Can You Trade the Gartley Pattern, Also Called the A-B Pattern?

 

 In the myriad of new e-mini trading techniques that pop up on a daily basis, it is surprising that many traders have abandoned the some of the most accurate trades that have been around for decades. Let me say that the A-B (or Gartley Pattern) trade is one of the old reliable set-ups, but the trade takes a fair amount of practice to recognize and execute. To be sure, one of the steadiest traders I knew on the CME was an elderly gentleman whose main tool in trading was none other than the A-B trade. He had this set-up mastered and was a marvel to watch trade.A cursory Google search will turn up a good deal of information on how to day trade the pattern developed by H.M. Gartley in 1933. Elliott wave traders appropriated parts of the Gartley system to augment their e-mini trading methodology (such as it is) and Fibonacci traders have adapted the trades to work under the Fibonacci trading methodology. While I am neither a Fibonacci trader and most definitely not an Elliot Wave affectionado (to say the least) the Fib adaptation can give you some early guidance on movement on the B-C leg. I should also mention that there are no shortages of trader-specific versions of this trade. In short, many people have developed their own distinct style of trading this particular pattern. The bottom line is that it is important to be able to executive the trade profitably, regardless of whether or not it is "according to the book."

 

I usually start looking for a leg that has moved a considerable amount, let's say 50 ticks, though I suppose it is possible to execute the trade on lesser movement. In my trading methodology, I like to see a longer initial leg, which is labeled the A to B leg. I then run a Fibonacci retracement from the onset of the move to the end of the move. I expect the B-C leg to run to an area that is between the 50% to 61.8% and then reverses. From point C-D is the leg I prefer to trade and is often equal to the A-B leg. It's a fairly simply trade to explain but often can become difficult if you overthink the whole set-up. On the other hand, if the retracement (the B-C portion) exceeds the 78% level I consider the trade null.Experienced traders can easily counter with the assertion that this trade is simply an Ambush trade, and they would be correct. I suspect the Ambush trade has its roots in the original Gartley Pattern. There are also a group of traders who are adherents to the "measured move" school of thought and they would be correct, too. Since the A-B trade dates back to 1933, it is my belief that many of these subpatterns I mentioned are variants of the original Gartley pattern.If the trade interests you, I would suggest that you give it a good deal of study before placing it in your daily trading arsenal as it can be a little tricky, at times. However, if you develop a mastery of this trade you stand to profit handsomely.

Would you like to start earning 300% every week? So would I... yet you see this type of hype on many sites these days. I don't promise astronomical returns, but 25 years of Wall Street trading experience has helped churn out solid e-mini traders for 5 years. Come see me trade. Real trading doesn't lie. Click here for a free visit to my trading room and see for yourself.