The Strat Patterns

Trader’s Guide

Strat
Pattern’s
 A Strat Trader's Guide

Table Of Contents

Introduction 3

Understanding Candlesticks Range 4

Hammer and Momo Hammer 6

Shooter and Momo Shooter 8

Three Scenarios 10

Strat Combos 12

Timeframe Continuity 28

Triangle They Out 29

Pivot Machine Gun 31

Trading Strategy 33

Summary 37

Thank You So Much! 37

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Introduction
The Strat Patterns trading method, introduced by Rob Smith, is a trend-following approach
that focuses on aligning price movements across multiple timeframes. By trading in the
direction of these aligned trends, it simplifies the trading process and emphasizes that the
"Trend is Your Friend."

This logical, rule-based system is designed to be easy to learn and apply, making it suitable
for both novice and experienced traders.

At the core of The Strat are key concepts such as timeframe continuity, broadening
formations, and actionable signals. By understanding how price behaves and applying clear
rules, traders can make consistent, low-risk, high-reward trades. This ebook will guide you
through these foundational principles, helping you harness the power of The Strat to trade
confidently in various markets.

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Understanding Candlesticks
Candlesticks are a core element of The Strat trading method, providing a visual snapshot of
market activity through the open, high, low, and close prices over a specified timeframe.

What is the Candlestick Range?

The range of a candlestick represents the difference between its highest and lowest prices
during a given period. This range is critical in The Strat trading method as it helps traders
gauge market volatility, strength, and potential future moves. The candlestick range
consists of two key elements: the high, which is the maximum price reached, and the low,
the minimum price touched within the timeframe.

By analyzing the candlestick range, traders can better assess market scenarios such as
consolidation or breakouts. When the price moves within the range of a candlestick without
breaking above or below it, this inward consolidation signals market indecision and the
potential for a shift in direction. Conversely, a range breakout occurs when the price
crosses the previous candlestick's high or low, signaling a possible trend in either a bullish
or bearish direction. The "outside range," where both high and low levels are breached,
signifies high volatility and often points to a significant market shift.

In The Strat, understanding the candlestick range and its behavior provides vital clues
about trend direction, helping traders anticipate and react to market movements with
greater precision.

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Types of Doji Candlesticks

Doji candlesticks signal market indecision and are categorized into three main types based
on their opening and closing positions: Long-Legged Doji, Gravestone Doji, and Dragonfly
Doji. A Long-Legged Doji has equal upper and lower wicks, reflecting a balance between
buyers and sellers. The Gravestone Doji forms when opening and closing prices occur at
the low end, with a long upper wick, often signaling a potential bearish reversal.
Conversely, the Dragonfly Doji appears when the open and close are at the high end, with
a long lower wick, often suggesting a bullish reversal or market indecision.

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Hammer
A hammer candlestick is a bullish reversal pattern that forms when a small body appears at
the upper end of the candlestick's range with a long lower shadow or wick that is at least
twice the length of the body. It typically emerges at the end of a downtrend, signaling a
potential trend reversal from bearish to bullish. In The Strat patterns, the hammer is used
as an actionable signal to help traders identify market turning points.

How to Identify a Hammer Candlestick

To spot a hammer candlestick, watch for these characteristics:
Prior Downtrend: The hammer should appear after a bearish trend, indicating seller
exhaustion.
Small Upper-End Body: The body forms in the upper 30% of the range and can be
either green or red; its color is less important than its position.
Long Lower Shadow: The shadow must be at least twice the length of the body,
indicating that sellers initially drove prices down, but buyers regained control.
Minimal or No Upper Shadow: There may be a small upper wick or none at all.

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Momo Hammer
The Momo Hammer is a trend continuation candlestick pattern characterized by a small
body near the top of its range and a long lower tail. It forms near the high of a preceding
bullish trend or a large bullish candlestick. This pattern signals the potential continuation of
an uptrend and is used primarily for managing trades and trailing stop losses.

Identifying the Momo Hammer

To accurately spot a Momo Hammer, follow these rules:
Formation Location: It should appear near the high of a prior bullish trend or a
prominent bullish candlestick.
Body Position: The body should be within the upper 33% of the total candlestick range.
Color Irrelevance: The candlestick body can be green or red; its color is not critical.

