In the example above, the higher time frame trend is bullish and currently pulling back before continuing higher. So, on our lower time frame, we could expect a reversal of the trend to bullish, so it would make sense to be looking for Double Bottom Pattern to get us into a trade in line with the higher time frame trend.
All three of the trades we took met our criteria of a Double Bottom Pattern as best as we could see. There are two lows; most online examples we found to be ambiguous about which, if any, of the lows should be lower.
So we enter the trade on the break above the neckline or the high between the two lows.
With a rather small but reasonable 2R target after two trades, we have taken 2 losses and only by getting into a third, rather aggressive entry are we able to recover the loss, so this becomes a break-even day trading Double Bottom Pattern.
There is one more time this day that a Double Bottom Pattern plays out. You can see it on the far right of the chart after the third trade.
But after losing two trades in a row and then scraping back to break even, would you take this trade?
Would your psychological state be such that you would risk taking a loss again? or would you decide not to take the last trade that would have taken your balance 2R into the positive, only to be frustrated further because of the missed trade?
This is one of the many issues faced by traders who only have a narrow retail view of the markets and follow patterns alone without fully understanding the institutional liquidity and how to capitalise on them.
