The ONLY Trading Guide You’ll Ever Need (Full 10+ Hour Course)

Welcome, ladies and gentlemen, to my free 10 plus hour trading course. And this is a special moment for me because what you're about to watch is something that I've spent hundreds of hours building [music] over the past several years. This isn't a quick upload or a repackage tutorial. This is the most complete beginner to advanced day trading education that [music] you will ever watch. And I am posting the entire thing on YouTube completely for free. And I say this with full confidence. My free course is genuinely better than most paid courses on the internet. And I'm not just saying that because it sounds good. I'm saying that because over 60,000 students have gone through my free course, applied it, and they told me that it changed the way that they trade. Thousands of them became profitable traders for my free course alone, and many of them told me it was far more valuable than any $500, $1,000, or even $5,000 program they bought from another guru. This video is special because it represents years of hard work, years of charting, experimenting with trades, taking winning trades, taking losing trades, losing money, making money, and reverse engineering everything that a beginner needs to know to finally become profitable. And for the first time ever, I'm making it available for the entire world. And I want to tell you why. My name is Emanuel and 5 and a half years ago, my father taught me how to trade. He was my trading mentor. And without him, I would not be a profitable trader today. And everything I teach in this course, every single concept came from the foundation he gave me. My goal is to now continue his legacy and lead the next generation of profitable traders the same way that my dad mentored me. My free course covers absolutely everything. It covers the basics. It covers the fundamentals of price action, strategies, support and resistance, how to use indicators, how to scan, trade management, trade psychology, how to scalp. Literally everything that you can think of is included in this course. This is truly the final blueprint that a beginner needs in order to finally become profitable and remove all of the guesswork from their trading. And I truly believe no other trader on YouTube has released something like this completely for free. Not at this depth, not at this level, and not at this quality. And that's why I'm so excited that you're here today. So, if you're serious about becoming a profitable trader, and you're tired of being confused, you're tired of being inconsistent, and you're tired of piecing together concepts from random YouTube videos, I want you to lock in. I want you to be distraction-free. I want you to take notes and I want you to focus on everything that I'm going to teach you in this free 10 plus hour course. And if you do, you will be unrecognizable as a trader by the end of it. It's crazy because this free course genuinely means so much to me. It's a symbol of my hard work over the past few years and I am confident it'll be the most impactful trading video that you will ever watch. And before we get officially started with the course for a better viewing experience, my free 10 plus hour course is also in my free private community where I'm going to be sending you way more other free resources such as frameworks to build a trading plan, PDF documents of the concepts that I talk about in the course. I even do free bi-weekly live training. So to get access to my private community, which like I said is 100% free, you can go to the description of this video. you'll be able to click on the link and you'll also be able to watch the free course there and get access to all of those free materials. By the way, my goal is to be as transparent and as real as possible because I think that is something that's severely lacking in the trading space. And over the past 12 to 13 months, from November 1st of 2024 to November 29th of 2025, which is today, I've made over $559,000 in day trading profits, which is a cumulative rate of return of over $372% on my entire trading account. This is my Charles Schwab brokerage login. I use Think or Swim platform. And if you're thinking this is a screenshot that I edited or if this is Photoshop, I will go ahead and refresh the page. And if I do that over the past one year exactly, actually, I've made over $481,000. And if we go back to the same dates that I showed you before of November 1st of 2024, there's the $559,000. I actually had a really good November in 2024. And I'm also happy to show you my personal brokerage statements as well. This is from 2025. And I started the year off in January with a really good month. I cleared over $53,000. And then we had the whole tariff situation where the market dropped over 20% and I actually had my best month of the year where I made just about $69,000 in February. And March was also a nice month. It's going to show that I lost money in March. My change in period balance is negative3,000. However, I withdrew $47,000 from my account that month. So, I actually made $44,000 in March, which was also a nice nice month. And my slowest month of the year was actually in June where I only made $10,850. And that is because I was in Europe and I only traded about 20 to 30% of the time. You know, everyone has to take a vacation. So, I was mostly in Europe. I went to Barcelona, Portugal, Amsterdam, and London. I did some trading on the side and ended up making a little bit more than $10,000. And I'm also happy to show you the other months as well. It was overall a super green year. Every single month was green for me. I did not have a single negative month this year. And I'm really looking forward to continuing that trend into 2026. And yeah, the reason I'm showing you this is to be transparent and to show you that I actually make money with trading. I do this for a living. This is my passion. This has been my career for over 5 years and everything that I'm going to teach you in this free course I personally use on a daily basis to make money. Let us begin this free course by talking about the fundamentals of trading. Let's talk about the basics. And let us first define what trading actually is. And trading is when you're buying and selling a financial asset. Whether it's a stock or a crypto or it's gold or silver or oil or wheat or it's an options contract. You're buying and selling a financial asset based on technical analysis and price action. This should not be confused with investing. I see a lot of people confuse the two. A lot of people think that trading is investing. It is not. As investors, we try to determine the intrinsic value of the asset that we're looking at. And based off that intrinsic value, we can determine whether the asset is overvalued or undervalued, right? And in order to figure out the intrinsic value, most of us look at the financial documents of a company. We look at balance sheets, income statements, we're looking at industry trends. We're looking at the news. We're reading analyst reports. We're understanding the cash flow the company has. We're understanding the assets that's on the balance sheet. We're looking at the fundamentals of the company and or of the asset that we're analyzing. And based off those fundamentals, we determine is it overvalued or undervalued. Right? When you think of investing, you should think of Warren Buffett. What he does is invest in companies long-term and that's how he makes his money. He is not trading. When you are trading, you are solely looking at price action. You're not looking at any financial documents or news or fundamentals or anything. We solely look at the price action. And in this course, I'm going to dive really deep into what price action is. And there's going to be other videos that go over company fundamentals and investing and the real differences between technical analysis and fundamental analysis. But a short little summary, price action is the study of how prices move. And what we do as traders is we analyze how prices have moved in the past. We analyze what prices are doing right now, how they're moving currently to analyze, to speculate, and to ultimately make money on what prices are going to do in the future. That's what we focus on as traders. We focus on technical analysis and price action. That is it. A question that I get asked all the time is, is trading gambling? And in order to answer this question, we need to define what gambling is? And by definition, gambling is betting on the uncertain outcome of a future event. Meaning, you don't know what's going to happen in the future, and you're betting that prices are either going to go up or prices are going to go down. By definition, trading is gambling. However, the connotation around gambling is that it's impossible to become successful as a gambler, I guess. And I don't really like to call trading gambling. I think trading is really similar to poker or blackjack in casinos, where if you're a really good poker and blackjack player, if you understand what you're looking for, if you have an actual edge, you're going to make money. And the same thing applies for trading. And in trading, just like in blackjack, we shift the probabilities of the trade in our favor by developing what is called an edge. And you've probably heard that before. Every trader has his or her edge. And more likely than not, you have multiple edges that make you a profitable trader. So, let's define what an edge is. That is a statistical or behavioral advantage in the market. An edge