The Momo Hammer often represents a brief profit-taking pullback during a strong bullish
trend, with minimal short-selling pressure. Its formation indicates that the uptrend is likely to
continue after the break of the high, providing traders with an opportunity to hold or add to
their profitable positions with confidence.

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Shooter
The shooter candlestick is a bearish reversal pattern that forms at the top of an uptrend,
characterized by a small body near the lower end of the candlestick and a long upper
shadow at least twice the body length. This pattern signals a shift from bullish to bearish
momentum. In The Strat trading, the shooter becomes significant when the price breaks
below its low, indicating strong selling pressure. It serves as an actionable signal within the
trading framework.

Identifying the Shooter Candlestick Pattern

To accurately identify a shooter candlestick, follow these guidelines:
Previous Uptrend: Ensure the pattern forms at the top of a bullish trend, indicating
potential exhaustion of buyers.
Small Body at the Bottom: The body should be in the lower 30% of the candlestick
range, with its color (green or red) being secondary to its position.
Long Upper Shadow: The upper shadow should be at least twice the length of the body,
reflecting strong buyer attempts to continue the trend, ultimately overpowered by
sellers.
Minimal Lower Shadow: There may be a small or no lower shadow; its presence is less
relevant compared to the upper shadow.

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Momo Shooter
The Momo Shooter is a bearish trend continuation candlestick pattern that features a long
upper shadow and a small body near the lower end of the candlestick’s range. It typically
forms after a series of bearish candlesticks and indicates a potential continuation of the
downward trend.

Identifying the Momo Shooter

To accurately identify a Momo Shooter, adhere to these guidelines:
Formation Location: The Momo Shooter should appear at the low of the previous
bearish candlestick within a bearish trend.
Body Position: The body should form in the lower 33% of the total candlestick range.
Color Flexibility: The candlestick body can be red or green; color is less significant than
its position and structure.

The Momo Shooter becomes "in force" when the price breaks below its low. This breakout
confirms a continuation of the bearish trend. Traders can use this pattern to trail stop losses
by placing a stop above the high of the Momo Shooter while holding the trade. The signal
remains invalid unless the low is breached.

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Three Scenarios
The Strat trading strategy revolves around three fundamental market scenarios that provide
insights into trade entries, exits, and holding decisions. Understanding these scenarios—
Inside Bar, One Side, and Outside Bar—is essential for accurately forecasting market
behavior.

Scenario 1: Inside Bar

An inside bar consists of a smaller "inside" candlestick that forms within the range of the
preceding larger "mother" candlestick. This pattern represents market indecision or a
pause, signaling a potential breakout in either direction. Inside bars typically occur when
market makers take a moment to reassess liquidity and trend direction. Traders can use
this scenario as an opportunity to prepare for trend continuation or reversal based on the
direction of the breakout.

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Scenario 2: One Side (Directional Breakout)

The one-side scenario forms when the price moves in a single direction, either up or down,
breaking only one side of the previous candlestick's range. This scenario 2 reflects trending
market conditions, with a bullish trend indicated by higher highs and a bearish trend by
lower lows. Traders use this pattern to ride the trend, adding positions or managing trades
for maximum reward as the trend progresses. Aligning with the direction of institutional
traders in this scenario increases trade success probability.

Scenario 3: Outside Bar (Broadening)

The outside bar pattern occurs when the price expands
its range, breaking both the high and low of the
previous candlestick. This scenario 3 signifies high
volatility, often resulting from stop-loss hunting by
market makers to create liquidity. An outside bar can
signal a major trend reversal, making it a critical point
for trade exits or adjustments. The pattern frequently
appears as a broadening structure on lower
timeframes, showing expanding waves of price action.

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Strat Combos
Strat combos are a set of trading patterns that help traders spot when trends are continuing
or changing direction. These include patterns like 2-2 Continuation, 2-2 Reversal, 3-2-2
Reversal, 2-1-2 Continuation, 2-1-2 Reversal, 1-2-2 Reversal, 3-1-2 Continuation, 1-3
Reversal, and 3-1-2 Reversal. Each pattern shows how price moves and gives traders
clues to follow trends or prepare for changes, making trading decisions easier and more
accurate.

