The Z Pattern

Trading Systems Free Forex Trading Systems
141

Now you know what it takes to stay focused and how important it is. If you haven’t grasped the concept then please
read again . If you think that you can’t relate to that then you are not letting your guard down and preventing
the light of learning to be ignited in you.

The next step is focusing on misconceptions that every trader has encountered during his/her journey.

A statistical statement goes like this; ‘’ I made 3% on a single trade today, if I do this everyday I can make 15% a week/60% a month.’’ You surely have done such calculations at one point in your trading career. You probably have found out that this is not working for you. Against the odds I’m here to tell you that you are on the right path! You just have to change your formulation.

A statistic is nothing but a number. In order to make it feasible you’ll need to turn it into a realistic term. What if you spot a Z pattern that gives you an excellent entry point to ride a big swing? What if that happens a couple of times within the day? By putting inflexible statistics on the table you are limiting your gains. A coach doesn’t tell his footballers to score 3 goals today, he let’s them play to their limits. Thus play what the market offers you and it see how it makes wonder on your account.

Moreover, 3% on a small account could be as little as 3£-9£ or maybe a bit more. Over the time gathering these small
amounts can still go a long way. But you need to be vary that there is an underlying force inside you that wants to make more money. However, since your account is limited you won’t see a pay rise. Here is a practical way that will guide you for the long haul;

Whatever your account size is, is the money you are able to risk. Your job is to make money from what is available.
As a Trader you are fully responsible for that amount and any losses or gains are dependent on time.
Over the time following the so far outlined trading mindsets and still to come trade setups will lead you to your
ultimate goal.

[B]You need to adhere and put into practice what you read here, in order to learn it!
Otherwise all this, is nothing but another good read.[/B]

Cheers

142

Quick Recap

We addressed several issues of '‘why despite having a working system you are still not making money’'
or ‘‘why eventhough everything lines up the trade gets stopped out and you get blamed for being inexperienced’’

I started to tackle inconsistencies in trading through the foundation of a trader. And explained in depth
that what happens during a trading session and the symptoms of mental fatigue that causes you to lose.
Moreover what to look for in order to stay concentrated, so that you as a trader can make money.

Lastly, I presented you with a new mindset towards your career outlook. Which will ensure that you stay on the
right path for the long haul and don’t deteriorate from it after a week.

It is absolutely crucial that you take what’s been said so far very serious. If you are serious about making money.
Bringing to practice what you read so far is part of your journey.

All said so far has zero to do with Z pattern trading system.From here on forth I will lay out how to bring
the right mindset together with the z pattern. I’ll cover some basics of trading with this fractal pattern.
What to look for,when to look for it,whether to open position or not and how to manage trades for maximum profits.

By the end we’ll put it all together and get ready to start making money for 2014!
If everything goes well , we’ll kick start a live Z pattern setup run for January.

Cheers

143

Hi All,

I wish everyone a Happy new year!

As promised I’ll post the Z pattern trading guide in the next few days. In order to get set and ready for the coming month.

Wish all the best.

Cheers

144

[B]Z Pattern Trading Guide[/B]

[B]C[/B]ontrary to other methods where you’re being told when to trade, I’ll tell you when not to trade.
If any of the below conditions are present you should not trade or adjust accordingly, in order to be on the safer side;

1- Regarding news releases. Don’t open any positions 30m. prior to NFP, interest rate decisions and/or
accompanied press conferences. If you have any open position risking to run into those news, either close it out or go BE.

2- Only open positions during UK/US trading sessions.

3- If a counter Z Pattern appears on any time frame that threatens your stop loss on an open position.
You’ll have to close the position and trade the reverse pattern or go BE.

[B]I[/B]n order to keep up a trading schedule it is vital that you set out for yourself what timeframes
you want to trade. If you are comfortable with the 8H and 6H charts, then you’ll have to check your
charts 2-3 times a day. Lower timeframes require more chart screening time respectively.

I suggest that you check 8H,6H,4H and if possible 1H regularly.But this is strongly dependent on how
much time you can put into your Trading business. Subsequently you might have more time on one day
than another.

[B]T[/B]he Z Pattern works wonders with strong momentums. So look out for big movements and big candles,they almost always have a Z pattern hidden in them. Monitoring such moves goes a long way with this pattern. A few examples are posted below:

Sample01- Notice the build up before price reversed.

Sample02- Gold prices were already dropping but a strong reversal
created a neat Z Pattern, that gave traders the opportunity to make big gains.

Sample03- Price made rapid gains on the charts and made traders believe
it is going higher, where in reality it was building momentum for a Z Pattern.

Sample04- This was one of my fav. trades. As it gave traders an excellent
opportunity to jump on the reversal and aim for big gains.

