Bat Advanced Formation

Bat Advanced formation

BAT ADVANCED FORMATION IDENTIFICATION RULES

Bat Tools:

*Fibonacci retracements (0.382%, 0.5%, 0.618% and 0.886%).

Bat Timeframes:

*The Bat Advanced formation was originally designed as a swing trading strategy. But it also works on lower timeframes.

Bat Tactics:

*Seek to identify 4 market moves that form M-type or W-type formation. Turning points of these formations form the points (X, A, B, C, D) that fulfill the formation. M-type should appear in the bottom of a downtrend. W-type should appear in the top of an uptrend.

Bat rules of engagement: Criteria 1

Bat rules of engagement: Criteria 2

Bat rules of engagement: Criteria 3

The Bat Advanced formation starts with an impulse leg/anchor leg that establishes our X and A points.

Once X and A points have been identified, we then look for our first criteria.

Criteria 1: The market forms the B completion point by fulfilling at least a 50% retracement of the XA leg.

Note: AB move remains valid as long as there is at least a 50% retracement of XA and that it does not touch the 61.8% retracement of XA. Only candlewick is calculated here. Candle close is not important.

If Criteria 1 has been met, then look for Criteria 2.

Criteria 2: The market forms the C completion point by fulfilling at least a 38.2% retracement of the AB.

Note: BC move remains valid as long as there is at least a 38.2% retracement of AB and that it does not touch the 88.6% retracement of AB. Only candlewick is calculated here. Candle close is not important.

Variations: BC move remains valid as long as there is at least a 38.2% retracement of AB and that it does not touch the A. Only candlewick is calculated here. Candle close is not important.

If Criteria 1 and 2 have been met, then look for Criteria 3.

Criteria 3: The market forms the D completion (entry point) by fulfilling a 88.6% retracement of XA.

 

BAT ADVANCED FORMATION TRADE EXECUTION RULES

Bat Entry: Limit order is placed at D completion point.

Warning signs: The patterns require additional confirmation sign (or should be skipped) if there are Gaps or extreme Expansion Bars within the CD leg. 

Bat Target 1: 38.2% retracement of AD leg.

Bat Target 2: 61.8% retracements of AD leg.

Bat Stop placement:  Stop always goes past X. Either 113% XA extension, or 1 ATR beyond X. Some some traders use 10 pips past X level.

BAT ADVANCED FORMATION TRADE MANAGEMENT RULES

  • When the limit order is triggered and price doesn't reverse exactly at the D but exceeds it, then targets should be adjusted. Restretch the fibs from A to the new D and place Target 1  and Target 2 to the new levels.
  • When Target 1 one is attained half of the position should be closed and the stoploss of the remaining half should be placed to breakeven.