2-2 Bullish Continuation Pattern

A 2-2 bullish continuation pattern occurs when a 2U (upward directional) candlestick is
followed by another 2U candlestick. This formation indicates that the existing bullish trend
will persist. To identify a 2-2 bullish continuation pattern:
Trend Identification: Look for a series of higher highs and higher lows within the
candlesticks.
Candlestick Range and Break: The next candlestick should open within the range of the
previous 2U candlestick and must break above its high.
Confirmation: A break of the previous 2U candlestick’s high confirms the continuation of
the bullish trend.

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2-2 Bearish Continuation Pattern

A 2-2 bearish continuation pattern forms when a 2D (downward directional) candlestick is
followed by another 2D candlestick, indicating that the existing bearish trend will persist. To
find this pattern:
Trend Identification: Ensure the candlesticks form lower lows and lower highs.
Candlestick Range and Break: The subsequent candlestick must open within the range
of the previous 2D candlestick and break below its low.
Confirmation: A break of the previous 2D candlestick’s low confirms the continuation of
the bearish trend.

2-2 Bullish Reversal Pattern

A bullish trend reversal occurs in the market when a 2D candlestick is followed by a 2U
candlestick at the end of a downtrend. Price will turn from bearish to bullish direction.
To identify the 2-2 bullish reversal, follow the following steps:
1. First, find a bearish downtrend. The price must be making lower lows, or it should be in
an oversold condition.
2. After the last bearish candlestick or 2 down candlestick, there must form a bullish
candlestick or 2 up candlestick showing the strength of buyers. and break of high of
previous 2D candlestick will confirm the bullish trend reversal.

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2-2 Bearish Reversal Pattern

When a 2U candlestick is followed by a 2D candlestick, a 2-2 bearish reversal occurs in the
market. This strat pattern will turn the bullish trend into a bearish one.
Here are the few steps that you should follow to find a perfect 2-2 bearish reversal:
1. Find a bullish uptrend. Candlesticks will be making higher highs and higher lows.
2. After the last 2U candlestick or a bullish candlestick, a 2D or a bearish candlestick will
form. The break of low of last 2U candlestick will confirm the 2-2- bearish reversal
pattern.

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3-2-2 Bullish Reversal Pattern

The 3-2-2 bullish reversal pattern occurs when a 3 outside bar is followed by a 2D (bearish)
directional bar, and then a 2U (bullish) directional bar forms, breaking the high of the
previous 2D candlestick. This pattern signals a reversal from a bearish trend to a bullish
one. To identify this pattern:
Identify the 3 Outside Bar: Look for a 3 bar or bearish engulfing pattern. The color of the
inside candle is irrelevant.
Formation of 2D Candlestick: Next, a 2D bar forms, making a lower low. It can also
appear as a rejection pin bar from a support zone.
Formation of 2U Candlestick: After the 2D, a 2U candlestick forms, breaking the high of
the 2D bar without breaking below its low.
Target Level: The high of the 3 bar acts as the initial target level in this reversal setup.
.

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3-2-2 Bearish Reversal Pattern

The 3-2-2 bearish reversal pattern occurs when a 3 outside bar is followed by a 2U (bullish)
directional bar, and then a 2D (bearish) directional bar forms, breaking the low of the
previous 2U candlestick. This pattern signals a reversal from a bullish trend to a bearish
one. To identify this pattern:
Identify the 3 Outside Bar: Locate a 3 bar that forms at the top of a trend reversal.
Formation of 2U Candlestick: Next, a 2U candlestick forms, making a higher high. It
may also appear as a pin bar, indicating price rejection from a resistance level.
Formation of 2D Candlestick: Following the 2U, a 2D candlestick forms, breaking the
low of the 2U bar without breaking above its high.
Target Level: The low of the 3 bar serves as the initial target level for price movement.

2-1-2 Bullish Continuation Pattern

A 2-1-2 bullish continuation occurs when a 2U (bullish directional) bar is followed by an
inside bar, and another 2U bar forms, breaking above the high of the inside bar. This
signals a continuation of the previous bullish trend. To identify this pattern:

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Identify a Bullish Trend: Look for a series of higher highs and higher lows.
Formation of Inside Bar (Scenario 1): After a 2U candlestick, an inside bar should form,
staying within the range of the previous bar.
Break Above the Inside Bar: The next candlestick must break the high of the inside bar
and form another 2U bar.
Validation: Ensure the price does not break below the low of the inside bar; otherwise,
the pattern is invalid.

