The Gartley 222 is so named because it was a trading technique that appeared on page 222 of the book by H.M. Gartley, ‘Profits in the Stock Market’. It is claimed to be one of the best technical trading techniques that has been found. It is generally considered to have four main attributes that make it a success. These are:
- A specific and pre-defined stop loss level;
- It’s considered to be a trading with the trend technique;
- It has a high profit to loss ratio of four to one;
- It’s commonly estimated that the success rate of trades based on the Gartley 222 is three out of every four trades.
How does the Gartley 222 work?
The Gartley 222 is a reasonably complicated trading pattern, that can be used in bull or bear markets, on intraday, daily, weekly or monthly charts, and has specific signals for both buy and sell. A buy signal on a chart looks somewhat like an ‘M’ and a sell signal like a ‘W’. In more detail the Gartley 222 uses Fibonacci ratios to determine where a chart trend is likely to move.
Suffice to say that I won’t go into the detail of mathematics behind a Gartley 222, but it is a great way to identify likely price trends. I like this analysis on Investopedia if you are interested in seeing the maths behind it or for pattern images.
Gartley 222 or as they are also known Gartley patterns are a great way for figuring out possible price movements, which you can utilise CFDs for trading to profit.