Succesfull Trader Handbook

Rick Saddler Trading for Profits, LLC
REV 01/17/2016
All Rights Reserved.
hitandruncandlesticks.com
May not be duplicated or distributed without permission
Copyright 2016
TABLE OF CONTENTS
Page
Introduction
W PATTERN
Appendix 1- Train the Eye Exercise
13
Appendix 2 - Candlestick Patterns and Signals
16
Appendix 3 - Candlestick Patterns and Signals

Confirmation
18

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INTRODUCTION
Trading stocks is one of the most rewarding careers of my life. The path to my successful
trading was not without pitfalls and disappointments. Along the way, I learned to
persevere and pay attention to my mistakes and take action to fix them. I started to earn
profits consistently when I developed a disciplined approach to my trading. This included
designing trade plans for every trade and making changes to my trading approach based
on my notes and observations about my habits and practices.
Before I could design a trade plan, it was imperative that I develop the skill to recognize
price patterns that produced the highest probability of success. A big part of this process
is that I spent many weeks if not months flipping through thousands of stock charts
making note of patterns and how price behaved around these patterns. After studying
these patterns and choosing the ones with the highest probability of success, I focused on
being able to quickly recognize these patterns. Once I thoroughly studied the patterns, I
then developed a trade plan for each of them.
This book provides a framework for the W pattern. The framework will help you to
recognize the pattern and give you a trade plan for each pattern so that you can build
confidence in trading them.
When starting out with new trading strategies it is best to stick with a basic approach.
Once you have mastered the basics, then you can feel free to modify your approach based
on your experiences. There is no one way of trading. Period! We all have to start with a
framework and a basis to develop a disciplined trading approach and then build from
there. That is what this book provides.
I am excited to share the fruits of my labor and provide you with a solid framework to
trading the W pattern.
If you have questions on material in this book or need help with your trading, please feel
free to contact me at Rick@hitandruncandlesticks.com . If you are looking for a
supportive community of active successful traders consider joining my online stock
trading room. You can sign up for a 2 week trial to see if it is right for you. Go to
www.hitandruncandlesticks.com for more information.
Best Wishes on Your Road to Success,
Rick Saddler
www.hitandruncandlesticks.com

Copyright 2016
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TERMS AND CONDITIONS

By purchasing training products and/or follow-up training, or receiving complimentary
educational products and services, from Rick Saddler, hitandruncandlesticks.com or
Trading for Profits, LLC, you understand and acknowledge the following terms and
conditions:
The content provided in these training materials is for your use only. Neither printed or
downloaded versions, nor any follow-up instruction or materials, are to be copied, shared,
sold or distributed to any other individual or entity without written permission from Rick
Saddler. You acknowledge that you are not an agent of, or acting on behalf of, any
seminar or other company that provides competitive training or products.
All content in these training materials, and any related materials provided with them
today or in the future, is for educational and illustrative purposes only and does not
constitute either investment advice or buy/sell recommendations. The author, Rick
Saddler, is not a stockbroker, broker dealer or investment adviser. He makes no
recommendation either to purchase or sell any particular stock, bond, option, equity or
security of any kind. No content, examples, or information provided shall be construed as
a recommendation, solicitation, prediction or advice for your own actions in, and dealings
with, the stock market.
Trading in the stock market involves a high degree of risk and you may incur financial
losses if you engage in such activity. These training courses and commentary were
designed and intended to assist recipients in increasing their knowledge of the stock
market and applying the techniques and strategies learned. Users are advised to apply
prudent risk and money management techniques in order to protect their capital.
Any or all strategies may be subject to change as needed with market conditions. The
dynamic of the markets often requires that traders change their methods and systems over
time. Therefore, what the author is utilizing currently may differ in the future as market
conditions change and/or as the author tests new systems and learns new, more effective
methods. Past performance is not indicative of future results.
These materials represent the authors knowledge and interpretation of the stock market
and trading methods and techniques at the time they were developed or revised. Some of
the content of these materials is subjective in nature. There is no guarantee that these
strategies, techniques, systems or trading plans will suit your trading personality, but
rather are intended to serve as a model.
Reference above to products and services includes, but is not limited to: private training
or coaching; phone or web-based instruction; down loadable or printed eBooks; forms
and trading tools; audio/video products. The above terms, conditions and waiver of
claims are provided and acknowledged at the time of registration for complimentary
products, or the purchase of products and services, either in person or at one of the
following web sites: www.ricksaddler.com, www.hitandruncandlesticks.com.

