10. How to Trade the Head and Shoulders Pattern Part 2

[hsiaoboi]

Hi Dave, this may be a dumb question, but:

When you say to enter after the break in the first downwards sloping head and shoulder figure, do you imply that we are supposed to sell short to the target price of the distance between head and the neckline? And vice versa for the reverse head and shoulders?

[rexton57]

where can i get the info on volume? thanks

[AndrewLamb15]

Hey Dave, Great Videos - My question is, why is the stop loss placed at the support level on the head and shoulders pattern? If it is truly a support level then wouldn't that price be as low as the price would go?

[saweaq1]

very good video thank you

[innamoratissimo]

how you draw the neckline??



[russellsaunders]

Hello Dave.

Have to says thanks for these videos. I am new to trading and have made quite a few gaffs, until I started watching and understanding what you are teaching. Above all I have now got my confidence back.

On this strategy, would you advise placing an 'Order to Open' on the break point, (or just below) or is it better to trade manually.

Thanks

[DayTradersWin]

Interesting video - friend and subscribe for day trading, day trader, day trade videos, technical analysis...

[thesexyfinancialshow]

check out gafnn site for traders created by a playboy model from women of wall street ,she's always on it chatting if you need advice!really cool site google gafnn

[deffsoul]

Hi Dave,

Im really enjoying and learning alot from your videos. My question for this video here is for the reverse head and shoulder. After the head there were 2 troughs made before you drew the neckline on the third one. so how did yu kno which one to pick. so is there a specific criteria to follow in drawing a neckline?. I hope yu understand my question and hope to hear back

Iz Ikon

[deffsoul]

Hi Dave,

Im really enjoying and learning alot from your videos. My question for this video here is for the reverse head and shoulder. After the head there were 2 troughs made before you drew the neckline on the third one. so how did yu kno which one to pick. so is there a specific criteria to follow in drawing a neckline?. I hope yu understand my question and hope to hear back

Iz Ikon

[deffsoul]

Hi Dave,

Im really enjoying and learning alot from your videos. My question for this video here is for the reverse head and shoulder. After the head there were 2 troughs made before you drew the neckline on the third one. so is there a specific criteria to follow in drawing a neckline. I hope yu understand my question and hope to hear back

Iz Ikon

[ziggy255]

Hi, What sort of timelines do you use for these patterns. Thanks

[LitheInvestments]

elliot wave pattern is another great pattern particularly for forex

[MrPlender]

Why does the length from head to neckline have to form the target profit?

[n33dw33d3333]

complicated strategies will get u nowhere, sry but this video doesen`t look good for me

[bullworthytrends]

What a bore this guy is!

Don't day trade - buy good stocks at good prices, and build yourself a small fortune!

Search "Bullworthy" for much more practical, interesting, and instructional videos!

[toddinohio]

I've liked this one the best so far of your series...thanks for putting them together.

[youdamion]

This is a good video. Much better than the Double Tops and Double Bottom.

[SuperRC51]

(117.50-113.20)*100=430

[toapeth]

I don't get how do u calculate pts, that is how does 117.50-113.20 = 430 pts?

[timpmarsh]

430 is the same at 4.30

[fishatuna18]

on what time frame would you locate the head n shoulders pattern, typically,

[InformedTrades]

I believe this chart is a 5 minute time frame, however it could be effective on a 15 min, hourly, or daily time frame.

-Brendan

[balrico88]

This might be a dumb question but how

come you put the stop/loss on the shoulder when you enter after pattern been completed. On shoulder pattern hasnt been completed. Doesnt time line on graph go from left to right?

[InformedTrades]

Hey Balrico, If you are shorting the break of the neckline then you would want to put your stop on the shoulder.

If you have more questions about this pattern I would strongly suggest checking out InformedTrades' website as there are tons of threads that talk about this specific pattern.

-Brendan

[mwe1967]

Over what time frame are these patterns covering?

[intelliGENeration]

any timeframe would do i'm assuming.. just don't make it too short.

[Wushudanny]

If you want to buy long term options you look at a longer time frame.

If you are daytrading, you look for the pattern in a short time frame (5min. or something like that)

[Wushudanny]

Of course a daytrader also looks at the longer term patterns, to see if the long term trend is still in his/her favor.

[BordelDeMerle]

Why not buy when the stock breaks resistance on the downtrend just as it moves over its 30 days MA? ( On the right part of the head )

[trem0lo]

Maybe a dumb question but I am still a newbie...