2-1-2 Bearish Continuation Pattern

A 2-1-2 bearish continuation occurs when a 2D (bearish directional) bar is followed by an
inside bar, and another 2D bar forms, breaking below the low of the inside bar. This
indicates a continuation of the bearish trend. To identify this pattern:
Identify a Bearish Trend: Look for a series of lower lows and lower highs.
Formation of Inside Bar (Scenario 1): After a 2D candlestick, an inside bar should form,
staying within the range of the previous bar.
Break Below the Inside Bar: The next candlestick must break the low of the inside bar
and form another 2D bar.
Validation: Ensure the price does not break above the high of the inside bar; otherwise,
the pattern is invalid.

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2-1-2 Bullish Trend Reversal Pattern

A bullish reversal occurs when a 2D (bearish) candlestick is followed by an inside bar,
and then a 2U (bullish) candlestick forms, breaking above the high of the inside bar,
signaling a shift from a bearish to a bullish trend. To identify this pattern:
Identify a Bearish Trend: Look for a downward movement with lower lows and lower
highs.
Formation of Inside Bar: An inside bar follows the 2D candlestick, signaling a pause in
the trend. The color of the inside bar is irrelevant.
Break of the Inside Bar's High: A 2U candlestick then forms, breaking above the high of
the inside bar.
Validation: The 2U candlestick must not break below the low of the inside bar for the
pattern to be valid.

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2-1-2 Bearish Trend Reversal Pattern

A bearish reversal occurs when a 2U (bullish) candlestick is followed by an inside bar, and
then a 2D (bearish) candlestick forms, breaking below the low of the inside bar, signaling a
shift from a bullish to a bearish trend. To identify this pattern:
Identify a Bullish Trend: Look for an upward movement with higher highs and higher
lows.
Formation of Inside Bar: An inside bar follows the 2U candlestick, showing a pause in
the bullish trend.
Break of the Inside Bar's Low: A 2D candlestick then forms, breaking below the low of
the inside bar.
Validation: The price must break the low of the inside bar without first breaking its high.
If the low is broken first but the high is subsequently broken within the same
candlestick, the pattern becomes invalid.
This reversal pattern helps traders identify key trend shifts and provides clear entry and exit
points based on the break of the inside bar.

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1-2-2 Bullish Trend Reversal Pattern

A 1-2-2 bullish trend reversal pattern forms when an inside bar (Scenario 1) is followed by a
2U (upward directional) candlestick, and then a 2D (downward directional) candlestick
forms, breaking below the previous 2U candlestick's low. This pattern signals a reversal
from a bullish to a bearish trend and often appears at key levels such as the top of a trend
or resistance zones. To identify this pattern:
Step 1: Identify an Inside Bar (Scenario 1): Look for an inside bar at the top of a trend,
resistance, or supply zone. Ensure it is not forming within a ranging market.
Step 2: Formation of 2U Candlestick: A 2U directional bar should form, breaking above
the high of the inside bar without breaking below it. This often represents a fake
breakout or false move by market makers.
Step 3: Formation of 2D Candlestick: A 2D directional bar follows, breaking the low of
the previous 2U candlestick. This confirms the 1-2U-2D reversal, signaling a shift from
bullish to bearish momentum.

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1-2-2 Bearish Trend Reversal Pattern

A 1-2-2 bearish trend reversal pattern occurs when an inside bar (Scenario 1) is followed by
a 2D (downward directional) candlestick, and then a 2U (upward directional) candlestick
forms, breaking above the high of the previous 2D bar. This pattern signals a reversal from
a bearish to a bullish trend. To identify this pattern:
Step 1: Identify an Inside Bar (Scenario 1): Look for an inside bar at the bottom of a
trend, support, or demand zone.
Step 2: Formation of 2D Candlestick: A 2D directional bar forms, breaking below the
low of the inside bar.
Step 3: Formation of 2U Candlestick: A 2U candlestick follows, breaking above the high
of the previous 2D candlestick. This indicates a reversal from bearish to bullish
momentum, often exposing a fakeout continuation attempt.

