Flat patterns

Flat Patterns

Flat Patterns

When trading binary options, education is of extreme importance. There is always something new to learn, some new strategy to master, so you should never stop improving your skills, even if you’re already experienced in this business. Flat patterns are something that can help you improve your chances significantly, but you have to be quite a knowledgeable trader to master them. So, if you’re a beginner, we recommend choosing something from our Binary Options for Beginners section. If you feel up to the challenge, however, let’s get right to it and start examining this interesting type of patterns. Since this is a pretty complex topic, you can expect more articles about it in the future. Let’s go!

Flat patterns | Basic features

Flat patterns belong to the group of corrective waves, which immediately tells you a lot about their features and place of occurrence. For example, let’s say you have a 5-wave Impulsive move; this type of pattern can only appear in the second or the fourth move. We must mention, however, that there are many types of flat patterns, and what we will be discussing here is the most basic one, the common flat. It consists of three parts: first we have an upwards move, then a retracement and then an upwards move once again. So it pretty much resembles the letter N. Still, there are some rules this pattern has to conform to if we are to consider it a flat, so stay with us and learn more about them.

Flat patterns | How to recognize it?

If you’re familiar with the Elliott Waves Theory, you know the meaning of the 61.8% limit. In a flat pattern, the second move (retracement) has to be bigger than 61.8% of the first move; otherwise we may be talking about a zig-zag or the beginning of an impulsive move. Remember that this is most often a part of a complex wave, which is why you need a lot of knowledge and experience to master it. Because of this fact, a top-down analysis of the chart is usually advised, so that you can gradually narrow down the timeframe you’re using to conduct your analysis. Remember that flat patterns come in a variety of shapes and sizes, and we will cover them all in our other articles on this website.

Flat patterns | Conclusion

Recognizing flat patterns can help you a lot, but it is by no means an easy task. That’s why you need to be an experienced trader if you want to completely understand how these corrective waves work. We’ve given you some basic pointers in this article, but remember that this is a very complex issue, so you will likely be seeing more articles about it. Browse around our website some more and you will surely find something that can help you further develop yourself as a trader. Good luck!

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FURTHER READING:

1. Apparatus and process for calculating an option (Vergil L. Daughtery, III – 2006)
2. 
How To Make Money In Stocks (William J. O’Neil, 1995)
3. Common Stocks And Uncommon Profits (P. Fisher, 2003)
4. The Ascent Of Money: A Financial History Of The World (N. Ferguson, 2008)
5. Trading By The Minute (J. Ross, 1994)

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Author: Ben Prescott
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