is an advantage. It's something that makes you better than other traders who are unprofitable. It's the reason why over hundreds of trades, you're going to make more money than you lose. You have to understand that an edge, a statistical advantage is played out not over five or 10 trades. It's played out over thousands of trades. And that's why it's so important to develop a sample size for your trading so you can actually extract data and then use that data to refine and build your trading plan which by the way I'm going to cover all of this later on in the course. Okay. So you need to focus on building an edge and that edge is going to make you money longterm after you take hundreds and hundreds of trades. So very good. So, is trading gambling? You could call it gambling because you're betting on an uncertain outcome of a future event. You don't know if prices are going to go up or down and you're betting on that price are going to go up by going long or that prices are going to go down by going short. And the way you shift the probabilities in your favor is by developing an edge. So, that begs the question, what types of edges even exist? And there's a bunch of different edges. Number one, technical edge. Technical edge is an edge when it comes to reading the price action, mastering the chart setups, understanding the relationship between the buyers and the sellers, understanding volume, understanding support and resistance, understanding what separates a highquality setup from a lowquality setup, understanding how to calculate reward to risk. So, you're only picking the setups that have a high likelihood of making you money. There's also a psychological edge. This is a trader that's able to control his or her emotions. They're able to stay disciplined and they're able to execute on their plan when even when it feels uncomfortable. And this is when you're able to control yourself. You're able to also control your impulses and you're able to consistently follow your plan without having your emotions impact you. Next, we have a riskmanagement edge. And there is a really kind of funny expression that I've heard in trading, and you'll have to excuse my French, but most traders eat like birds and [ __ ] like elephants. And essentially what that means is a majority of traders don't make much money on their winning trades when they're right, but they lose a lot on their losing trades when they're wrong. And as a trader, you want to reverse that outcome. You want to be capitalizing heavily on the trades where you are right. On the winning trades, you want to be making a disproportionate amount of money. And then on your losing trades, you want to focus on limiting your losses. And that's the riskmanagement edge. And I'll tell you straight up for me, the reason I am such a good trader today, I am really good at risk management. I rarely have losing weeks. I've never had a losing month in my entire career. Of course, I have losing days, but I'm really good at limiting my losses on my losing trades. And I'm very good on capitalizing on my winners, but specifically I'm really, really good at managing my losses. I'm a really good loser, and that's what makes me a really good trader. Now, of course, I do have the other edges as well, but I would say my riskmanagement edge is probably the most important edge in my own trading. And a lot of the times you could have an excellent strategy, you could be an excellent trader, but if your risk management sucks, you're never going to become profitable, right? Your first priority as a trader is to actually preserve the capital in your account. You'll learn about that later in the course. Number four, execution edge. This is the edge where you have a really good trading plan. You are very good at reading price action. You're good at identifying high quality setups. You're good with the risk management, but you're also excellent at executing it and being able to actually make money off of your trading plan in real time. You know how to quickly execute on your platform and get out of trades really quickly, enter into trades really quickly. You're able to manage trades in real time without making emotional decisions. And it's your ability to act on your plan without hesitation. And in this course, by the time this video ends, you will know exactly how to turn every single one of these edges that I just talked about into a system. You're going to learn the specific details that you need to know to master every single one of these edges. So hopefully it can transform the way that you trade forever. And that's exactly why I created this free course, to give you an edge in your technicals, with your psychology, with your risk management, and with your execution. Let's go over the different types of markets that you could trade in in 2026. And for me personally, I day trade stocks. I don't trade crypto. I don't trade forex. I don't trade futures or options. I am day trading stocks only. And I trade small caps, midcaps, large caps. I even trade penny stocks. And I personally trade on a margin account. Now, the one thing about trading on a margin account is that the PDT rule is going to apply. In the PDT rule, the pattern day trader rule, it requires you to have at least $25,000 in your margin account if you want to take more than three trades per week. If you have less than $25,000 in your margin account, then you're limited to only three trades per week. Now, the reason why a margin account is so useful is number one, on a margin account, I can go long and I can go short. on a cash account, which is a very common alternative. You cannot go short on a cash account. And there are also other limitations that I'm going to talk about later in this free course. And with a margin account, you also have access to 4x additional um intraday buying power. What that means is if I have $25,000 in my margin account, I could day trade with $100,000 worth of capital. If I have 30K in my account, I could trade with $120,000 worth of capital. And you might think that's really risky. Or maybe you're associating the word margin with someone that you know who lost a lot of money. But margin is only risky if you don't know how to control your risk. If you just yolo every play, you have no idea what margin is. You don't know how to size your positions. Of course, it's risky. If you don't know what you're doing, yeah, trading is going to be risky. Anything is going to be risky if you don't know what you're doing. You can't imagine driving a car without knowing how to drive, right? Obviously, that's going to be risky, but that's why you learn the proper precautions. You learn how to drive a car effectively and that's when you go out on the highway, right? So, same thing with trading. There are ways to minimize your risk and for you to control your risk, which is, you know, that's exactly why you're watching free course. I'm going to teach you how to do that. Now, I personally trade on a margin account because I'm able to take more than three trades per week. And of course, I have way more than $25,000 in my account. How However, when it comes to how much money you need to start day trading, you only need about 25,000. In fact, I would probably add a little bit just to have a buffer because if you go below 25,000, even if it's 24,999, you'll be below the 25K and you'll be limited to three trades per week. So, I'd recommend having maybe 25,500 in your account or 26,000 or 27,000 just so you have a small little buffer so you're not constantly worried that your account balance is going to fall below $25,000. I also think that day trading stocks, what I do, it's a lot easier and more straightforward to manage your risk. In fact, I think it's overall way more beginner friendly than trading options or futures or even crypto. I really think day trading stocks is the most beginner friendly and it's the easiest to actually control your risk as long as you know what you're doing. Okay, number two, crypto. This is when you're trading Bitcoin or altcoins such as Ethereum, Salana, or other coins. With crypto, you could use actually an insane amount of leverage. There are some platforms that allow you to trade with up to 200x leverage, which is just insane. Um, I don't really recommend day trading crypto. I think it's way better for swing trading. Now, the thing is with crypto, it's a 24hour market. And what I don't like about trading in a 24-hour market is that I really like that as a day trader, the stock market closes at 400 p.m. Eastern. Meaning once 4 p.m. hits, the market's closed. I can't trade anymore. And I like that. I like, you know, once 4 p.m. hits, I'm out of all my positions as a day trader. I don't have to worry about overnight risk. I don't have to worry about, oh, well, you know, where's my stock opening at the next morning, am I up or am I down? I don't worry about that. 4 p.m. hits, I'm done with the day, and I don't think about trading unless I'm journaling or reviewing my trades until the next morning, which I like that. With crypto, it's a 24/7 market. So, you might be waking up in the middle of the night and checking on your positions and just constantly being stressed because there's crazy fluctuations in the crypto markets. I don't like that. Okay? I like trading in a market that closes at 4 pm Eastern. Okay. However, you know, there's a lot of volatility in crypto. A lot of traders do like that. What I don't like about crypto as well is that during slower times like during bare markets or where or when the market's not doing