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APPENDIX 1
Train the Eye Exercise
CHAPTER 5 - W PATTERNS
The W Pattern is usually a bullish reversal pattern. This means that price is in a
downtrend prior to the W Pattern. The W Pattern forms when buyers and sellers negotiate
price so price moves up and down and price stops moving lower. Price then breaks out of
the zigzag pattern called the W and an uptrend begins. The W Pattern is not considered
complete until price breaks out of the W.
W Patterns Visual
There are three common types of W Patterns as shown in Example 5-1
1. Left and Right side of the W have approximately the same lows. This is a strong W
Pattern in that sellers took price down to a low forming the Left side of the W and sellers
took price down a second time to form the Right side of the W. The fact that sellers could
not break the Left side lows indicates that buying pressure is building.
2. Left side of W has a higher low than the Right side of the W. This is the weakest W
pattern in that sellers took price down to a low forming the Left side of the W and sellers
took price down a second time breaking the lows established by the Left side of the W
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APPENDIX 1
before forming the Right side of the W. Buyers are not strong enough to hold the lows
established by the Left side. With this W pattern a pullback from the top of the W is more
likely than with the Ws in 1 and 3.
3. Left side of the W has a lower low than the Right side of the W. This is the
strongest W pattern in that sellers took price down to a low forming the Left side of the W
and sellers took price down a second time but could not bring price down to the lows of
the Left side of the W. A higher low forms the Right side of the W. The fact that sellers
could not break the Left side lows and the fact that a higher low is formed indicates
strong buying pressure.
Four Phases to the W Pattern
There are four phases to the W Pattern.
1. Downtrend - Price is in a definable downtrend. The longer the downtrend, the more
powerful the W pattern and the higher the profit potential.
2. Left Side of W - The Left side of the W forms when price finds support and rallies.
3. Right Side of W - The Right side of the W forms when price drops from a resistance
area after forming the Left side of the W, falls to a support area and then rallies back to
the resistance level.
4. Breakout - The W Pattern is not complete until price breaks and closes above the
resistance level
W Patterns on a Chart
Example 5-2 ACI on the next page shows a W Pattern on a daily stock chart. The four
phases are displayed on the chart.

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APPENDIX 1
Example 5-2 - Arch Coal, Inc. (ACI)
1. Downtrend - ACI is in a downtrend from the beginning of July 2015 until the
beginning of August 2015.
2. Left Side of W - Price finds support around $1 where price forms a bullish piercing
candlestick formation and rallies to a resistance level around $2.13.
3. Right Side of W - Price tests the resistance level and forms a bearish engulfing
candlestick formation and falls to find support around $1.25. Notice that the Right side of
the W is higher than the Left side of the W. This is the strongest W pattern.
4. Breakout - Price rallies off of the $1.25 support level, it forms a bullish morningstar
candlestick formation and then rallies to the resistance level. Price breaks and closes
above the Resistance Level. The W Pattern is now complete.
Trading the W Pattern
The trade plan for every W pattern is the same. The key is to wait until the W Pattern is
complete before entering a trade. Watching the Resistance Level for a breakout is the
trigger for entering a trade.
In terms of Entry, Stop Loss and Exit here is a trade plan.
Entry - Enter a partial or full position on Day 1 on a close above the Resistance Level.
The alternative entry is to enter a full position on Day 2 if price opens above the close of
Day 1.
Stop Loss - Place a hard stop below the Resistance Level. Consider placing a hard
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APPENDIX 1
stop below the candlestick that touched the Resistance Level for the first time.
Exit - Exit the trade when you see candlestick sell signals near a resistance area. For the
resistance area look at price action during the downtrend and draw resistance lines or
boxes at pivot points or price levels where price sold off. To do this look for places where
price consolidated and then broke down. Consolidation patterns are flags, pennants and
boxes. Another exit can be when the trade produces a profit of a certain dollar amount or
percentage.
The Trade Plan for ACI
Example 5-3 - Arch Coal, Inc. (ACI)
1. Entry - Enter a partial or full position on Day 1 near the close (price entry around
$2.20-$2.28) Notice that price gaps above the Resistance Level and forms a hammer
candlestick. This is a bullish signal. Another entry is to enter a full position on Day 2 at
the open (price entry around $2.60-$2.80) since price opened higher than the close on
Day 1. If a partial position was entered on Day 1, consider adding to the position on
Day 2.
2. Stop Loss - Enter a hard stop below the Resistance Level. In this case, the hard
stop is below the close of the first candlestick to touch the Resistance Level (Stop price
around $1.66). Each trader needs to evaluate the amount of risk at this stop level. If there
is more risk than the trader can handle, move on to another trade or raise the stop price to
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APPENDIX 1
a level that meets the traders tolerance for risk. Consider raising the stop on Day 2 to
protect capital. A place to raise the stop could be just below the close of the Day 1
candlestick which is also below the Resistance Line. This stop level should be
considered if the trade is entered on Day 2.
3. Exit - Exit the trade when candlestick sell signals appear around a resistance area.
Some common candlestick sell signals are bearish engulf, shooting star and evening star.
Refer to the Appendix at the end of this eBook for examples of bearish candlestick
patterns. In this trade, there were no bearish candlestick sell signals as price approached
Resistance Areas 1 and 2. We all know that price does not go up forever so in this case
a trader considers exiting the trade at a certain dollar amount or percentage gain in profits.
Taking profits around the $4 level produces a profit of around 35% - 45% depending on
the entry price. Remember you can always enter the trade again using a different trade
strategy.
W Patterns that Fail
As with any pattern, there are times when the W Pattern fails. This means that price
comes close to the Resistance Level and does not break up through it or breaks up
through the Resistance Level and then moves back down through it and the downtrend
resumes. If traders follow the rules for entry and have hard stops, they avoid entering a
losing trade or limit losses. Example 5-4 shows a failed W Pattern.
See Example 5-4 on the next page.

