Thoughts about bat pattern. Some tips and secrets. Part X.

FX:EURGBP   Euro Fx/British Pound
Welcome back, traders. It’s Wednesday and we have another edition of “Thoughts about Bat pattern”. Today we’ll continue discussing bat pattern types. Or… If we treat bats a vivid creatures I’d better say species)).
In my last edition I told you mostly how I discovered types but not about the types themselves. I got lots of feedback and messages asking me to explain the rules of distinguishing the types. So, I decided to start from the very beginning. For the sake of simplicity I will only explain one type per edition.
Let’s get it started then. But first, remember the critiria of distinguishing:
1. Is the pattern bullish or bearish?
2. Is XA straight or not straight? (“S” or “HS”)
3. Is BC             straight or consolidating? (“N” or “F”)
4. Does A and C correlation form a double top/bottom or single top/botto? (“D” or “S”)
5. Is CD straight or not straight? (“I” or “P”)
Now I should explain what I mean saying “straight”. When I say “straight” I mean the move is not in terrupted by a specific size retracement. This size equals min BC             requirement or 0,382AB.
I usually use square             tool to establish the needed range. Then I just drag the square             to the place I neeed to check. Or I clone it. Sometimes I just measure the amount of pips in 0,382AB and then measure the retracements within bat’s legs. Square             tool is the most convinient). See picture 1.
If we have XA leg containing this size retracement then XA is marked “HS”. If we don’t have retracement of this size then XA is marked “S”. The same rule is for CD leg. If CD is interrupted by 0,382AB size retracement it is marked “I”. If not, then it’s marked “P”.
What is straight or not straight BC? It’s just a comparison with AB. Does BC             look more consolidataing than AB or vice versa. Counting bar may help here. If AB has 2 bars while BC             has 5 – we almost always have an “F” type BC             . “F” type BC             form cnannels, triangles, wedges while AB serves as a Flag staff. If AB is consolidation also – then we won’t have “F” type BC             but “N” type. Remember, we are to compare the two legs. They either move with equal speed (sometimes BC             moves faster) or BC             moves slower. First scenario is for “N” type, second is for “F”. You are to train your eyes to see the proportions. Note that BC             cannot be one-bar move (it invalidates the whole pattern).
I use Jason Stapleton’s rules for distinguishing double top/bottom when compare A and C placement.
Ok, suppose you have a bat pattern . To find out what type it is you are to answer the list of 5 questions I enumerated above.
Now you can distinguish type by yourself. Let’s discuss the types in details.
Last time I started discussing HSNSP and SNSP. I briefly described their features. Having lots of requests from my subscribers asking me to explain each type in more details I decided to explain these types once again. From now on I will explain one type per edition....
SEE continuation in comments... Tradingview doesn't allow too long descriptions))
The first type is HSNSP.
Let’s decode the name. “HS” – XA is interrupted by a deep (at least 0,382AB) retracement, we can have more then one retracement. “N” – BC is straight. “S” – A and C don’t form double top/bottom. “P” – CD is not interrupted by a deep (at least 0,382AB) retracement.
First we are to know average success rate of a bat pattern. What results we get if we trade all bats we can find?:
On eurusd it is 53,52%, gbpusd – 52,39%, audusd – 51,53%.
I’ve been testing HSNSP on M5 TF on 4-year period data and got the following features (I will only talk about eurusd, gbpusd and audusd as examples):
On eurusd I found 64, on gbpusd – 53 and on audusd – 53.
Success rate of HSNSP type:
On eurusd it is 56,25%, on gbpusd – 43,39%, on audusd – 58,49%.
As you see this pattern has more than average success rate on eurusd and audusd and less than average success rate on gbpusd. One need not to be a genius to find out that trading HSNSP on eurusd , audusd and not trading HSNSP on gbpusd improves the results.
Ok, mates. That is all for today. Next type I will explain SNSP. If you find the information interesting – click “thumb-up”. If you don’t want to miss the next edition – subscribe. Hope to see you again.
+2 Reply
IvanLabrie PRO Alexander_Nikitin
Very systematic approach, great stuff.
thanks, mate. will keep on working)
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