anything or when Bitcoin is just chopping around, right, volume can kind of dry up and it can be pretty slow. So, yeah, crypto is a whole another animal. I personally like day trading stocks, but I do invest in crypto. I'm a big big believer in Bitcoin and Ethereum long-term. Next, futures. I'll be honest with you guys, I don't have a lot of futures experience, but that's like trading NQ, ES, oil, gold, and other leveraged instrument instruments. Um, it's very prop firm heavy. A lot of people who trade futures use prop firms, which I'm also going to cover in this course. And I think trading futures, it's easier to scale your profits once you're really good at trading futures. However, it's there's a lot more of a learning curve to get started because I think it's a lot harder to manage your risk with futures compared to day trading stocks. And that's why I recommend for most beginners to just, you know, start with stocks and later on you can move on to futures. And yeah, I mean, I think I don't have much experience with it. So, you could still apply a lot of my education that I teach in this course towards futures. I just don't personally trade it. Uh, forex, never trade forex. Never will. I think it's a really heavily manipulated market. I just don't recommend trading forex. Why would you trade forex when you could trade, you know, stocks or futures or crypto? Just stick to those. Personally, I day trade stocks. But it doesn't matter. You could apply everything that I teach in this video towards all markets. So, if you want to use my education for futures, great. You can do that. You want to use it for crypto, great. You could do that. For stocks, fantastic. That's exactly what I trade. Even if you want to trade forex, no problem. You can still use all of these principles and fundamentals and price action concepts that I'm going to teach for your trading. Let's go over the tools, software, platforms that you need in order to trade. And I actually have personal experience with a lot of the platforms I'm going to talk about. So, I'm going to give you my honest opinion. Number one on my ranking is Think or Swim by Charles Schwab. This is actually the platform that I personally use for my own day trading. And whenever you're creating a Schwab account, make sure you enable margin and you enable think or swim access when you are applying. And let's go over the pros first. Number one, the execution is overall really good. It's a great platform to scalp stocks on. You know, of course, every platform is going to have delays and it's going to be slow from time to time, but overall, Think or Swim is consistently fast with the execution, and I think the platform overall is actually pretty intuitive. At first, it's going to seem really strange because it looks a lot different than other trading platforms. However, once you get the hang of it, it's super intuitive. I really like the charting. It's great for shorting, has a really good hard to borrow list, and the hard to borrow fees aren't too expensive. So, you have a lot of different options when it comes to shorting stocks. Um, and it's available internationally, right? It's available almost everywhere around the world. In Europe, it's available in South America. It's available in certain parts of Asia. It's available in certain parts of the Middle East. So, if you're watching this and you're not from the United States, I would just do a simple Google search, look up, is Schwab available in my country and if it is, go to the Schwab international site and you should be able to find your country and you'll be able to apply for an account. And overall, I love using Thinkorswim. Another huge pro is they have excellent price improvement and that's when they give you a better fill than you were supposed to get on your trades, which could be a massive edge on some of your trades. So, the price improvement is excellent as well. I would say the biggest con is the fact that the paper trading platform has limitations. So, if you're a beginner and you don't want to jump into real money right away, you want to paper trade first, the paper trading platform honestly kind of sucks. there's huge delays. The execution isn't good. The fills aren't good. So, that's the one con I would say. Funny enough, all those delays that exist with paper trading, they don't exist with real money. And in fact, it could even be looked at as a pro because I've actually had students that paper traded on Think or Swim for a few months. They became profitable paper trading. And once they transitioned into real money, they actually performed even better with real money because paper trading on Thinker Swim is almost like trading on hard mode. It's like playing Mario Kart on max difficulty where it's super super hard, right? Um but then once you go to real trading and you don't have those same delays and you actually have really good execution and good fills, trading feels a lot easier. So, it's kind of actually a good thing where you can kind of trade on hard mode as a beginner and then when you go to trading with real money, it feels a lot easier execution-wise. So, I highly recommend Think or Swim. I don't even have an affiliate link. I'm just recommending what I personally use. Next is Trade Station. I used to use Trade Station back in the day. Trad Station is solid. I would say it's just a worse version of Think or Swim. The execution is actually great. The platform can be a little bit glitchy when it comes to charting, but overall it's actually really similar to Think or Swim. It's a great platform. The biggest con for me personally is the fact that the short list is limited. You can't short as many stocks on Trade Station as you can on Think or Swim. And locating shares can be super annoying. So, if you're choosing between Trade Station or Think or Swim, I would just use Think or Swim personally. Now, let's go over Weeble. I've never used Weeble actually. However, I've had students that have used Weeble. It's a pretty good platform execution-wise, but similar to Trade Station, the short list is limited. I don't think they really have that good of price improvement. And the customer service is non-existent. Okay? So, if you're stuck in a trade and you want to call their front desk, no one's going to pick up. Yeah. This the customer service just isn't good. So between Weeble Trade Station and Thinker Swim, I would obviously use Think or Swim, but Weeble is still a solid option. Interactive Brokers, it has commissions. So if you're in a country where no other, you know, you don't have access to any of these other platforms and Interactive Brokers is fine. However, it has commissions and I know the platform isn't very intuitive. Uh, next we have Lightseed and there's a bunch of platforms similar to Lightseed also like Cobra Trading and the only issue with Lightseed is that they have big commissions but you know the execution on Lightseed is amazing. So the execution is amazing and I think it's actually pretty complicated for a new trader. That's another con. And you could also customize your routing on Lightseed. So, I would say if you're a trader who's trading massive size, where you don't really care about paying 500 to 2,000 a day in commissions, you're trading massive size, you're going for 20, 30, 40, 50k days, light speeded is probably your best option. However, the commissions are super rough, but the execution is excellent. So, that's what I would recommend. Personally, I would just go with Think or Swim Platform out of all of these. And if you if you're international, I think you could actually pair interactive brokers with tradation if you don't have Thinkorswim available in your country. And if you're a beginner or unless you're trading massive size, I just wouldn't use Lightseed, right? Because the commissions are just overwhelming. Other tools, you could use tradingview.com. You don't need to purchase a paid account. I use the free account. I don't use this for my personal day trading. I use this after trading hours if I want to review charts. I use this to look at crypto. I use this on my phone whenever I want to check out a chart. Um, it's a really easy charting software. I don't think there's a need to pay for premium though. You could also use a trading journaling software where you could actually link the platform where you execute your trades to this software and your trades would actually carry over and the software would give you feedback based off your win rate or your reward to risk and it can give you very valuable information about your trading. So, it could be super useful. The most popular one is Tradezella. Now, I don't personally use one right now. However, I've had a lot of students that have used Tradezella and other ones and they found it really beneficial for their trading. I would just do a Google search and look up best trading journaling softwares and from there just pick the one that makes the most amount of sense for you. And when it comes to actual trading setup, my biggest recommendation is to just keep it simple. Now, you can trade on a laptop. That's fine. When I started, I actually traded on a small little Dell laptop. However, I do recommend a 25 in plus monitor just so you do have the screen space and I'd recommend either a desktop computer or you could actually link your laptop to the monitor. You need a mouse and a keyboard and of course you need a great Wi-Fi con uh connection. That's all you really need. Okay, there are a lot of traders that have like crazy curved screens. They have