Diamond is one of the rare patterns that show up on charts. While this template only appears a few times a year, it doesn’t detract from the importance of learning the template because, if used correctly, it can make a lot of money in one session. Second, understanding the features of diamond pattern formation on a card will provide you with more information on the general principles of technical analysis. How is a diamond pattern created? Diamond is a reflective pattern.
It consists of two main methods:
When should reduction be replaced by increase? At the top of an uptrend when it suddenly turns into a downtrend. So we speak of ascending and descending diamonds depending on the situation.
The trading method with diamond pattern
- Bylaws for Trading Diamond Patterns: Don’t Trade in a Pattern!
- Trading algorithm for buying
The first thing you need to do is identify the diamond on the card. The main problem is not to confuse the pattern with the pattern of the head and shoulders and not to be fooled by some distortions on the map as there may not be the classic shape of a diamond.
So you must first learn to recognize the “diamond” in the diagrams.
Since diamonds are an inverted pattern, it is important to enter the market in the opposite direction to the current trend. In some cases it makes sense to open a buy position:
- With maximum price separation of the reverse pattern above the diamond
- When the candle closes above the specified resistance level
- When price crossed the uptrend and came back from the resistance line
- After passing the stock price of the last significant maximum pattern
Don’t forget the importance of ensuring an open position that will save you from big losses. This insurance is called stop loss. Stop-Loss 2 points below the pattern are set from the bottom of the diamond chart or from the bottom of the last chart. This will help you save money in the short term and expect a lucrative uptrend.
A trading algorithm for sales
You can enter a sell order that is higher than the maximum (see resistance line at the top right). You can also trade successfully by breaking the diamond floor. Knowing what a diamond is and how to spot the pattern on the top and bottom charts will help you spot that pattern on the charts in a timely manner, and the trading features can make you big money, or at least protect your money from inexplicable ones Losses.