[B]O[/B]nce we have a confirmed signal, we’ll always aim for classical TP as outlined
on the first page of this thread. Unless we are anticipating a stronger move and see price targeting
further price levels.

I’ve layed out the very basics of price anticipation and on How to catch bigger moves with the Z Pattern?. I explained the importance of value zones/S&R levels and on how they act like magnets. We’ll expand further on price anticipation with the Z Pattern as it is a technique best learned through live trading.

As a rule of thumb we’ll close half of our position at initial TP level and leave the rest of the position to run
and hit anticipated price levels. This ensures that our position has enough space to breath as it is very
common that price retests entry levels. Another approach is to go BE on a position once it reached initial
TP. And leave the rest to play out. Both approaches have their benefits.

Next I’ll go through [U]Z Pattern Signal Guide[/U]. I’ll cover the basic requirements of a valid Z pattern and
talk about a strong confluence that will keep you on the winning side most of the time.

Cheers

145

Awesome thread. Looking forward to more.

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Z Pattern Signal Guide

The basic requirements of a valid Z pattern are very clear.

-It has to resemble one of the three types
-It has to fit perfecty in a channel or Equidistant channel

Entry,stop loss and take profits are outlined here

There are 2 conditions that invalidate a Z Pattern:

1- Whenever a Z Pattern has been completed through a price gap.
You don’t trade a setup if it has gapped like the sample below;


Relevant Line chart


To be continued…

147

2- Whenever Price moves past your Stop Loss before the trade gets triggered.
But market conditions get volatile at times and we only deem a setup invalid once price moves a few good pips past SL.

In this sample price crossed SL just under a full pip, and it was still a valid trade.

In this sample price crossed more than just a few pip and despite rendering the setup invalid it played out well.

However we always want to minimize our risk and sticking to these two rules is vital.

Cheers

148

[B]Z Pattern Signal Guide[/B] continued

So do we just trade once there is a confirmed setup?

Basically yes, once you followed The Z Pattern trading Guide you are good to go.

However there are strong confluences that will keep you on the winning side most of the time.
Confluences like price anticipations,pinbars and many more.

[B]P[/B]inbar is a single candle that represents markets rejection of a given level.
Where the rejected level is pinpointed with a long wick, usually longer than the body.
Bringing a pinbar and the Z pattern together is a strong confluence that will go a long way with your
trading.

Next we’ll Recap everything mentioned so far and get ready for our January Trading Challenge!
Cheers

149

Greetings, is this a valid z pattern? Its from the pound/yen on the 4hr chart? Looking forward to learning more on this thread.

Best regards,

GBPJPYH4.jpg700×308 11.9 KB

150

My first post here and i see that the blue e-channel is not viewable. Its the z close to the end of the price action?

151

Better screen shot. Thanks for your reply.

GBPJPYH4.jpg700×308 12.7 KB

152

Hi firecapt,

My lines look different, but it was a superb Z pattern setup on your charts. Well spotted!

I’ll post a full Z pattern trading plan hopefully tonight. Moreover, I’ll post live Z pattern trades that I’m taking too
for the full month. This should get you and everyone else started with the Z pattern as live trading is always more productive.

Hope you had a great weekend.

Cheers

153

[B]Recap[/B]

A few days before New Year’s Eve I sparked the question, How come despite all efforts you are
not profitable yet? Many FX tutors try to teach their systems to others but it just fails to generate money
for aspiring traders. You didn’t come to the FX market and it’s related Forums to just spend your time on a good read. You came to make money!

Hence we focused on how to reach the ultimate goal. Which is making money in the FX market. We left behind all the cliche’s about inexperience and other Trader crushing concepts. And presented a way of trading that changed your mindset.

The first thing you needed to learn was, in order to gain is to find out what makes you lose? Mental fatigue, is a very important trade grinder and one of our key components in the upcoming Trading Plan. Mental Fatigue is a result of chemical reactions in your brain originating from stress,dehydration,sleeplessness,workload …etc. We tackled the symptoms and
went into details on how to handle them.

Lastly I talked about how to stay flexible in order to grow your account to it’s fullest potential.
And a guide to your account size that will keep you on the right path of growing it overtime

[I]’‘Whatever your account size is, is the money you are able to risk. Your job is to make money from what is available. As a Trader you are fully responsible for that amount and any losses or gains are dependent on time.Over the time following the so far outlined trading mindsets will lead you to your ultimate goal.’’[/I]

Next I’ll lay out The Z Pattern, Trading Plan.

Cheers

154

[B]Z Pattern Trading Plan[/B]
[U]

Time frames:[/U] 8h,6h,4h,1h,30M

[U]Non tradeable conditions:[/U]

-30 min. to Interest rate decisions,accompanied press conferences and NFP.

