BC Is Always "Biggest Correction" How Not To Measure XABCD
This mini chart is about how not to measure XABCD formations.
The simple basic approach is to remember that BC is the biggest correction, is a mnemotechnic way to remember it. If there is another bigger correction like EC you should not classify pattern as an XABCD or you should draw pattern differently using bigger correction as a BC leg. In this chart we can use this EC correction as a BC leg, but after market went below E point but the pattern would not be valid anyway so we have to revise the measurements. This is not that important, but I will try to post this revision on the comments.
So to be logical is to respect that on the chart you only will trade from DE point and manage trade to maximize profit as much as you can (using stop loss, trailing it on brake even if you can, etc.)
This is hard, cause many traders do not understand this concept, drawing always next pattern to trade and usually market just goes against them twice or more taking stop losses. Instead of just lose one stop loss, they often lose twice or more. This is usually problem of aggressive male macho traders who wants just to beat the market instead of just being humble enough, and lose one stop loss. This is not to be found so often in female traders as much as in male traders.
Females in trading are more able to just say "I don't know" and males often are saying "I know better" "I want to know fast" "I will know"
The simple basic approach is to remember that BC is the biggest correction, is a mnemotechnic way to remember it. If there is another bigger correction like EC you should not classify pattern as an XABCD or you should draw pattern differently using bigger correction as a BC leg. In this chart we can use this EC correction as a BC leg, but after market went below E point but the pattern would not be valid anyway so we have to revise the measurements. This is not that important, but I will try to post this revision on the comments.
So to be logical is to respect that on the chart you only will trade from DE point and manage trade to maximize profit as much as you can (using stop loss, trailing it on brake even if you can, etc.)
This is hard, cause many traders do not understand this concept, drawing always next pattern to trade and usually market just goes against them twice or more taking stop losses. Instead of just lose one stop loss, they often lose twice or more. This is usually problem of aggressive male macho traders who wants just to beat the market instead of just being humble enough, and lose one stop loss. This is not to be found so often in female traders as much as in male traders.
Females in trading are more able to just say "I don't know" and males often are saying "I know better" "I want to know fast" "I will know"