Raising The Bar On Your Forex Day Trading Strategies: The 3 Bar Play Pattern
As you may already know, the 3 bar play is a typical and greatly utilized three-candlestick trend continuation candlestick pattern. In fact, the three-bar play pattern predicts that the market will stay in the prior trend.
This three-bar play candlestick pattern is used by retail traders to forecast the direction of the trend. Then, to profit from the market, they trade in line with the main trend. Trading against market makers will always result in losses in trading; trading with the trend is the secret to success.
Continue reading to find a thorough explanation for trading the 3 bar play chart pattern, along with a guide on how you can use it to your advantage in your day trading routine and increase your bottom line.
How Can I Recognize it?
In fact, recognizing the three-bar play pattern is a very straightforward process as three candlesticks make into a three-bar play candlestick design. A three-bar play pattern is formed by two large bullish candlesticks and a little candlestick. Between the other two large candlesticks, the little candlestick is continually forming.
3 Bar Play Variations
Based on trend direction and candlesticks, there are two different forms of this candlestick pattern. Rising/bullish 3-bar play candlestick patterns develop throughout the emergence of a given bullish trend. It comprises a modest retreat candlestick and two large bullish candlesticks. Within the other two candlesticks is the little pullback candlestick shape. It demonstrates that the market’s positive trend will persist.
During the bearish trend, a falling/bearish three-bar play pattern develops. It comprises a modest retreat candlestick and two large bearish candlesticks. It indicates that the market’s negative trend will persist. To select the finest patterns from the chart, you must adhere to three guidelines.
- At least 60% of the first and third candlesticks’ bodies should be exposed to the wick. The hue should match as well. For instance, both candlesticks in a bearish trend should be red, whereas both candlesticks in a bullish trend should be green.
- A price retreat is represented by the inner candlestick within the larger candlesticks. Compared to the other two large candlesticks, it will be a little candlestick.
- A substantial critical level should always emerge for the three-bar play pattern.
What Can Day Traders Learn From The Three-Bar Play Pattern?
You may become a successful trader by using price action to predict the market maker’s activities behind the chart. Because decision-making is so crucial, the likelihood of losing money in trading increases if judgments are made without a good basis. The likelihood of losing money will, however, go down if you base your choices on an examination of the trader’s activities off the chart. Trading, therefore, involves raising the likelihood of winning by introducing new variables.
When a critical level is reached, the first meaningful bullish candlestick forms, signaling that buyers are in total control and have overcome a substantial important obstacle set by sellers. Retail traders will now attempt to sell from the resistance level following the breakthrough, and the price will provide a little retreat to indicate that the price is declining. Now, there will be more retail vendors on the market. In actuality, though, this was a market-maker trap designed to draw in additional traders and raise volatility.
Once the market makers return, a large bullish candlestick will emerge, signaling that they are in a bullish trend and that the subsequent trend will likewise be bullish. Thus, trading with a positive trend will also result in gains; nevertheless, trading like a retail trader would result in losses most of the time. When market makers support the negative trend, a bearish pattern will also develop.
How can I Trade The Three Bar Candlestick Pattern?
Price patterns in this trading method include breakout, retreat, and continuation. After a downturn, we will enter the market and maintain the position till the trend continues.
Create A Sell-Stop Order
When a strong bearish candlestick occurs at a significant critical level in the form of a breakout candlestick, the price will provide a retreat in the shape of a little candlestick after the breakout candlestick.
Open a sell-stop order below a little candlestick’s low. Once the pricing trend continues, the order will be completed automatically. The trade is then held until the trend reverses thanks to candlestick confirmation following the three-bar play pattern. Otherwise, close the position if a third bearish candlestick does not appear.
Publish A Buy-Stop Order
A small candlestick-sized decline in price occurs after a large bullish candlestick breaks a significant critical level. Open a buy-stop order above the little candlestick’s peak after that.
Close the order and search for another chance if the third candlestick does not have a significantly bullish body or does not match the requirements of the three-bar play. Hold the position until a significant trend reversal if not.
Candlestick patterns serve as the primary building blocks of technical analysis in the trading industry. These price patterns disguise a number of things due to the pricing system that they utilize. You are going to determine whether or not you are going to use a design repeatedly.
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