Thoughts about bat pattern. Some tips and secrets. Part VII.
Welcome back, traders. It’s Wednesday and we have another edition of “Thoughts about Bat pattern”. Today we’ll talk about a very weird thing called BAMM.
My backtesting, forward testing and real trading pointed to a very interesting phenomenon. I have noticed that when price action violates B-point, it usually goes to 0,886XA to complete the bat pattern. Of course, C-point should be in its place before price action violates B)). For bear bats violation means a Higher High and Higher Close above B. For bull bats – Lower Low and Lower Close below B. This phenomenon was first described by the founder of Bat Pattern, Scott Carney. He called it BAMM. It stays for Bat Action Magnet Move. And it really works as it is called – like a magnet. Well, I repeat the idea: when B-point is violated the bat pattern usually completes.
This gives us an edge, don’t you think? We have a higher probability of one thing happening over another.
How can we trade it? We can trade it as a classical breakout strategy or we can trade it like a 2618. In first strategy we place our limits at B-point after the breakout and wait for a pull back to enter. In 2618’s we stretch fibs from the high/low of double top/bottom to a high/low of a breaking candle and place limits at 0,618 retracement to enter. I use the second method because I truly believe that market respects fibs)).
So, what my BAMM strategy looks like? First I need to introduce a new point. I will call it “E”. It’s the high/low of a breaking candle. Suppose I am tracing a bear bat completion. After C-point completes I wait for a B-point violation. When I have a HHHC-candle I stretch fibs from C-point to this candle’s high (E-point). I place limit orders at 0,618CE and stops at 1,113CE. I use D-point as take profit. I close half of my position at E-point retest and move stops of the other half to breakeven. If price goes higher without triggering the entry, I restretch the fibs from C to a new E and modify my limit. If price hits D before 0,618CE then I delete my orders. I use stop and reverse technique to enter short when pattern completes. It means I sell two units. The first unit closes my long position and the second opens my short. For bull bats everything is vice versa.
Note I use a combination of BAMM and Bat pattern strategies. Let’s look at some outcomes.
If a bat pattern completes my BAMM wins and triggers my Bat entry. Trading Bats along I either have my Bat entries win or lose. Combining with BAMM I have a winning BAMM and a winning Bat or a winning BAMM and a losing BAT. Note that BAMM always wins when pattern completes. If BAMM loses then Bat pattern never completes and I delete my Bat entries.
Ok, that’s all for today. Hope you find my edition useful. If so, press “like” and “follow” and I will give you much more.
See the related ideas link to check my other editions
My backtesting, forward testing and real trading pointed to a very interesting phenomenon. I have noticed that when price action violates B-point, it usually goes to 0,886XA to complete the bat pattern. Of course, C-point should be in its place before price action violates B)). For bear bats violation means a Higher High and Higher Close above B. For bull bats – Lower Low and Lower Close below B. This phenomenon was first described by the founder of Bat Pattern, Scott Carney. He called it BAMM. It stays for Bat Action Magnet Move. And it really works as it is called – like a magnet. Well, I repeat the idea: when B-point is violated the bat pattern usually completes.
This gives us an edge, don’t you think? We have a higher probability of one thing happening over another.
How can we trade it? We can trade it as a classical breakout strategy or we can trade it like a 2618. In first strategy we place our limits at B-point after the breakout and wait for a pull back to enter. In 2618’s we stretch fibs from the high/low of double top/bottom to a high/low of a breaking candle and place limits at 0,618 retracement to enter. I use the second method because I truly believe that market respects fibs)).
So, what my BAMM strategy looks like? First I need to introduce a new point. I will call it “E”. It’s the high/low of a breaking candle. Suppose I am tracing a bear bat completion. After C-point completes I wait for a B-point violation. When I have a HHHC-candle I stretch fibs from C-point to this candle’s high (E-point). I place limit orders at 0,618CE and stops at 1,113CE. I use D-point as take profit. I close half of my position at E-point retest and move stops of the other half to breakeven. If price goes higher without triggering the entry, I restretch the fibs from C to a new E and modify my limit. If price hits D before 0,618CE then I delete my orders. I use stop and reverse technique to enter short when pattern completes. It means I sell two units. The first unit closes my long position and the second opens my short. For bull bats everything is vice versa.
Note I use a combination of BAMM and Bat pattern strategies. Let’s look at some outcomes.
If a bat pattern completes my BAMM wins and triggers my Bat entry. Trading Bats along I either have my Bat entries win or lose. Combining with BAMM I have a winning BAMM and a winning Bat or a winning BAMM and a losing BAT. Note that BAMM always wins when pattern completes. If BAMM loses then Bat pattern never completes and I delete my Bat entries.
Ok, that’s all for today. Hope you find my edition useful. If so, press “like” and “follow” and I will give you much more.
See the related ideas link to check my other editions
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.