five different monitors and it looks like a really complicated and professional and fancy setup. You don't need that. Okay, especially as a beginner, if you have a 25-in monitor, a normal computer, and a good Wi-Fi connection, and a mouse and a keyboard, that is all you need. Start small, and then you could upgrade your setup as you become more profitable. Let's talk about order types and order execution. Whenever you are placing a trade, you need to submit an order. And the best way to think about this is the orders that you place is kind of like the language between you and your trading platform. And you're going to be placing different types of orders depending on the trade and depending on what you want to accomplish. So you're going to be placing different orders if you're going long or short or whether you want to buy at a certain price or exit at a certain price. And it's really important to master the language between you and your trading platform so you could trade quickly and you could trade efficiently. So, let's go ahead and talk about all of these types of orders so you can become a master and you could really understand the types of orders that you want to execute. So, let's go and start with a market order. And this is probably the most basic type of order. And by definition, a market order buys or sells a stock immediately at the best available price. So, if you're trading on your platform and you press market buy, you are going to get filled right away at the best available price. If you're in it long, let's say you're in a position, it's long, it's moving up, and you want to sell that position as quickly as possible, you would place a sell market order and it would fill your position at the best price available, the current price. So, this is an order that you would use if you want to get out as quick as possible. you want to exit right now, you would place a market order to sell if you're long, or you would place a market order to cover your shares if you're in it short. So, let's say, for example, Apple is trading at $180, and you place a market buy order. That order is going to fill you right away. However, it's not going to fill you at your desired price. It's not going to fill you or it's not guaranteed to fill you at your desired price. Meaning, let's say the price is at 180. You press a market order to buy. Maybe by the time your order executes, the price moves and it'll fill you either at 180.02 or maybe if it's really moving fast, it's going to fill you way late and it's going to fill you at 18020 or maybe it'll fill you, you know, fill you below that price where it fills you at $1 179.98 or $179.90. And that is really going to depend on how quickly the stock is moving. It's going to depend on the spread which you're going going to learn about later. It's also going to depend on the liquidity. So this is like saying I'll pay whatever the current price is. Just get me in right now or get me out right now. Okay. So what does a market order really mean? So you're going to get really fast execution because it's going to fill you immediately whether you're getting in or whether you're getting out. However, it's not guaranteed to give you the best price. For example, let's say Apple is moving up and it's starting to consolidate. And let's say I want to buy it when it hits 180, like this example, right? And let's say as soon as it hits 180, that's your trigger to buy it. And you place a market order to go long, right? By the time your order executes, maybe the stock has already moved really quickly and it's here by this point where where it really moved up and you place an order at 180 market order to buy, but it ends up filling you at let's say 18030, right? That could happen where you get filled 30 cents late than when you actually placed the order. And of course, that's going to depend on liquidity. It's going to depend on the spread and it's going to depend on how quickly the stock is moving. So that's the downside. you're not always going to get the best price. You can't control the price that you get filled at because it's just going to fill you at the best available price, right? So, for me personally, I rarely use market orders to enter into trades. Pretty rare. I would say maybe 5% of the time, I'm going to enter into a trade using a market order. However, I always use market orders to exit my trades, right? Um, even if it's a stop-loss, right? A stop-loss order actually triggers and executes like a market order. And I'm going to explain that in a second. But whenever whenever I'm exiting, I'm always using a market order to exit. I rarely use market orders to get in because whenever I'm entering into a trade, I want to make sure I get my desired price. I don't want to get in late. Okay? Because if I get in late, let's say I want to get in at 180. I place a market order right here and it fills me a 18030. Well, I'm 30 cents late. That's going to impact the size of my stop-loss, which you will learn about later in this free course. And it's also going to impact my reward to risk, which you will also learn later. So, yeah, when it comes to market orders, I don't like to use them to get into trades. However, I always use them to exit out of trades, and it's going to fill you at the best available price. However, you're not guaranteed to get the exact price that you want. So, this is more for instant execution. Let's go over what a limit order is. A limit order lets you set the maximum price you're willing to pay when it comes to going long or the minimum price you're willing to sell when you're going short or when you are selling. So the best way to explain this is to go over an example. So let's say you want to buy Tesla at $240. However, the current price is $245. So, let's say Tesla is basing and right here it's $245. Okay, great. However, you think that's a little bit too expensive. You don't want to pay $245 for your shares of Tesla. You want to pay $240 or less, right? You don't want to pay anything more than $240. So, you're okay with paying 240. You're okay with paying $235 for Tesla. You're okay with paying $200 for Tesla. You just don't want it to be more than $240. Great. In this example, you would set a limit order at $240. So, you'd place a limit order right here. Let's say at $240. So, $240, you place a limit buy. Okay, I'll just write limit buy. Fantastic. So now the only way that you would get filled on your limit buy order is if the prices went down to either 240 or below 240 where maybe let's say Tesla reported earnings and the earnings weren't very good at all and the stock gapped down overnight had an overnight change in price to the downside and opened lower the next day. Let's say it opened lower at 230, right? Would it fill your order? Well, is 230 less than 240? Is it a better price than 240? Yes, it is. 230 is less than 240. It's a better price. So, therefore, you would get filled, right? If it gapped to 220, would you get filled? Well, 220 is less than 240. You placed a limit by 240. So, you want to pay 240 or better. 220 is better than 240. Yes, you'd get filled. Let's say it opened instead at 242. Would you get filled? Would you? And the answer is no, you wouldn't because you only want to buy this at 240 or lower. 240 or better. So, you will not get filled. So, you would get filled at 240s, 230S, 220s, right? And you know the downside is, right, you control the price. You control exactly where you want to get in. However, you might not get filled, right? Maybe the prices don't go down to 240 and instead the prices just continue going higher. In that case, you're not in the trade, right? So, this is like telling your broker, I want you to buy these shares. I want you to buy this stock, but only if it gets cheap enough. Okay? And the same thing applies if it's the opposite way and you're going short. It's the same exact thing. Okay? So, when it comes to limit orders, I actually use limit orders 95% of the time when I'm entering my trades. And I place limit orders on the current ask price when going long. And I place sell limit orders on the current bid price when going short. So, there's probably going to be a video later on in this free course that really explains the bid and the ask. But basically, you know, when it comes to trading, it's basically kind of like an auction. You have a bid and you have the ask, right? The ask is the best price the sellers are willing to sell at and the bid is the best price [clears throat] the buyers are willing to buy at, right? So, for example, let's say the bid is at $7 and the ask is at $701. So, right off the bat, the difference between the bid and the ask is called the spread. So, $701 minus $7 is 1 cent. That means there's one cent spread here. That still sounds confusing. Don't worry. I'm going to cover it later in this free course. Okay. So, if I want to buy a stock, I'm going to get failed where where well, who am I buying from? I'm buying from the sellers. And the sellers, well, their price is at 701. The sellers are willing to sell this stock at 701. So, when I'm buying, I'm going to get filled on the ask. I'm going to get filled on the ask price. Whenever I'm selling, well, who am I selling to? I'm selling to the buyers on the bid. So if I sell something, I'm going to get filled on the bid at $7. So for example, let's say I buy a,000 a,000 shares of stock, right, at this current price. Well, I'm going to get filled for where I'm going to get filled on the ask. So I buy a,000 shares. I'm going to get filled at 701 when I'm going long. Okay. Now, if I was to sell immediately, let's say the price doesn't move and I just sell this immediately. Well, if I sell, I'm going to get filled on the bid, right? So, now I'm selling a,000 and I'm going to get filled at $701. Oh, I'm sorry. I'm going to get filled at $7. $7, not 701. I got filled at 701 when I bought it. And then when I'm selling it, I get filled on the bid. So, I get filled at $7. So, how much am I losing here? Well, right off the bat, I'm losing 1 cent, right? Because $71 when I got in long, I got filled on the ask. When I sold it, I got filled on the bid. So, I lost one cent in this trade, right? 