The STRAT trading methodology offers a precision-based approach to understanding price action setups. Whether you're just starting out or a seasoned trader, mastering STRAT Combos can drastically elevate your trading game. Here’s a comprehensive breakdown to help you unlock these powerful setups and use them effectively in the markets.
What Are STRAT Combos?
STRAT Combos are specific candlestick patterns that indicate either price continuity or reversals. By understanding these combinations, traders can pinpoint precise entry points, target levels, and identify momentum in both bullish and bearish trends. These setups give you a structured way to approach the market, enhancing your ability to trade with confidence.
Key STRAT Combos to Know:
1. 2-1-2 Bullish Continuation
This setup begins with a pullback leading to an inside bar (1), followed by a breakout to the upside with a bullish bar (2). Entry occurs above the high of the inside bar, with the target being the projected range. Confirm with increased volume for a strong trend continuation.
2. 2-1-2 Bearish Reversal
After a bullish bar, an inside bar forms (1), and a bearish breakout (2) follows. Enter below the low of the inside bar and target the nearest support level. Look for weak rejection wicks to validate the bearish move.
3. 3-1-2 Bullish Reversal
The broadening bar (3) sets the stage, followed by an inside bar (1) and a bullish breakout (2). This pattern is ideal near support zones. Entry occurs above the inside bar, with the target being the projected range of the broadening bar.
4. Rev STRAT 1-2-2 Bearish
A consolidation inside bar (1) is followed by a breakout (2) in one direction, only to reverse sharply in the opposite direction (2). This setup presents a strong reversal opportunity when confirmed by volume and market sentiment.
Additional Tips for STRAT Combo Trading:
Volume Confirmation: Always ensure a volume spike accompanies the breakout or reversal to validate the move.
Use Multiple Timeframes: Combine a higher timeframe analysis for overall trend direction with lower timeframes for more precise entries.
Risk Management: Place your stop-losses based on Average True Range (ATR) or key support and resistance levels to manage potential losses effectively.
By mastering the STRAT combos, understanding candlestick patterns like inside bars (1), trend bars (2), and broadening bars (3), and combining this knowledge with volume analysis and risk management, you can significantly increase your chances of success.
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