Price Action Pattern Breakout Strategy: Wedge,Triangle,Channel

2023년 11월 19일

Introducing the Price Action Pattern Breakout Strategy: Wedge,Triangle,Channel 💹🚀

The "Price Action Pattern Breakout Strategy: Wedge, Triangle, Channel" is a dynamic and automated trading strategy that excels in recognizing and capitalizing on breakout opportunities within the realm of powerful price action patterns. It is finely tuned to achieve exceptional precision in detecting three distinct pattern types: Wedge, Triangle, and Channel. This diversity equips you to confidently navigate a wide range of market scenarios and opportunities.

This strategy automates trade entries and exits upon confirmed pattern breakouts, this eliminates human errors in correctly recognizing patterns and prevents emotional decisions. This strategy is designed to work across different time frames, making it suitable for both short-term and long-term traders. Whether you're a day trader, swing trader, or investor, this strategy provides the flexibility you need to thrive in diverse market conditions.

💎 How it Works:

▶️ In this strategy, three price action patterns have been utilized, one of which is the "Wedge" pattern. The Wedge pattern has consistently demonstrated a high level of credibility, typically resulting in sharp and rapid price movements following a confirmed breakout from this pattern. This characteristic makes the Wedge pattern highly noteworthy in our strategy. The second pattern is the "Triangle" pattern, which, depending on its formation, whether ascending or descending, can indicate a strong continuation or reversal of the trend. The last pattern is the "Channel" pattern. The reason for using the Channel pattern is its versatility in various market conditions and its tendency to produce reliable results.

In the snapshot below, you can observe the types of patterns that this strategy is capable of identifying at a glance:



▶️ This strategy employs two types of targeting systems: Fixed Targets and Trailing Targets.

Fixed Targets is the default targeting system of the strategy, incorporating two primary targets: TP1 (Target Point 1) and TP2 (Target Point 2). These targets are thoughtfully adjusted in alignment with specific rules for each pattern. With Fixed Targets, you have the flexibility to designate the position size percentage for your exits at TP1 and TP2. For instance, should you opt to allocate 60% of your position size to TP1, as soon as the price triggers the first take profit level, 60% of your initial position is gracefully closed, leaving the remaining 40% to exit the trade upon reaching TP2.



Trailing Targets represent the strategy's alternative targeting system. With this system, the trailing stop becomes active once the price reaches the specified trigger point. The strategy then exits the trade based on the defined offset percentage and price retracement from the trailing limit.



▶️ This strategy relies on a single type of stop loss, determined by previous pivot points and adjusted based on the trade's direction, whether long or short, placing the stop loss above or below the prior pivot. This stop loss approach has demonstrated reliability when used alongside price action patterns.

In addition to this fixed stop loss, you can specify a percentage buffer, offering protection against potential stop hunting due to market fluctuations. This buffer helps protect your positions from sudden price swings. For example, selecting a 1% buffer means your stop loss will be positioned 1% higher or lower concerning the last pivot, depending on your trade's direction. This added layer of security ensures your trades remain resilient and less vulnerable to market volatility.

▶️ A practical feature of this strategy is the "Risk-Free" option. Once activated, it continuously monitors price movements, and as soon as the price progresses in the trade's direction and surpasses the designated Risk-Free Trigger Point in percentage, the stop loss is dynamically shifted from its initial position to the entry price, effectively making the trade "risk-free." This means that if the trade doesn't go as expected, we exit at the entry point, incurring neither profit nor loss from the trade.

Additionally, you have the flexibility to fine-tune the modified stop loss, positioning it slightly above or below the entry price through the configuration of a specified percentage. This allows for effective consideration of commission fees in your trading strategy.



▶️ Risk management is a crucial concept in trading, playing a significant role in a trader's long-term success. This strategy introduces a unique feature called "Fixed Loss Position Sizing", where upon activation, you can limit the risk exposure to a specified percentage of your capital per trade. Set your preferred risk percentage along with the intended leverage. The strategy independently considers your available capital and designated leverage, determining the position size before executing any trade.

