Trade Setups, Rules & Trading Strategies dba of FreeTradingVideos.com, Inc. v.1411 Using Technical Analysis to Enter, Manage and Exit Trades
Quote of the Day At Grok Trade, we do not trade Trading Patterns. We trade the breakouts or breakdowns from trading patterns.
105 Bullish Pattern Breakout Rules Bullish Patterns 1. Golden Rules - Bullish. SPX ; Fundamentals ; Trading Pattern 2. Long entry at minor trend line. 3. Confirming volume with breakout. Puts the odds in our favor.
106 Pattern Breakout Order Entry Set Entry Order Above minor trendline. Use a Stop/Limit order Stop = minor trendline. Limit = 5-10 cents more than stop price. Set Stop-Loss Below bar s low by ¼ of trading range Manage based on S/R line; Bars or moving averages. Entry Stop-Loss
107 Position Sizing Risk per share = Entry - Stop loss. Position size = Max $ Risk /Risk per share. Entry Stop-Loss Example Max risk $350 per trade $.63 per share Risk $350/$0.63 = 555 shares
Breakout
Breakout
108 Bearish Pattern Breakdown Rules Bearish Patterns 1. Golden Rules Bearish. SPX ; Fundamentals ; Trading Pattern 2. Short entry at minor trend line. 3. Confirming volume on breakdown Puts the odds in our favor.
109 Pattern Breakdown Order Entry Set Entry Order (sell short) Below minor trendline. Use a Stop/Limit order Stop = minor trendline. Limit = 5-10 cents less than stop price. Set Stop-Loss Above bar s high by ¼ of trading range Manage based on S/R line; Bars or moving averages. Stop-Loss Entry
Breakdown
Breakdown
Practice Order Entry Set Entry Order Above/Below minor trendline. Use a Stop/Limit order Stop = minor trendline. Limit trigger +/- 5 to 10 cents Set Initial Stop-Loss Below/Above bar s low by ¼ of trading range
110 Exercise: Set Orders
111 Set Orders Exercise
STOP-LOSS-- IMPORTANT
112 Stop-loss Rules How a trade is exited is more important than how it is entered. KEY STOP-LOSS RULES: Never trade without a stop-loss. Always calculate acceptable loss (mathematically and emotionally) before trade. Never move stop against trade.
Stop-loss Options 1. Based on bars (static); aggressive-- will stop out faster. 2. Based on moving average(s) Breathing room-- helps catch nice moves. 3. Based on swings; usually too much risk. 4. Based on trendlines; Usually offers acceptable risk 5. Based on trailing stops; Only use when unable to manage trade yourself.
113 Stop-loss on Bars Manage stop after each closed bar ¼ the trading range above/below the closed candle. Tighten stop-loss near target areas, support/resistance areas or after extended runs. Very Aggressive.
114 Stop-loss on MAs Select moving average(s) stock is Honoring. Moving averages move, so stop-loss areas can be subjective. Best practice: Wait for bar to close below/above before triggering exit. Tighten stop-loss near target areas, S/R areas or after extended runs.
Parabolic Run Stops Set stop just under 8ema. Focus on static (closed) candle.
115 Parabolic Stop-loss - 8ema
116 Stop-loss on Swings Stop-loss based on swing highs or lows. Swing is second bar s higher-high or lower-low. Must have two (2) legs. Set stop above/below highest/lowest close of swing---not body or high/low.
117 Stop-loss With Trendline Best practice: Use MINOR trendline to trigger a stop. A trendline needs two points (swings) to draw a straight line. Tip: Wait for a close below trendline before engaging exit order.
118 Trailing Stop-loss Automatic trailing stop setup. Set amount to equal Average True Range (ATR) + 25-33%. Trail with either % or $ amount Remember initial risk -0.75% rule It s better to use trailing stops when you are not able to manually manage the trade yourself.
119 Profit Taking Target Exit Use sell limit order to exit all. Partial Exits Take partial exits (i.e. 33%; 50%) with stop limit order at: Support or resistance areas. Whole numbers. Moving averages. Extended rallies. Adjust Stop-loss share amount for remaining position. Stop out on the rest.
120 Stop-loss Exercise
121 Stop-loss Exercise
122 Extended Range Candle Stop 5x normal trading range. Set stop at just below 50% of candle. Look at 5min chart and look for areas on consolidation; set stop just below.
Stop-loss for Extended Range Candle
This there a trading pattern? TRADING PATTERN QUIZ
Trade Setup yes or no?
123 a. Trade Setup?
124 b. Trade Setup?
125 c. Trade Setup?
126 d. Trade Setup?
127 e. Trade Setup?
128 f. Trade Setup?
129 g. Trade Setup?
133 During Break How Many Trading Patterns?
MULTIPLE TIMEFRAMES
Timeframe Point Higher timeframes trump lower timeframes. Price action is directly influenced by the price action of higher timeframes of a particular security.
Timeframe Point Trades should always coincide with the direction (up/down) of leg/trend of HIGHER timeframe.
