Trading with stock patterns can be an effective strategy for short term and long term gains. Even though stock patterns do not always lead to consistent gains, they can certainly be a successful way to invest. The key to pattern trading is to take advantage of closing lows and opening highs, and timing your buy and sell orders to this pattern.
Last month, I was able to have several very successful trades from the Apple stock after following this strategy. I noticed that AAPL would often reach its day’s lowest price towards closing, so I would place a limit buy order in that range. I would then place a limit sell order that was at a realistic price in accordance with the day’s range. For example, if today’s highest price was at 191.50, I would order at a limit that is a little above or below that number depending on whether the trend for the last few weeks has been bullish or bearish. Observing after hours is also a helpful strategy to determine this value. I have noticed that underestimating highs and overestimating lows has always been a safe mindset while trading.
This “wave” pattern that certain stocks go through on a daily basis can be a great opportunity to pursue a long-term scalping strategy that leads to significant gains over a span of a few days to weeks.