In the case of a stop loss, your loss is limited to the specified risk percentage. For instance, with a $1000 account and a 1% risk set, the strategy adjusts each trade's size to ensure a maximum loss of $10 if the stop loss is triggered. Enabling this feature will ensure disciplined risk management, aligning potential losses precisely with your predetermined risk percentage, contingent upon your total available capital.

▶️ Another feature of this strategy is a sophisticated mechanism called "Loss Compensation". When enabled, Loss Compensation dynamically adjusts the position size after a loss, aiming to recover from previous losses in subsequent trades. This adaptive mechanism continually modifies the position size to mitigate the impact of consecutive losses until reaching a user-defined limit for consecutive loss compensations.

The feature's configurability allows users to set the maximum number of consecutive losses to compensate for and also includes an option to factor in trading fees from prior trades into the compensation calculation. Loss Compensation operates in conjunction with the 'Fixed Loss Position Sizing' setting, ensuring that once losses are sufficiently compensated, subsequent entries revert to the predefined configurations within the 'Fixed Loss Position Sizing' settings.

This advanced tool ensures a stable risk management approach by changing trade sizes dynamically according to past results during consecutive loss periods.

▶️ This strategy incorporates a feature known as the "Counter-Pattern Breakout", altering its approach to wedge, triangle, and channel pattern breakouts. Normally, the strategy relies on standard pattern signals to determine whether to enter long or short positions based on breakout directions.

For example, in an ascending channel or a rising wedge pattern, the strategy typically seeks a short position opportunity upon a confirmed breakout in the lower line, and breakouts from the upper line are disregarded by the strategy. But with this feature enabled, strategy disregards the conventional pattern signals, seizing breakouts from upper or lower lines to open corresponding positions. For instance, in the ascending channel or the rising wedge pattern example, the strategy might enter a long position if the upper line breaks or a short position if the lower line breaks.

This introduces a more adaptive and opportunistic trading style, allowing you to capitalize on price movements, irrespective of the typical signal direction indicated by the pattern.



▶️ This strategy is fully compatible with third-party trading bots, allowing for easy connectivity to popular trading platforms. By leveraging the TradingView webhook functionality, you can effortlessly link the strategy to your preferred bot and receive accurate signals for position entry and exit. The strategy provides all the necessary alert message fields, ensuring a smooth and user-friendly trading experience. With this integration, you can automate the execution of trades, saving time and effort while enjoying the benefits of this powerful strategy.

⚙️ How to Use & Configure User Settings:

To fully utilize the "Price Action Pattern Breakout Strategy: Wedge, Triangle, Channel," it's essential to consider and comprehend the following steps. They play a crucial role in enhancing its functionality and achieving its utmost potential outcomes:

1. General Strategy Settings:

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  Enable Dark Mode if using a dark TradingView theme for improved chart visibility.
  

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  Select the Strategy's Trade Direction: Long, Short, or Both.
  

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  Choose Pattern Recognition Accuracy: High for precise recognition but fewer positions, Low for more positions with slightly less accuracy.
  

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  Enable 'Prevent New Entry on Opposite Signal While In Position' to avoid new trades if the opposite signal occurs.
  

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  Switch to Indicator Mode if solely using the strategy as an indicator or in combination with other strategies.
  

2. Pattern and Pivot Configuration:

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  Consider configuring the Number of Patterns and Pivot Lookback Lengths. Here, you can personalize the pivot lookback lengths for wedge, triangle, and channel patterns across eight different settings on your chart. For lower time frames, consider larger lengths to reduce chart noise. Alternatively, to maintain clarity on your chart, you can disable multiple patterns with different lengths while ensuring at least one pattern remains enabled.
  
  Note that enabling more patterns doesn't always equate to increased potential profit. Sometimes, fewer patterns result in greater profit potential, and vice versa. Experiment with lengths and the number of patterns to determine the most profitable and optimal outcome for your trading symbol and timeframe.
  

3. Targeting System Selection:

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  Choose between 'Fixed Targets' or 'Trailing Targets' for your targeting system.
  

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  'Fixed Targets' is the default setting, operational when 'Trailing Targets' are turned off.
  

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  Set the TP1 Position Size as a percentage, defining the size for TP1, and the rest exits at TP2.
  