1 cent on a,000 shares is $10. So, that means by just me getting into this stock and without it moving, I'm automatically down $10. I'm automatically down one cent on every single share that I bought. Coincidentally, one cent is also the spread. And that's exactly why spread is significant. That's why we want to trade stocks that have tight spread, right? Because if [snorts] I'm buying, let's say, something that's super spready. Let's say instead this is at 707. This is at $7, right? So the the bid is at $7. It's the best price the buyers are willing to buy at, but the ask is at 707. This is the best price the sellers are willing to sell at. That means what's the spread? Well, $707 minus $7 is 7 spread because that's the difference between the bid and the offer. That means if I was to buy this stock, where would I get filled? 1,000 shares. I want to buy it. I would get filled on the offer. So, I'd get filled at 707. And then let's say the price doesn't move and I want to sell it. Okay, I sell a,000. Where would I get filled? At $7. So, how much did I lose here? I lost 7 cents per share. How many shares did I buy? A,000. So I would lose $70. So basically the spread is significant because that's the exact amount that you're down whenever you enter into a trade without it moving, right? Like if you enter into a trade right away, you're down whatever the spread is. You're down 1 cent times how many shares you have or in this case down 7 cents because the spread is 7 cents. Does that make sense? So that's actually a little bit of a crash course when it comes to spread. It's not really important yet. You don't need to know that yet, but just so you have some background. Let me go ahead and erase this. So let me explain how I place my limit orders. Okay, let me just erase all this. Okay, so when it comes to placing my limit orders, and I'm looking and by the way, you would use the level two to un to see the bid and the ask, but most platforms are going to tell you this. So again, this is the bid. This is the ask. Okay. So if I get in, let's say the bid is at $7 again and the offer is at 71. When I buy it, where am I going to get filled? I'm going to get filled on the ask. So what I will do whenever I'm getting in is I place a buy limit order on the current ask price. So if I want to buy this right now and I don't want to pay more than 701, I will place a buy limit order at 701. Okay? And whenever I want to sell, I can either go market, right, which is I'll just get out immediately at the best price available, or I could place a sell limit order on the bid. So whenever I'm buying, I'm buying on the ask. Whenever I'm selling, I'm selling on the bid. So that's what I would do, right? [clears throat] So if I'm going short, I want you to think about it. If I'm going short, what kind of order am I going to place? Well, I'm going to be placing a sell limit order where a sell limit order on the bid. Okay, in that case, I'm paying that this price or better. So if the price goes down, I'm not going to get filled late, right? Or let's say I place a buy limit order. Where am I going to place that? on the ask, I'll place it at 701. In that case, if prices jump to 702 or 703 or 704, I'm not going to get filled late because it's a limit order. I'm only willing to pay that or lower. So, if I place a limit order at 701, that means I only want to get filled at 71 or better. So, I can get filled at 71 at $7 or $6.99, right? But I'm not going to get filled at 702. And that's what ensures I won't get filled late. So that's exactly why I place buy limit orders on the current ask or whenever I'm going short, I will place a sell limit order on the current bid. Now, that honestly might sound a little bit confusing, especially if you're a beginner. Don't worry, that's fine, okay? If this still sounds confusing, don't worry. I'm going to cover it later in this free course. Uh, but that was basically a crash course on how the bid and the ask works and how spread works and how I place my orders. I play I place buy limit orders on whatever the current offer is to make sure I get filled here or better and I don't get filled late. Whenever I'm going short, I place sell limit orders on the bid price. And that ensures I either get filled at $7 or better and I don't get filled late if the price continues to drop. Okay, hopefully that makes sense. And my recommendation is to just practice this. Okay, and let me know in the comments if you do have any more questions about this. Happy to clarify anything. Fantastic. Let's go ahead and talk about what a stop order is. And you've probably heard of this because I'm sure you've heard of stoploss. Well, a stoploss order is a stop order. Okay, so by definition, a stop order becomes a market order once the price hits your stop level. Most people use this to protect themselves from big losses. So, hypothetically, you bought Nvidia at $120. Okay, Nvidia triggers a breakout and you bought it at 120 right here and you set a stop order at 115. Let's say your stop order is at 115 right here. And this is a sell stop order. Okay. If the price drops to 115, it will trigger a market order to sell your shares. That's really important. So, let's say that again. If the price drops to 115, that means the price drops to 115, it will trigger a market order to sell your shares. So, it will exit you as soon as your stop order is hit when prices hit 115. Now, keep in mind because it will trigger as a market order, it's not guaranteed to fill you at exactly 115. It might fill you at 115. It might also fill you at 11480 or 11490 or 11510 or 11515, right? Because it's a market order. We already talked about that a market order gets you out at the best available price. And we already talked about that if it's an illlquid stock or if there's a lot of spread or if it's a really fastmoving stop um stock, it might not fill you at the exact price where you placed your order. Okay? So, if you place a stop order at 115 and it triggers, it might not actually fill you at 115. It will fill you at whatever the best available price is when the order executes, which could be 11490, it could be 11460, could be 11510, right? It completely depends. Okay, so let's go over another example. Um, you could also place stop orders when you want to enter into a trade. So, let's say Nvidia is at $120. Okay, let's erase this example. Let's say Nvidia is already at $120 right here. Okay, but you want to enter the trade if the price hits 130. Meaning, let's say it's at 120. You don't want to get in at 120. You want to get in at 130 right here. Because let's say, I don't know, if it hits 130, it officially triggers a weekly setup and there's a breakout on the weekly time frame. You only want to get in if prices hit 130. So, what you can do is you place a buy stop order at 130. And this will only trigger if prices move up and hit 130. Okay? So, you could place, you know, stop orders when it comes to protecting yourself where you're in it long and you place a stop-loss order wherever your stop loss is. Or maybe you're in it short. Maybe it's a breakdown, right? You get in right here at 120 and let's say your stop loss is at 130. Hypothetically, you would place a stop loss at 130 and then if prices go back up to 130, it would exit you out of your position. Okay? So, you could either do it to exit your trades or you could even do it to enter into your trades where like in this example, prices are at 120, but you only want to get in if prices hit 130. So, you would place a buy stop order at 130 and it would only execute once prices move from 120 to 130. So, this could help you limit losses, but it may execute slightly below your stop due to volatility, right? We just talked about that how because it's a market order, you're not guaranteed to get filled at the exact price that you want, right? And same thing with this. If you place a buy stop order at 130 and prices move up and hit 130, it might not fill you at 130. It might fill you at 12950. It might fill you at 13030, right? Again, depending on how fast the stock is moving. So, this allows you to place orders ahead of time if price hits a certain level, right? So, if prices go to 130, it'll fill my order and it'll it'll trigger me into the trade. Or let's say it's a short, right? Let's say this is 100. You only want to get in if prices hit 90, right? In that case, you'd place a sell stop order at 90 and then prices need to go down to 90 to fill your order and you would get executed here as a market order. Okay? So, you could use stop orders either to exit out of trades by using by using just a traditional stop-loss order like probably what you've heard of, you know, that we just showed where you're in a trade, you place a stop-loss. If it hits your stop, you're out of the trade to protect yourself from further downside. Or you could even use it to enter into trades where you want prices to move up to a certain key level to get