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Bullish 3-1-2 Continuation Pattern

A bullish 3-1-2 continuation occurs when a 3U (3 Up) candlestick is followed by an inside
bar, and then a 2U candlestick forms, breaking the high of the inside bar. This indicates a
continuation of the prior bullish trend. To identify this pattern:
Identify a Bullish Trend: Look for a series of higher highs and higher lows, ensuring the
pattern forms within an existing bullish trend.
Formation of 3U Candlestick: Find a 3U candlestick that fully engulfs the previous bar.
Formation of Inside Bar (Scenario 1): An inside bar follows, indicating consolidation or
indecision.
Break of the Inside Bar's High: A 2U directional bar breaks above the high of the inside
bar, confirming the bullish continuation.
Note: The price must not break below the low of the inside bar; otherwise, the pattern
becomes invalid. The entry point is at the break of the high of the inside bar, with the first
target at the high of the 3U candlestick.

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Bearish 3-1-2 Continuation Pattern

A bearish 3-1-2 continuation occurs when a 3D (3 Down) candlestick is followed by an
inside bar, and then a 2D candlestick forms, breaking the low of the inside bar. This signals
a continuation of the prior bearish trend. To identify this pattern:
Identify a Bearish Trend: Look for a series of lower lows and lower highs, ensuring the
pattern forms within an existing bearish trend.
Formation of 3D Candlestick: Find a 3D candlestick that fully engulfs the previous bar.
Formation of Inside Bar (Scenario 1): An inside bar follows, indicating a pause or
indecision in the trend.
Break of the Inside Bar's Low: A 2D directional bar breaks below the low of the inside
bar, confirming the bearish continuation.
Note: The price must not break above the high of the inside bar; otherwise, the pattern
becomes invalid. The entry point is at the break of the low of the inside bar, with the first
target at the low of the 3D candlestick.

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Bearish 1-3 Reversal Pattern

A bearish 1-3 reversal occurs when an inside bar is followed by a bearish outside bar at a
resistance or supply zone. This signals a shift from a bullish to a bearish trend. To
accurately identify this pattern:
Step 1: Find a Resistance/Supply Zone: Identify a key resistance level or supply zone
on the chart.
Step 2: Formation of Inside Bar: Look for an inside bar at the key resistance level,
indicating market indecision.
Step 3: Bearish Outside Bar (3): The next bar must fully engulf the inside bar, making
both a higher high and a lower low, showing that sellers have taken control and a
bearish trend is likely to follow.

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Bullish 1-3 Reversal Pattern

A bullish 1-3 reversal occurs when an inside bar is followed by a bullish outside bar at a
support or demand zone. This indicates a shift from a bearish to a bullish trend. To identify
this pattern:
Step 1: Find a Support/Demand Zone: Identify a key support level or demand zone on
the chart.
Step 2: Formation of Inside Bar: Look for an inside bar at the support level, signaling a
pause or indecision in the bearish trend.
Step 3: Bullish Outside Bar (3): The next bar must fully engulf the inside bar, making
both a higher high and a lower low, indicating that buyers have taken control and a
bullish trend is likely to begin.
Note: This pattern is also known as a bullish engulfing pattern. It is essential to consider its
location on the chart to avoid false signals, as support and resistance zones play a critical
role in filtering out unreliable patterns.

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Bullish 3-1-2 Reversal Pattern

A bullish 3-1-2 reversal occurs when a 3D (3 Down) outside bar is followed by an inside
bar, and then a 2U (upward directional) bar breaks the high of the inside bar, signaling a
reversal from a bearish trend to a bullish trend. This pattern often forms at demand or
support zones and provides high-risk reward opportunities. To identify this pattern:
Step 1: Identify a Bearish Trend: Look for a downtrend characterized by lower lows and
lower highs.
Step 2: Formation of 3D Outside Bar: A 3D outside bar should form at the end of the
downtrend, indicating strong selling pressure.
Step 3: Formation of Inside Bar: An inside bar follows, signaling market indecision and
consolidation.
Step 4: Break of the Inside Bar's High: A 2U directional bar breaks above the high of
the inside bar, confirming the bullish reversal.
Note: The first target is often the high of the previous 3D outside bar.

