: The protective stop loss is placed exactly one tick past the opposite side of the signal bar.
Your entry order is placed as a stop order one tick above (for longs) or below (for shorts) the Signal Bar . The Signal Bar must have a strong closing bias. For a long, it must close near its absolute top. For a short, it must close near its absolute bottom.
The manual simplifies trend analysis. Instead of complex trend lines or ADX indicators, Pat teaches a visual assessment of market structure:
The mantra is, "The trend is your friend." The manual provides strict rules for identifying the trend direction using a 21-period Exponential Moving Average (EMA). If the price is above the EMA, you only look for buys; below, you only look for sells. 2. The Power of Two-Legged Moves Pats Price Action Trading Manual.pdf
The PATs system has built a loyal following over the years, and the manual is widely praised for its clarity and practicality. On Investimonials, multiple users have shared their experiences:
Beyond simple trend following, advanced study involves recognizing complex corrections and "failed" patterns. For instance, a failed second entry can often signal a strong reversal, providing a potential setup in the opposite direction.
Deep dives into specific trade examples and scenarios. : The protective stop loss is placed exactly
Pat’s strategy is distinct in its obsession with the "pullback." A trend is rarely a straight line; it moves in waves. The manual teaches traders to identify the "impulse wave" (with the trend) and the "corrective wave" (against the trend).
PATS is a scalping and day trading methodology designed primarily for the S&P 500 E-mini futures (ES) market, though its principles apply to any liquid asset class. The system operates on a 2000-tick chart. Tick charts are crucial to PATS because they measure transaction volume rather than time, making market congestion and trend transitions highly visible.
The PATs manual’s main differentiator is its and a strong emphasis on understanding market geometry and resting orders. This focus helps traders avoid the paralysis that can come from having too many patterns to remember. For a long, it must close near its absolute top
The manual details several specific setups that form the backbone of the strategy: Price Action Trading Explained - Learn To Trade The Market
The market naturally moves in two-legged cycles. If the market is trending up, a correction will typically consist of two distinct legs down before the uptrend resumes. PATS teaches traders to spot the completion of these two legs to enter at the safest possible moment. 2. Counting Entries (The Bread and Butter)
The market rarely moves in a straight line; it moves in waves. A "Second Entry" occurs when the market attempts to correct against the dominant trend twice, fails, and then resumes the main trend.
: The signal bar must close in its lower one-third, showing strong bearish rejection.
Markets move in channels. The first step in any PATS analysis is drawing accurate trend lines connecting swing highs and swing lows. A valid trend channel requires at least three touches on one side and two on the opposite. Once a channel is established, you trade strictly in the direction of that channel until it breaks. 3. Support and Resistance (Trading Ranges)