filled or if you're in it short, you want prices to drop to a certain key level before you get in in the trade short. So hopefully that makes sense. Um, and yeah, make sure you rewatch this clip and the other clip, the limit order, a couple of times to really understand what this means. And my suggestion is to go and practice this. Open up your platform and start taking taking stop order trades and start taking limit trades as well, just to get a feel of it and just to get some practice in. Let's go ahead and talk about what a stop limit order is. And just like the name suggests, a stop limit order combines a stop order and a limit order. So once your stop price is reached, instead of it triggering as a market order like I talked about in the last example, instead it triggers as a limit order. So instead of a market order, it triggers as a limit order. So let me explain why this is important and how it works. So let's say you're watching Nvidia at $120. You've identified a resistance level at 125. Price has tested it multiple times, but it hasn't broken through yet. Okay? So, let's say you're looking at Nvidia. You see a consolidation, and the current price is $120. [snorts] And this key resistance level is right here at let's say $125. Fantastic. you strongly believe that if it breaks over 125, it could rally quickly to 130. So let's say this is your target at 130. You're confident that if prices break 125 and it breaks out of this resistance area, it could easily go to 130. Great. So what you can do to execute on this order is you could place a buy stop limit order. Okay? So your stop price would be 125, right? Just like in the other [snorts] example that we just went over when when we went over what a Whoops. When we went over what a stop order is, you could place your stop order at 125, right? So, meaning if prices go up to 125, it would trigger your stop order and you would get into the trade. Now, a traditional stop order, that order would trigger and execute as a market order, meaning you might get filled at 125. You also might get filled at 12510 or 12530 or 12570 or even 126. It might fill you late because this stop order is triggering like a market order, right? Maybe it fills you even below. Who knows? It depends how the stock moves. But the point is, you're not going to get your exact price at 125. You might get above your exact price or below your exact price. And that uncertainty is unsettling for a lot of traders. Who knows? Maybe the stock moves really quickly, right? It hits your stop order at 125, triggers a market order, and it fills you at 127, right? It fills you at 127, and now you're in the trade $2 late, and you don't like that. So what you can do to protect yourself from that situation is instead of using a stop order, you would be using a stop limit order. So when you add the limit part of this into the equation, right? What you could do is you place your stop price at 125, great. So when prices hit 125, great. Instead of it triggering a market order, it would trigger a limit order. and you could do a buy limit order at 12550. So let's say that happens. Let's say you place an order, a stop order at 125 and when the stop is hit, then the limit order activates at 12550. So keep in mind, what does a limit order do? Let's go ahead and remind ourselves what a limit order does. A limit order sets the maximum price you're willing to pay when you're buying. It sets the maximum price. So basically with this limit order triggering at 12550, it's either going to fill you at 12550 or lower. Meaning that let's say the stock moves really fast and by the time this triggers it pops really fast to to 12570 or 126 or 127, it's not going to fill you up there. It's not going to fill you late. It's only going to fill you at 12550 or lower. Okay? So, if Nvidia's price hits 125, your buy stop triggers your limit order activates, right? So your buy stop would trigger and as soon as that's triggered it would activate your limit order and you will only get filled if the price is at 12550 or lower. You will not get filled if the if the price spikes too fast and too high. You won't get filled at 126 or 127. You're only going to get filled at 12550 or lower. It's like me saying if the stock proves itself and breaks above resistance, right? If it breaks above 125, I want to get in. However, I only want to get in if I can get a reasonable fill. I only want to get in if it fills me at a reasonable price. And you could set what that reasonable price is. You could set this instead of 12550, you could set this at 12510. Right? In that case, if this triggers your limit order activates, right? you're only going to get filled at either 12510 or better. You won't get filled late. Now, the downside is maybe it's fast. Maybe it goes up right away and it doesn't even it just flies by your limit order. In that case, you won't get filled. However, at least you're not in it late versus, you know, if you used a regular stop order, it would fill it would fill you market and you might be super late on the trade. Okay, does that make sense? So, in summary, I know that might be a little bit confusing. In summary, whenever you're placing this type of, you know, stop limit order, it's always going to ask you what's your stop price. Like on your platform, it's always going to ask you what's your stop price and what's your limit price. Okay? So, you have to put in the stop price first. In this case, I want to potentially get in if it breaks above this resistance, right? If it breaks above 125, that's the trigger for my setup. I want to get in. So, your stop price would be 125. However, I don't want to pay 126 for this. I don't want to pay 127. I don't want to get in late at 128. I want to make sure that if it hits my stop at 125, right? I want to make sure that my average price is no greater than 12550. I'm okay with being 20 cents late, 30 cents late, even 50 cents late. However, I'm not okay with being even 60 cents late, which would be at 12560. I'm not okay with being $1 late, which would be at 126. No, I want to get filled at 12550 or better. And this allows you to control the price that you get filled at. So, it's a really useful way to make sure that if you have a if you're getting into a trade using a stop order, well, you're not going to get filled super late when it ends up triggering as a market order. You could you could place a stop limit order and you'll get filled, you know, at a you you make sure you won't get filled at too high of a price. Okay? I don't recommend doing this uh when it comes to exiting a trade, right? Like let's say you're already in a position. Let's say you're in this breakout long. I don't recommend placing a stop limit order here, right? Because if you're exiting a trade, you want to get in, you want to get out as soon as possible. You don't want to like imagine you leave your desk and you have a stop limit order here. Who knows, it might not fill you and all of a sudden you're in the trade as it's going against you. So, when it comes to exiting, I would just use a regular stop order where it'll just fill you market at whatever the price is. But whenever you're entering, you also have the option of using a stop limit order to make sure you control the price that you get filled at. Okay? Hopefully that makes sense. And my recommendation, guys, is based off my explanation here, I would load up your trading platform. I would re-watch every single one of these explanations and as I'm explaining it, I would literally, you know, do what I am explaining. I would literally go on your platform and place these types of orders. You could do it on maybe on a simulation with paper trading so you're not risking real money and you could practice and you could see how it all plays out in real time. That's my suggestion. So do that and yeah, I'll see you in the next video. Let's go over some key trading terms. And to make this as convenient as possible for you, I actually uploaded all of these terms onto a word document. And you can download this document in my free course community. So, if you go to the description of this video, you click on the link to join my free community, and you go into the free course, the same one that you're watching right now, you could actually go to the key trading terms video, and right under that video, you will be able to find this PDF document, and you'll be able to download it or even print it. So, make sure you join up in my free course community because I'm going to be posting way more resources for you, such as other PDFs and frameworks that you can download and print out that will really help your trading. I also do bi-weekly live trainings that you can sign up for, of course, as well in my free community. So, that's probably the easiest way for you to review this and for you to refer back to it. So, download that file and I'll see you on the next video. Hey guys, the topic for today's class is the differences between technical and fundamental analysis. And we're still super early on in the course. So, I figured it'd be very important to actually touch up on technical analysis and fundamental analysis. And um if you guys haven't heard of those terms, this usually these are the terms that describe how to analyze a particular security. you know, it mostly applies for, you know, stocks and it does also apply for crypto, but I think it was coined mostly for stocks, right? And, you know, I'm sure you've probably heard one is superior to the other. So, I'm here going to tell you exactly what they are, what