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Bearish 3-1-2 Reversal Pattern

A bearish 3-1-2 reversal occurs when a 3U (3 Up) outside bar is followed by an inside bar,
and then a 2D (downward directional) bar breaks the low of the inside bar, signaling a
reversal from a bullish trend to a bearish trend. This pattern is more effective when it forms
at resistance or supply zones. To identify this pattern:
Step 1: Identify a Bullish Trend: Look for an uptrend characterized by higher highs and
higher lows.
Step 2: Formation of 3U Outside Bar: A 3U outside bar forms, indicating strong buying
pressure.
Step 3: Formation of Inside Bar: An inside bar follows, showing market indecision and
consolidation.
Step 4: Break of the Inside Bar's Low: A 2D directional bar breaks below the low of the
inside bar, confirming the bearish reversal.
Note: The first target is typically the low of the previous 3U candlestick.

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Timeframe Continuity
In Strat trading, timeframe continuity means aligning trends on higher timeframes, often
using a 2-2 continuation pattern, before executing trades on lower timeframes. This
strategy helps filter out weak setups and focuses on high-probability trades in the direction
of the higher timeframe trend. For example, if a 2-2 bullish continuation pattern is present
on higher timeframes, traders should look for bullish Strat patterns, such as 2-1-2 bullish
continuations, on lower timeframes.

Identifying Higher Timeframes

Higher timeframes differ based on your trading style:
Intraday/Day Trading: If trading on 1M or 5M charts, higher timeframes could be 30M,
60M, and 4H.
Swing Trading: Trading on 1H or 4H charts would use daily, weekly, and monthly as
higher timeframes.
Position Trading: Trading on the daily chart would reference weekly, monthly, and
quarterly charts.

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Triangle They Out (TTO)

The "Triangle They Out" (TTO) pattern refers to broadening price movements against the
major trend, creating higher highs and lower lows that often take out the stop losses of
retail traders. In Strat trading, this concept is crucial for maximizing profits by holding trades
longer and adding positions in line with the main trend. Understanding TTO helps traders
identify market moves that appear to counter the primary trend but are, in fact, opportunities
for continuation.

Understanding Broadening Formations

Price moves through broadening or expanding patterns across all timeframes, forming
higher highs and lower lows. Market makers use these moves to hit stop losses and keep
retail traders out, leading to the formation of minor retracements against the main trend.
Recognizing these movements is essential for trading the TTO pattern effectively.

Identifying the TTO Pattern

The TTO pattern forms through a series of expanding waves that move against the primary
trend:
Wave 1: This wave moves against the main trend (e.g., bearish if the main trend is
bullish).
Wave 2: Engulfs and surpasses the previous wave.
Wave 3 and 4: Each wave expands, with the 4th wave typically signaling a reversal
back in the direction of the main trend. TTOs can extend beyond the 4th wave but are
confirmed after it.
On higher timeframes, TTOs often appear as Scenario 3 patterns (engulfing bars). Lower
timeframes provide more granular details of these movements.

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Triangle They Out (TTO)

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Pivot Machine Gun (PMG)

The Pivot Machine Gun (PMG) pattern in Strat trading forms when the price creates a
series of consecutive higher lows or lower highs, followed by a rapid reversal that breaks
through these levels quickly. This pattern reflects the principles of supply and demand and
provides traders with a high-profit potential by capitalizing on rapid price moves. PMG is
used to identify take profit levels and to increase profit targets when combined with Strat
actionable patterns.

Identifying the PMG Pattern

Bullish PMG Setup: To identify a bullish trend reversal PMG:
a. Find a series of 5 consecutive lower highs in previous candlesticks.
b. Draw a horizontal line across each lower high and extend it to the right.
c. Each lower high serves as a take profit level on trend reversal.
d. Look for a 2D-2U bullish reversal pattern to confirm the trade, ensuring alignment
with timeframe continuity.
Bearish PMG Setup: For a bearish trend reversal PMG:
e. Identify a series of 5 consecutive higher lows in previous candlesticks.
f. Draw a line across each higher low and extend it to the right.
g. Each higher low serves as a take profit level on trend reversal.
h. Confirm the trade with a 2U-2D reversal pattern, making sure it aligns with
timeframe continuity.

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Market Dynamics Behind PMG Formation

The PMG pattern operates on the supply and demand principle:
When the price rises due to increasing demand, it forms a series of higher lows.
As demand is consumed, supply builds up, causing a potential price drop when the
series of higher lows breaks.
Retail stop losses placed below these levels are triggered, causing a rapid price
movement as traders are forced to close positions, adding to the selling pressure and
volatility.

