As a newbie trader, you should consider using the ABCD pattern since it is simple and straightforward to trade with. Although it has been around for a while and is basic, it is still successful, which is why many traders continue to use it. With this technique, you will do everything other traders in the market are doing because you feel the trend is on your side. Let’s look at how this one may function.

The ABCD pattern will begin with a powerful upward surge. At this moment, buyers are actively purchasing stock from point A and repeatedly setting new highs throughout the day, which is point B. You should enter the trade at this moment, but don’t pursue it since point B is already at an extremely high price. Furthermore, at this stage, you are unable to determine where the stop loss should be placed, and trading without a stopping point is never a smart idea.

At point B, the traders who previously purchased the stock will begin to gradually sell their stocks to earn a profit, causing the price to fall. It is not a good moment to initiate a trade since you will not predict where the retreat will occur. However, if the price does not fall from a specified level, such as point C, this indicates that the stock is operating with some possible support. This implies that you will prepare the transaction and then place the necessary steps to maximize your profit.

This is a basic method that you may use, making it an excellent choice for novices. There are a few actions you may take to improve the effectiveness of this method. These stages are as follows:

When you scan the scanner for a stock that surges up from its initial point A and achieves a new high for the day or its point B, you should pay notice. You must examine that stock to determine whether the new price may become support higher than what was discovered at the initial point A. If it receives enough support, it will become point C in your trade. Take your time with this since you don’t want to make an assumption and trade too soon.

After you’ve reached point C, you may keep a close eye on the stock throughout its consolidation phase. You may determine the desired share size to work with based on the facts you get during this period. This is a perfect moment to devise an effective stop and exit plan.

When you notice that the price holds onto the support at point C, you should join the trade at or around point C. The aim here is for your selected security to rise to a new support level, known as point D, if not higher.

To use this approach, you should set the stop loss to point C. If the price falls below your predetermined point C at any point throughout the day, you must sell your shares and accept any losses that arise. The closer you can buy the stock to that point C, the better with this technique since you can limit your losses.

If you find that this stock continues to rise, you should sell around half of your holding when it reaches point D. To assist you to generate a profit; you may then adjust your stop higher to your entry point.

If you observe that the objective has been reached or that the price is losing steam, you should sell the remaining shares even if it does not achieve the objective. When the price reaches a new low, it indicates that purchasers have run out of options, and the trend will reverse.

This is a basic method that you can use, but you must understand how to interpret the charts you have and have the patience to join the market at the right moment to earn a big profit. You must also be cautious and keep an eye on the stock the whole time you are trading. The trend might rapidly swing against you, resulting in rapid losses. However, as a novice who can devote some time to the market and your trade, you will discover that the ABCD approach is an excellent choice.