to focus on, and [snorts] how you can begin using them. Okay, so let's start out with technical analysis. Technical analysis is focusing on reading price action. Okay, that's what we're focused on. reading historical price trends and price action in order to determine whether we're going to go long or short or determine our our outlook on the stock for whether it's you know during the intraday time frame whether it's you know few hours few minutes or even you know few days even few weeks few months away okay so two the two buzzwords or the two buzz terms are price action and price trends Okay. And technical analysis for trading specifically for trading. And that's what this course is about. We're here to learn about trading. Technical analysis is the only way to analyze a stock for the short term, right? Because as traders [snorts] we're operating kind of on a short-term basis. Even if we're approaching longerterm trades, you know, trades that are, you know, several months or, you know, several weeks, um, that's still short-term enough where you can actually where you're going to be using technical analysis. Okay? If you're looking, you know, 10 years out, 5 years out, trying to figure out the value of a stock, of course, then we're going to use fundamental, but I'm [snorts] going to I'm going to get into fundamental analysis in a second here. I just want to finish up with technical analysis. So the whole point the whole goal of this course is to actually teach you guys technical analysis and that's only one part of trading but it's it's one of the most important parts because ultimately that's how we're going to predict you know price action is is by reading uh prior price action you know the way the candlesticks look the way the moving averages look. We're reading all of this to make um intelligent decisions on where to put our money and what trades to actually take. Okay? And that's why technical analysis is king. If you guys aspire to be successful traders, you must innately understand technical analysis. And this is what you should be focusing on technical analysis. Not and we're going to get into anal fundamental analysis. Fundamental analysis is basically looking and reading the intrinsic value of a security, of a stock, of a crypto, the intrinsic value. So, you're going to be looking at um you know macroeconomic trends. You're going to be looking at financial statements of the company. You're going to be looking at [snorts] intellectual property. You're going to be trying to read the company's worth, right? And based off you know how valuable the company is you know what they offer whether um you know uh you know their products are trending you know for a longer term scale or um you know just reading the actual value of the company you know we're able to establish you know if this is a good investment but this is what you have to understand fundamental analysis is you know for the longer term for 5 10 15 20 25 years down the road right we can't read uh you know we can't read shorter term trends using uh fundamental analysis. Okay. So for our purposes here for for you know purposes of trading and actually before I get into that I just want to uh give you guys a quick example. The reason why a lot of people um you know unsuccessful traders a huge reason is because they actually pay attention to news which at the end of the day you know news about a company news about a crypto at the end of the day that's fundamental information that's not technical information right that's not about price action it's about something the company did something the company acquired right um certain news going around the company people focus on that and they actually enter trades just based off the news just based off recently heard fundamental information and this is the one of the biggest mistakes you can make. You know, why would you, you know, buy something when um, you know, you're hearing about the news the last we're the public. We hear about the news literally last. Think about all of the uh, you know, shareholders or people, you know, insiders in the company. They heard about this news weeks ago, months ago. the news that you're hearing on a day-to-day basis about stocks, companies, crypto, it's already priced into it. Okay? So, stop relying on that information. Sorry for this tangent, but it's extremely important. Stop relying on this information. Okay? It is pointless. It will it will only lead to um you know bias in your trading and and a complete lack of objectivity. Okay? And that's why you know in order to have objectivity in trading, we have to read the price action. We have to read what the charts say in the charts like this one here shows you price action. Okay. And those are the main differences. So key points here is is uh focus on on technical analysis and you don't really need fundamental analysis for trading at all. I mean I'll tell you the truth. I have never researched a company in my life for that I'm trading. Doesn't matter to me, right? I've never looked at news. There's only the only news that could be interesting is like let's say uh the Fed is having a meeting that could be impactful or looking at news that could affect stocks you know during the intraday time frames meaning like during the day let's say some news comes out and a stock drops super hard you that might be interesting to you for a potential trade but besides that you guys should not be focusing on news or fundamental analysis divert um you know all of your attention towards technical analysis read and reading price action Okay. And that's what we're going to be teaching now, you know. So, I hope you guys found this helpful. Okay. Hope you guys understand the differences and which ones to really focus on. And let's get on to the next video in the course. Real quick, I believe in transparency and I would never make a claim that I make money with trading without showing concrete proof. So, this is my Charles Schwab brokerage account. I day trade on Think or Swim. And over the last one year, from October 4th of 2024 to October 3rd of 2025, I've been able to generate $529,000 in day trading profits, which is a cumulative rate of return of over 340% on my entire trading account. And some people may think this is Photoshop or this is some sort of screenshot that I edited. Well, if I go ahead and refresh the page on my Charles Schwab brokerage login and I go back to one year, as you can see, there's the $529,000. And the reason I'm showing you this is to be real and as transparent as possible. So, in this video, I'm going to show you the exact process that I followed to become a profitable trader. And a lot of what I'm about to teach you, my dad taught me 5 years ago. And it's honestly the reason I'm a profitable trader today. I'm not showing you easy strategies. I'm not going to show you plug-and-play indicators that lead to easy money and oh, use this support and resistance structure to find entries. No, I want to show you the nobullshit process that you could follow right now to actually make this happen so you could hopefully become a full-time trader by the end of the process. And the first step is critical. The first step is important. Focus on your education. Okay? A lot of people, a lot of traders, they just want to jump into the markets, fund their account, and instantly make money. That's not how it works. And in fact, in all areas of our life, and every other profession out there, you need to educate yourself first. You have to go to school. For example, if you want to become an engineer or a lawyer or a doctor, you basically have to get a degree for any job out there, right? You have to go to school for four years to educate yourself. Yet most traders, especially beginners, they don't want to, you know, focus on the education. They just want to make quick money. Well, that's not how trading works. And when you're focusing on your trading education, you want to focus on one core methodology. You don't want to be bouncing from this strategy to this strategy, and try this methodology out, then that one, then this one, right? want to stick with one because every single methodology, it's going to teach different principles and it's honestly going to confuse you. And I see this all the time where traders, they just bounce around from one thing to another and they never stick in master just one strategy or one methodology, right? You want to build the foundation for your trading success. And [clears throat] if you think of a skyscraper that is being built, the engineers, the architects, the project managers, they all focus on building the foundation first. In fact, they spend most of the time working on the foundation because the foundation is what ensures that uh building doesn't collapse three or five or 10 years later because of a crazy storm. And that's the way I want you to think about your trading. Just like how the foundation of a building is built strongly so that building obviously doesn't collapse later on. That's how you need to approach your trading. You have to focus on building the foundation. So what goes into that? Well, number one, your edge. What is your edge right in your trading system? What's going to differentiate you from every single other trader out there? And the only way to develop an edge is to educate yourself. Focus on the education. It's your mindset, right? Are you going to approach trading with a conservative mindset or an aggressive mindset? How are you structuring your expectations when you go into trading? Of course, price