Can you use the head & shoulders method be applied to any type of graph data, short and long-term?

[KevinTheNoobie]

Yes head & shoulders can be applied to almost any type of graph.

[fascinating1964]

Hi Dave great set of videos thank you for posting. Can i suggest (as other video makers do) that you use a live pointer on the screen so that we can follow more clearly what you are saying. Do not know if you can do this on future videos but i am only on no. 10 so perhaps you do so later on.

Anyway thanks again.

[rockofthelast50years]

Well done on the videos dave -

One question though

after the reverse head and shoulders has been completed, do you hold onto the shares until they have increased in value by 430 points? and when you place a stop loss, does it automatically sell your shares when they pass a certain value?

thanks for your help

[pressedsuit]

Great video's Dave. Quesion, why would you not put your exit closer to the neckline as opposed to the shoulder? Using H&S pattern, you'd think that a momentum trend upwards will occur, so as to limit your losses, you might place the stop loss just below or in between the neckline and the top of the shoulder. Possibly you are giving yourself room for some volatility?

[InformedTrades]

Hi Pressedsuit, Thanks for the compliment I am glad you like them. The way that I outline trading the pattern in the above video is the "textbook" way of trading the pattern however there are many who make tweaks to this including the one you have suggested. Best Regards, Dave

[W3HXI]

Hi Dave:

I am sure I am asking a dumb question but how did you come up with the 610 points? I see on the chart you start with 122.10 minus 116.00; how does this translate into 610. Thanks for the great videos even for dummies like me. Cheers, Wayne

[allankuah]

117.50-113.20 = 430points?

[InformedTrades]

No worries. A 1 point move in this market is from .00 to .01. Best Regards,

Dave

[Todge6666]

@W3HXI

Not a dumb question - it is a bit confusing. See it as 610 'pips' if you day/swing trade.

122.10-116.00 = 6.10. Profit in a spreadbetting/CFD market would be 610 pips or points. (If you staked ten bucks a pip on this (buy) trade you'd be looking at six grand coming your way.)

[wojtek0000]

hi dave, can you create a link to the next sequential video right below each video? it would really be helpful.

[InformedTrades]

Hey wojtek000, Unfortunately I don't think there is a way to do that on Youtube however I do have them organized on my website with links below that take you to the next video. This is in the free course section of InformedTrades and this is the basics of trading course. Best Regards, Dave

[Fullperson]

what kind of jobs can day traders get once they are out of college? Or do I have to eat peanut butter till I get 20k? (are the returns of a good day trader worth the insecurities? Will day trading make a good profession considering all the other business jobs one can obtain?)

[InformedTrades]

There are many high paying trading jobs that I would think one would have a much better chance of obtaining if they traded actively during college. This being said there are lots of other professions where one can make money, and perhaps a lot easier than trading, so I think it really just depends on your personality and what you want to do. Best Regards, Dave

[RoarRoar135]

Thanks a lot dave for the videos, they're great! I subscribed.

[InformedTrades]

Hi RoarRoar135, Thanks for the comment and for subscribing I am glad you like the videos. Best Regards, Dave

[aasyraf]

Hi Dave

To measure the Peaks and the Troughs and Necklines, do you take the end of the wick or the closing price (thicker part), with reference to candlesticks??

thanks

[InformedTrades]

Hi aasyraf, This is a matter of preference. Many traders use the close of the candle for all of their analysis as they consider this a truer representation than the high or the low. Other traders will use the high or the low of the candle. If I want to be conservative then I would use the close in this instance and if I wanted to be more aggressive I would use the top and bottom of the candle but again thats just personal preference so make your own decision. Best Regards, Dave

[Commander0001]

Great vid, very clear and precise on what to do,i wish i can download the vid and keep playing it until it sticks in. Thanks Dave

[InformedTrades]

Hi Commander0001, Thanks for the comment am glad you like the video. If you would like to download the video and keep it on your computer I also upload to google video and they will allow you to do this. Best Regards, Dave

[besnikl]

David you're a star!

[InformedTrades]

Thanks! I hope that trading video stars get the girls like rock stars;-)

[STEELLOVER2]

great vid once again

[InformedTrades]

glad you liked it and thanks for the comments they are much appreciated. Best Regards, Dave

[chiadog8888]

Great information.

[InformedTrades]

Thanks very much for the feedback I am glad you liked it.

Best Regards, David