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APPENDIX 1
Example 5-4 - Arch Coal, Inc (ACI) W Pattern Failure
For ACI in Example 5-4, it looks like a W Pattern is forming but price fails to breakout
above the Resistance Level. Traders who waited for the breakout before starting a long
entry, stayed out of a losing trade. You can see why it is so important to follow the trade
plan for this pattern.
When trading the second W Pattern on the long side, where the Right side of the W is
lower than the Left side, be aware that price has the highest probability to pull back.
Since the Right side is lower than the Left side, price has to travel a longer distance to get
to the Resistance Level than with the other two patterns and sellers may be waiting at the
Resistance Level to take profits. If you follow the rules outlined in the trade plan for this
pattern, you protect yourself from a losing trade or limit your losses.
Another way to look at the second W Pattern is to trade it as a failed W pattern. This
means that instead of waiting for a breakout above the Resistance Level, traders wait
for a breakdown below the Support Level to enter a short trade. The rules for this trade
are the same as for the M Pattern.
Looking at ACI again, Example 5-5 below shows a Short Entry Box just below the
Support Level. The Short Entry Box outlines a price area where traders can enter a short
trade. The hard stop for this trade would be somewhere above the Support Level.
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APPENDIX 1
Example 5-5 - Arch Coal, Inc (ACI) Failed W Pattern - Short Entry
The W Pattern as Part of another Pattern

The W Pattern can be part of another price pattern. It is often a part of the Inverse Head
and Shoulders Pattern. The rules for entering the trade are the same in that you wait for
the breakout to confirm the pattern is complete. A W Pattern can fail to breakout if it is
part of another price pattern. Watching for the breakout before entering the trade is
very important.
Summary
The W Pattern is usually a bullish reversal pattern.
There are three types of W Patterns

1. Left and Right side of the W have approximately the same lows.
2. Left side of W has a higher low than the Right side of the W.
3. Left side of the W has a lower low than the Right side of the W.
There are four phases to the W Pattern.

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APPENDIX 1
1. Downtrend - Price is in a definable downtrend. The longer the downtrend, the
more powerful the W pattern and the higher the profit potential.
2. Left Side of W - The Left side of the W forms when price finds support
and rallies.
3. Right Side of W - The Right side of the W forms when price drops
from a resistance area after forming the Left side of the W, falls to a support
area and then rallies back to the resistance level.
4. Breakout - The W Pattern is not complete until price breaks and closes above the
resistance level
A W Pattern trade plan is

Entry - Enter a partial or full position on Day 1 on a close above the Resistance
Level. The alternative entry is to enter a full position on Day 2 if price opens above
the close of Day 1.
Stop Loss - Place a hard stop below the Resistance Level. Consider placing a hard
stop below the candlestick that touched the Resistance Level for the first time.
Exit - Exit the trade when you see candlestick sell signals near a resistance area. For
the resistance area look at price action during the downtrend and draw resistance
lines or boxes at pivot points or price levels where price sold off. To do this look for
places where price consolidated and then broke down. Consolidation patterns are
flags, pennants and boxes. Another exit can be when the trade produces a profit of a
certain dollar amount or percentage.

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APPENDIX 1
This exercise is to help you recognize the pattern when you see it. Focus on the boxed
in area to see the pattern. As part of your own exercise, draw a box around patterns that
you see when flipping through charts. Keep a file of these charts for later study.

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APPENDIX 1

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APPENDIX 1

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APPENDIX 2
Bullish Candlestick Signals and Patterns
Doji
Spinning Top
Kicker
Morning Star
Dragonfly Doji
Belt-hold
Doji Sandwich
Hammer
Harami
Piercing Candle
Tweezer Bottom
Engulf

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APPENDIX 2
Bearish Candlestick Signals and Patterns
Gravestone Doji
Engulf
Belt-hold
Evening Star
Dark Cloud Cover
Doji Sandwich

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Kicker
Hangman
Shooting Star
Tweezer Top
Harami
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APPENDIX 3
Bullish and Bearish Candlestick Signals and Patterns
Remember that candlestick patterns and signals need confirmation before taking action.
This means that if you see a bullish candlestick signal or pattern, look for bullish price
action the next day. This bullish price action can be a higher open or close the next day. If
you see a bearish candlestick signal or pattern, look for bearish price action the next day.
This bearish price action can be a lower open or close the next day.

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Rick Saddler Trading for Profits, LLC

Appendix 1- Train the Eye Exercise

Appendix 2 - Candlestick Patterns and Signals

Appendix 3 - Candlestick Patterns and Signals

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

TERMS AND CONDITIONS

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

The W Pattern as Part of another Pattern

The W Pattern is usually a bullish reversal pattern.

There are three types of W Patterns

There are four phases to the W Pattern.

Rick Saddler Trading for Profits, LLC

A W Pattern trade plan is

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

Dark Cloud Cover

Rick Saddler Trading for Profits, LLC

Rick Saddler Trading for Profits, LLC

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