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Trading Strategy
The Strat trading strategy provides a straightforward, structured way to understand and
predict market movements using specific candlestick patterns. By following the key
components of the Strat method, traders can refine their approach, select high-probability
trades, and hold profitable trades longer. Let’s go through each essential component in the
order they’re applied:

1. Identify Timeframe Continuity on Higher Timeframes

Timeframe continuity is the first step in the Strat strategy. This step involves filtering assets
based on the trend direction across higher timeframes. If all selected higher timeframes
(e.g., 30M, 60M, and 4H for intraday traders) are aligned in one direction (e.g., showing a
2U for an uptrend), we’ll only look for trades in that direction on lower timeframes. This
helps avoid trading against the main trend and improves the likelihood of successful trades.

Example: Suppose the S&P index shows a consistent 2U pattern across higher timeframes,
indicating a bullish trend. This alignment suggests looking for bullish setups on lower
timeframes.

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2. Find Actionable Signals on Lower Timeframes

After confirming timeframe continuity, the next step is identifying actionable signals on a
lower timeframe. Actionable signals are Strat patterns (like 2-1-2, 3-1-2, 1-2-2) that indicate
potential reversals or trend continuations. By narrowing down to only the assets that match
our higher timeframe trend, we’re left with high-probability setups.
Example: With the S&P index showing 2U on higher timeframes, we then look on the 5M
or 15M timeframe for bullish actionable signals, like a 2-1-2 continuation pattern or a 1-3
pattern. If found, these patterns strengthen our trade signal in line with the broader trend.

3. Specify Entry, Stop-Loss, and Take Profit Levels

Once an actionable signal forms, it becomes "in-force" when it breaks in the intended
direction (e.g., a 2-1-2 pattern becomes in-force if it breaks the high of the inside bar). This
is when we enter the trade. Here’s how to manage the position:

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Entry Point: Enter the trade as soon as the pattern becomes in-force by breaking the
key level.
Stop-Loss Placement: Place a tight stop-loss on an even lower timeframe, ideally below
a recent swing low for bullish trades or above a swing high for bearish trades.
Take Profit Levels: The initial target is usually the high/low of the pattern, or the next
swing high/low. For extended targets, use the Pivot Machine Gun (PMG) or TTO
patterns to identify further profit-taking opportunities.

Example: After confirming a 2-1-2 continuation in S&P aligned with the 2U higher
timeframe trend, set your entry at the breakout point, stop-loss below a recent low, and use
PMG to maximize the take profit levels as price reaches each successive high.

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Additional Components to Enhance the Strat Strategy

Besides the core strategy steps, the Strat method includes additional components for
further refining trades:
Pivot Machine Gun (PMG): Identifies take profit levels by marking consecutive higher
lows or lower highs. This pattern enhances profit targets, especially during trend
reversals.
Triangle They Out (TTO): Adds opportunities to enter more trades during retracements
by identifying broadening price patterns against the trend, providing potential add-on
entry points in the direction of the major trend.
By combining timeframe continuity, actionable signals, and structured risk management,
the Strat trading strategy offers a comprehensive approach for capturing profitable market
movements with greater precision.

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In Summary
The Strat trading strategy offers a structured and systematic approach to understanding
and predicting market movements. By focusing on key components like timeframe
continuity, actionable signals, and effective trade management with entry, stop-loss, and
target levels, traders can significantly improve their success rate.

Integrating advanced concepts such as the Pivot Machine Gun (PMG) and Triangle They
Out (TTO) further enhances profitability and precision in trading. The Strat’s reliance on
simple candlestick patterns makes it accessible to both beginners and seasoned traders,
helping them align trades with market trends and maximize profit potential.

Master the Strat, and you'll see the market's

story unfold one candle at a time.

Final words from Strat Trading

Congratulations! If you’ve made it this far, you possess the trading spirit and determination
to understand market behavior deeply. We know this guide has given you much to
consider, but remember, knowledge is only as good as its application. Backtesting the Strat
strategy on at least 100 samples is highly recommended to hone your skills and gain
confidence in live trading scenarios.

Click the button below to get access to Strat Patterns indicator

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