-Price gaps

-Outside UK/US trading sessions

-High or Low of the pattern gets taken out by more than a few pips.

[U]Signals:[/U]

-Valid Z Pattern

-Pinbar (confluence)

[U]Trade Management:[/U]

-Close position at Tp (high or low of the pattern) or

-Close half of position at Tp, leave rest to play out. or

-Break even once price reaches Tp level and leave rest to play out.

Note, that trade management will be specified before considering a position.

[U]Critical Situation Management:[/U]

Once a position is opened most traders deem it critical,but it really isn’t.
Here are hypothetical ‘critical situations’ that you might find yourself in and on how to manage them
(It is notable that many FX teachers leave that point out as they believe it is too obvious to mention,
in reality it is one of the key points that makes a trader stick to their trading plan. Because it guides them
through the storm):

-If a counter Z Pattern emerges that threatens your SL.
You have to close your position and possibly trade the new setup.

-If you have an open position that hasn’t moved much and you’ll have to keep it open
overnight or over the Weekend or risking to run into news releases .
You have to go BE,or atleast close half of the trade and leave the rest to play out.

-If a trade gets triggered and runs in a minus straight afterwards.
You have to stay loyal to your trade management and leave the position to play out.

[U]Mental Fatigue Management:[/U]

You should be able to identify Mental Fatigue everytime the below mentioned situations
occur. Moreover on how to handle them.

-Symptom; you notice a missed opportunity, that would have resulted in a hypothetical massive gain.
How to handle;You never made that amount of money. So you are day dreaming, therefore
you’ll have to put effort in catching another trade. There si always another trade!

-Symptom; you open a trade based on your bias and following your system, yet the market turnes completely around and goes south.
How to handle; Your job is to analyze before you open a position, anything that happens afterwards is not anymore in your hands. You are not to blame, rather praised for being a sophisticated trader who sticks to the trading plan.

-Symptom; you see a trade opportunity that doesn’t completely line up. Where your feelings tell you, that this is a sure winner.
How to handle; Regardless of the outcome, you cannot trade based on your feelings and if that means that you let a few winning trades go than that is what you have to do.

-Symptom; you are in a position that you believed is in line with your trading system but after a while you realize that you’ve been wrong. That means your perception of taking a trade at that time was manipulated by either yourself or influence of your environment.
How to handle; A successful businessman cuts losses short when he/she sees a flaw. So should you.

-Symptom; you placed a trade and your Tp has been hit. However price continued for a potential
far bigger gain.
How to handle; You’re responsible for trading within your systems framework. What happens after
your systems edge played out is just part of all those 1000 pips a day movements.And you simply
cannot catch them all.

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[B]1 Month Trading Challenge[/B]

With the correct mindset and the right tools. We’re all set for this month trading challenge.
But what’s the challenge about? How does it benefit you?

The challenge is to follow the trading plan for a full month. Get rid of your misconceptions and stuborness.
Now is the time to start the new year with the Z Pattern trading guide. The goal is to follow the plan through
every trading session. No matter what the market throws at you. And as promised I’ll do my best to share all
Live setups so you can get used to the setups and on how to play them. As there is nothing more productive than learning trading live.

You’ll benefit from learning to adhere to the trading plan and teach your subconcious to tackle all your trading fears and
Fatigues. In order to stay consistent with your trading longterm.

I wish all the best.

Cheers

156

Much thanks for all your efforts with this thread. I know we are not in the two trading times you specified but is this z fit the criteria?

EURUSDH4.jpg700×308 13.4 KB

157

EUR/NZD 8H LIVE Z PATTERN


The 8h chart presented us with a neat Z pattern which is in confluence with a pinbar.

Relevant Line chart


This setup gives a superb risk to reward ratio. My trade management is to
close half of my position half way through and leave the rest to play out.

Note; These trading setups are only suggestions. I only post them for traders that are
studying the Z pattern and are interested to see it in action in order to learn.

Wish all the best.

Cheers

158

Eur/usd live 8h z settup


From this Z Pattern setup, I am anticipating a bigger move. The level that I’m targeting is marked above.
My trade management is to close half of my position at classical TP and leave the rest to play out.

I wish all the best and a successfull trading month!

Cheers

159

Not at all.

It always helps if you post what pair and timeframe you’re looking at.
But from what I can see, there is no valid Z pattern. It seems that point 2 and 4 are not in proportion.

Hope that helps.

Cheers

160

Good afternoon Michael,
I have located the EUR/NZD Z pattern you published this morning, however I am at a loss as to where the Z pattern is starting on the EUR/USD on post 158. Perhaps I am looking in the wrong place but if you could explain the two points at the start of the Z pattern I should be most pleased.
Many thanks for a superb presentation.
Nissanman.