance that I wouldnt hang in too long in the trade, and not be too greedy. Here is how it went:



    Initially i was stopped out as the cd leg extended much further than i had originally thought, right upto the 1.618 of ab. The red line inicates a previous major swing low, which i though may have formed support, but was broken.

    Anyway i re entered at point D and managed 32 pips.

  7. #7
    212
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    Hey Naughtypip,

    I have also been trading the c-d short and have had great returns but I really like the set up. Just a thought, when you enter with two positions and take one off the table put a trailing stop on your other position and let it run for a bit. Just a thought hope it helps

  8. #8
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    Quote Originally Posted by 212 View Post
    Hey Naughtypip,

    I have also been trading the c-d short and have had great returns but I really like the set up. Just a thought, when you enter with two positions and take one off the table put a trailing stop on your other position and let it run for a bit. Just a thought hope it helps
    Hi 212, glad to see you are using a similar method. Your right I should really use more than 1 contract but didn't do so on this one for some reason.

    I guess my strategy isnt set in stone yet im still experimenting. Hopefully i'll be able to lay out some definite rules on money management for this soon.

  9. #9
    212
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    Naughty

    Looks like there is a beautiful ABCD Strategy setting up right now on the EUR/USD 30M chart check it out I just pulled some pips from the C-D down

  10. #10
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    Quote Originally Posted by 212 View Post
    Naughty

    Looks like there is a beautiful ABCD Strategy setting up right now on the EUR/USD 30M chart check it out I just pulled some pips from the C-D down
    Hey, im watching it now, it appears to be touching the support level/major swing low of may 6 (roughly 1.2512) , this could be a big reversal if it bounces....

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