We continue deepening the Bow Tie going to see in detail what are the six rules we have to apply to use in practice this particular figure technique. Recall that the Bow Tie is a figure that is formed using three different moving averages, a simple 10-period and two exponentials, one to one to 20 times and 30 times.

The first point is that the three averages must converge and then disappearing with each other, just as if they were to form the shape of a bow tie. In an upward trend that we have an average of 10 times is the greater, then one to 20 and then one to 30 times. The three averages are not crossing over within 5

The second rule to keep in mind is that the minimum value of today must be less than the minimum value that was reached yesterday.

The third rule is the one that tells us to buy when we reach the higher price than today.

In case you can not reach this price, then we must continue to seek a price that is higher than the maximum of the previous day. This is the fourth rule.

The fifth rule comes into play after we made the acquisition. You should set a stop loss below the minimum price the previous day, when this is very far away, then we can set about around 4 or 5%.

Finally we use a technique of trailing stop to follow the trend until we can find a signal of expected output. The Bow Tie is primarily a strategy that allows us to find a point of entry into the market rather than an exit point.