130 Selecting Higher Timeframe Decide on a higher timeframe by 5 to 6 times more than timeframe traded. Ex. Swing Trade (daily/weekly) Ex. Day Trade (5min./30min.) WHY? The average (long) leg in a swing is between 5-6 bars.
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132
1-2-3 Punch Gap Trades GAP STRATEGIES
Gaps What is a gap? A break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between.
Gaps Gaps can be caused by: Gaps can be created by a variety of factors including, but not limited to: News. Company earnings announcement. Analyst upgrade/downgrade. FDA decisions. Adjustment to earnings expectations Economic data, and so on.
134 Gaps Axioms Axiom: Gaps tend to want to fill. Axiom: Gaps once filled often retrace the direction of the original gap.
1-2-3 Punch Gap Trades #1 Fade the Gap #2 Pullback Reverse #3 30 min Gap
#1 Fade the Gap GAP FADE STRATEGY
135 Fading Gaps Gap Up Sell Short First lower low. Stop last high+. Gap Down-Buy Long First higher high Stop last low+. Find gap 1% to 5%. #1 Fade the Gap
Trade 1 of 3
#2 Pullback Reversal PULLBACK REVERSE
136 Pullback Reverse Gap Up Now Short Breaks Stop. Reverse to long Stop below Gap Down Now Long Breaks Stop Reverse to short Stop above #2 Pullback Reverse
137 Trade 2 of 3 Fade and Bull Pullback
Powerful Trade Strategy 30-MINUTE GAP STRATEGY #3 30 min Gap
138 30-Minute Gap Strategy 1. At market open. 2. Find stocks that gap more than >1%. 3. SOH for 30 minutes. 4. Analyze market internals. 5. Set order above/below 30min high/low. 6. Manage stop-loss order.
Bearish- 30-minute Gap
139 30 minute Gap Gap Up Now Long Breaks 30 min High. Go long/add to position Manage Stop Gap Down Now short Breaks 30 min Low Sell short/ add to short Manage Stop #3 30 min Gap
140 30-minute Gap Example
Trade 3 of 3 Gap fill play
1-2-3 Punch Gap Trades #1 Fade the Gap #2 Pullback Reverse #3 30 min Gap
141 1-2-3 Fade/Bull Pullback/30-min 3 1 2
Trade 1 of 2 Fade and Bull Pullback
Trade 2 of 2
Trade 1 of 2 Fade
Trade 2 of 2 Fade and Bear Pullback
Trade 1 of 3
Trade 2 of 3
Trade 3 of 3
Bullish 30min. Gap Example
Bearish- 30-minute Gap
Set-and-walk-away REAL SIMPLE STRATEGY (RSS)
142 Real Simple Strategy-Bullish Set BRACKET ORDER (1 buy; 2 sells) Enter confirmed breakout. Set stop below support. Set target exit 2x risk. OCO order. Walk away-- Let it ride. 40% win ratio you make $$$. T E S-L
Unconventional Trade SPECIALIST BEHAVIOR TRADE
Whitetails & Redheads
143 Specialist Behavior 3-Questions 1. Is there a pullback? 2. Is there a whitetail (gap-down run-up)? 3. History of Specialist Behavior. Enter limit order near close of day at ask.
Located after an up-leg. Red Heads Watch for market correction thereafter.
Located after an down-leg. White Tails Watch for market rally thereafter.
Specialist Play
Specialist Play
144 Specialist Play
Identifying Major Market Moves SECTOR ROTATION
145
146 FinViz.com- Groups
Quote of the Day We are what we repeatedly do. Excellence, then, is not an act but a habit. Aristotle
Critical Steps for Swing and Position Traders NIGHTLY ROUTINE
147 Nightly Routine (Swing & Position Traders) Part A Current Positions and Orders 1. Assess the broad markets. Watch Grok Trade broad market review. Check actual indexes or ETF s (SPY, DIA, QQQ, IWM, etc ). Check market internals such as the TRIN, VIX, BANK, etc. 2. In brokerage account, find out What you got stopped in to or out of for either a profit or a loss. 3. Update TradeLog #1. 4. Adjust stops on existing positions. 5. Update TradeLog #2. 6. Assess unfilled orders. Is it still a relevant trade (keep open, adjust or cancel)? 7. Update TradeLog # 3. 8. Check news and upcoming earning on current positions.
148 Nightly Routine (Swing & Position Traders) Part B Future Positions 1. Set up Watch List and Focus List. Watch List ready soon - close to setup. Focus List perfect setup right now at trigger. 2. Scan Existing Watch/Focus Lists. Use 12 month daily for swing trades 5 year weekly for position trading. 3. Use Scanning Tools. Grok Trade vnewsletter Bull and Bear lists. Charting software proprietary scans. The IBD 50 (Investors Business Daily). Online scanners such as Finviz.com. 4. Closely Evaluate Stocks on Focus List. Dig deeper to find confirmation. MACD, Stochastic, Money Flow, RSI, ATR, ADX, PVT, CCI. 5. E.S.T. Your Trade; Added to TradeLog. Set the Entry; Stop; Target with min 2:1 Reward / Risk.
Open Discussion
Homework Scan charts and find: Two Bullish trading patterns Two Bearish trading patterns
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