The Market Strategy has been tested across different asset classes (currencies, , stocks and cryptocurrencies). We recommend that you take the time and backtest the bat patterns strategy before attempting to use this in your trading strategy.
How to Trade the
The market strategy like any other is a four-leg reversal pattern that follows specific Fibonacci ratios. A proper needs to fulfill the following three Fibonacci rules:
- AB= minimum 38.2% and maximum 50% of XA leg;
- BC= minimum 38.2% and maximum 88.6% of AB leg;
- CD= 88.6% of XA leg or between 1.618% – 2.618 of AB leg
Step #1: How to Draw the
I would walk you through this process step by step. All you need to do is to follow this simple guide and see figure above for a better understanding of the process:
First, click on the indicator which can be located on the right-hand side toolbar of the TradingView platform.
Identify on the chart the starting point X, which can be any swing high or low point on the chart.
Once you’ve located your first swing high/low point you simply have to follow the market swing wave movements.
You need to have 4 points or 4 swings high/low points that bind together and form the strategy.
Every swing leg must be validated and abide by the Forex Fibonacci ratios presented above.
Step #2: How to Trade the Bat Pattern: But at the completion of wave D which should satisfy the CD= 88.6% of XA leg
The 88.6% Fibonacci ratio gives you a better risk: reward ratio which is the reason why the market strategy is such a popular trading strategy. The ultimate entry point is the 88.6% which is a very precise market turning point.
We recommend entering as soon as we touch the 88.6% figure because often times and based on our backtesting results we have found out that the strategy doesn’t go much beyond this level.
Step #3: Place the Protective Stop Loss below Wave X
Normally you want to place your protective stop loss below the point X of a . That’s the logical place to hide your stop loss because any break below will automatically invalidate the .
Step #4: How to Trade the – Take TP1 at Wave C and TP2 at Wave A
There can be many ways to manage your trades, but the optimal target for this pattern should be to implement a multiple take profit strategy. For the strategy, we’re going to take the first partial profit once we hit wave-C level and the remaining half once we break above wave-A