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  Optionally activate 'Skip Entry if TP1 is Passed' to bypass entering positions if the price has exceeded TP1.
  

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  Alternatively, opt for the 'Trailing Target' for dynamic exits based on trigger points and offsets. Note that this option disables fixed targets.
  

4. Stop Loss Configuration:

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  Determine the number of candles to consider for stop loss placement based on the last pivot.
  

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  Optionally add a percentage to the stop loss to create a buffer against market fluctuations, guarding your positions from sudden price swings.
  

5. Risk Management Configuration:

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  You can activate the 'Risk-Free' feature, making your trades risk-free by moving the stop loss to the entry price upon reaching a specified trigger point.
  

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  You have the possibility to enable 'Fixed Loss Position Sizing' to limit risk to a percentage of total capital per trade, ensuring prudent risk management.
  

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  You can employ 'Use Real-Time Balance for Each Entry' to precisely calculate fixed loss position sizing according to the real-time balance for every entry.
  

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  The 'Loss Compensation' feature can be activated to automatically adjust trade sizes during consecutive losses and compensate for prior incurred losses.
  

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  Loss compensation continues adjusting trade sizes until it reaches the defined limit of consecutive losses specified in the 'Maximum Consecutive Losses To Compensate' field.
  

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  You can factor in commission fees by specifying a percentage in the 'Include Trading Fees in Compensation (%)' field, providing an option for more accurate loss compensation calculations.
  

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  You have the option to enable 'Limit Compensation to Real-Time Balance' to prevent consecutive loss compensation from exceeding your current real-time account balance.
  

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  It's important to note that for the 'Loss Compensation' feature to operate, the 'Fixed Loss Position Sizing' must be enabled.
  

6. Counter-Pattern Breakout Configuration:

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  In this section you have the option to enable the "Counter-Pattern Breakout" feature to adjust the strategy's approach to wedge, triangle, and channel pattern breakouts. Once enabled, the strategy disregards traditional pattern signals and capitalizes on breakouts from either the upper or lower lines, initiating corresponding positions accordingly.
  

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  Choose between 'Fixed Target' or 'Trailing Target' for your targeting system. If you opt for the 'Fixed Target', set a specific target point as a percentage, serving as the default target for counter-pattern breakouts. Alternatively, choose the 'Trailing Target' for dynamic exits based on trigger points and offsets. Do keep in mind that selecting the 'Trailing Target' option disables the fixed target setting.
  

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  Keep in mind that for standard, non-counter-pattern breakouts, the target point settings in their respective sections remain applicable, distinct from the settings configured for targeting within this section.
  

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  Note that the stop loss configurations are shared across standard pattern and counter-pattern breakouts and can be adjusted within the stop loss section.
  

7. Info Tables:

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  In the info tables section, you can show or hide different tables on the charts. This includes the backtest table, the current balance table displaying available funds, and a table showcasing Maximum Consecutive Wins or Losses. Choose which to display according to your preferences and specific needs.
  

8.Date & Time Range Filter:

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  Utilize the Date & Time Range filter feature to precisely select a start and end date, including time, to filter data within the chosen range.
  

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  When connecting this strategy to a trading bot for automated trades, ensure to set the start date and time to the intended initiation moment to avoid undesired outcomes as this directly affects the real-time balance calculations of the strategy.
  

8. Integration with Third-Party Bots:

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  To automate trading, leverage the strategy's compatibility with third-party trading bots. Seamlessly integrate the strategy into well-known trading platforms by using alert message fields to input commands from third-party trading bots, enabling automated trade execution for both long and short positions.
  

By furnishing these adjustable settings, the strategy empowers you to personalize it according to your unique requirements, thereby bolstering the adaptability and efficacy of your trading approach.

🔐 Source Code Protection:
The 'Price Action Pattern Breakout Strategy: Wedge, Triangle, Channel' source code is engineered for precision, reliability, and effectiveness. Its original and innovative design warrants protection and restricted access, preserving the strategy's exclusivity. Safeguarding the code maintains the strategy's integrity and distinctiveness, providing users with a competitive advantage in their trading endeavors.