action principles. How are you reading charts? Are you using any indicators? If so, how many? Right? Which price action principles are you looking for in a setup or rules within your plan? Right? I think you're only as profitable as how strict your rules are within your plan. And that's part of the reason why I'm a profitable trader today is because I'm very disciplined with the constraints within my plan. I don't deviate from my system. Of course, trade management, right? When you enter into the trade, where are you taking profits? Are you moving your stop loss? Are you taking half profits and leaving a runner? Or are you taking full profits at target one? Right? Entering into a trade is the first step. The second step is extracting profit from that trade. You need a game plan for that. And of course, risk management, which by the way, I probably should have started out with this one. This one is by far the most important. In fact, most of your foundation is going to be built around risk management and limiting your losses. Listen, I know you're excited. I know you want to fund your account. You want to start making money. However, I emphasize, please focus on your education. Focus on building this foundation for your trading because your goal isn't to just make money over the next few months. Your goal is to make money in 5 years, in 10 years with your trading. And the only way to ensure long-term profitability is to build this foundation for success and focus on the education. And if you don't know where to go for this, I have hundreds of hours of free education on the internet. Not only on this YouTube channel that you're watching right now. So I strongly encourage you to watch my other videos on this channel, but I also have a free 10 plus hour trading course that is genuinely better than most paid courses on the internet. It will help you build this foundation. So, you could find my free course in the description of this video. Take advantage. Let's move to step number two. Now that you've educated yourself, you know a few strategies, you know how to calculate risk and size your positions, you know how to limit losses, you know what criteria you're looking for in your setups, and you have a methodology. From there, you're probably excited. You're ready to practice, and you're ready to apply what you just learned. And this is by far the most important step. It's the application, right? You can read books, watch videos on how to drive a car, but until you're behind the wheel and driving every single day, you're never going to become a confident driver. Like, imagine you're on the highway for the first time. Are you going to feel comfortable merging? Are you going to feel comfortable going fast? No, of course not. You need repetition. You need practice. And the most important part of this step, and this is where most traders actually they get this wrong, is when you start practicing, you either want to paper trade, which is trading with fake money, or you want to be trading with very small risk. What most traders do, is that once they've learned the education, great, they fund their account and they start using big risk. And you know when you're using big risk during this experimentation phase where you're testing your strategies, you're testing setups, right? You're not going to become profitable right away. You're going to make mistakes. You have to figure out what works for you. You have to figure out what doesn't work for you. So why would you risk a lot of money in this beginning stage of learning, right? When you begin live trading, you need to paper trade or trade with small risk. When I say small risk, I'm talking like1 to5 a trade.$1 to $10 a trade. Something so small. So even if you have 10 losers in a row and you're risking five bucks a trade, okay, you lost $50. That's not a big deal. That's not so bad. You're going to learn a lot through those 10 trades, but 50 bucks, that's not going to blow up your account. That's the goal, right? And you want to take a lot of trades. You want to experiment with your strategies. Even if some of the setups are lower quality, that's fine. experiment with it so you could learn through experience and just take a ton of trades and practice everything that you just learned in the education. Keep in mind that during the step two application phase, your focus shouldn't be to make money. I don't want you to care about the end result of every single trading day. I want you to detach yourself from the outcome and focus on the process. And specifically, you're going to be focusing on what is working in your trading and what isn't working in your trading. And the only way that you could figure that out is through step number three, data collection and observation. And this is when you're going to be journaling your results. And no, I don't mean your profits. Okay? I don't care how much you're making dayto-day. I want you to journal what strategies you resonate with, what types of stocks are you most profitable with. For example, for me, I really gravitate towards mid to low caps, and I don't really like trading stocks that are over like $50 to $100. I also don't really trade the name brands. So, I won't day trade Tesla or Amazon or Apple. I just don't really gravitate towards those types of stocks. Now, other traders may gravitate towards them, right? I just know what I like because I figured that out very early in my trading career. Another another example is with the strategies that I resonate with. I really like breakouts. I like breakouts more than I like retracement setups. Now, retracements are still within my trading methodology, but I always naturally gravitated towards trading breakouts, right? That's just what works for me. But that might be different for you. That might be different for every single trader. Same thing with the trade management. For me, I really enjoy scalping. I love kind of getting in and out of positions quick, right? I get big size. I go for a bit smaller moves and I'll take profits quick and I'll do that a lot of times every single day and my profits really add up. And that's what I like to gravitate towards. right now. I do other styles of trading as well where I'll get in and I'll hold that trade for a few hours, but I wouldn't say that's my bread and butter. I still know how to do it. I still do it almost every single day, but that's not like my breadand butter strategy. So, you need to figure out what you resonate with. What style of management do you like? Do you like kind of getting in and out quick, which is a lot more active, or do you like perhaps getting into something in the morning and then waiting until, you know, the end of the day to get out? And the only way that you're going to figure this out is to apply, is to practice and trade everything that you've learned in your education. And as you're practicing in trading, I want you to be journaling what you're gravitating towards and what strategies are making you money. And I want you to do what makes sense to you. Do what you resonate with. When you take a trade, you usually get a really good feeling about it. And there's always going to be a style of trading that you're like, "Yeah, I just like this. I could feel it." You know, and you almost develop an intuition for that style. And that's, you know, that's what I want you to accomplish through this data collection and observation point. Now, in the beginning of your journey, you're not going to know exactly what you resonate with at first. You're not going to know what strategies are most profitable for you. That's going to take time. And that part is difficult to really identify. But what isn't difficult to identify is figuring out what's not working in your trading. It's pretty easy to figure out what's consistently not making you money. So, I want you to to really focus on that. Focus on what isn't working. Example, maybe every single day you start the day down 2 to three hours. Every day at the market open, you start the day down two to three hours. Perfect. Stop trading the market open. Eliminate that from your trading plan. Maybe you know 50% of your trades are going for reversals and you're consistently losing money on reversals. Fantastic. stop trading reversals or just be way more selective with reversal setups. You get the idea. Figure out what isn't working and then eliminate it. And then what you're going to be left with are strategies and the styles that are working for you. Let's move to step number four. Focus on breaking even consistently and raising risk gradually. Your first priority as a beginner trader isn't to become profitable. It's to become a consistently break even trader. A break even trader is someone who doesn't lose, who knows risk management, who knows how to limit their losses. And by becoming a break even trader first, when you know you're consistently not losing, that's going to give you a lot of confidence. And that confidence is what you need to become profitable. So, in the beginning, when you're just starting out, you don't want to go from beginner to profitable. You want to go from beginner to consistently break even and then break even to profitable. Once you're a break even trader and you're not losing every single day, you're like 80% of the way there towards becoming a profitable trader. And as long as you're focusing on step one, step two, step three, and step four, and you're putting in the work, you're consistent, you're disciplined, you're going to see some genuine progress. In fact, you might even begin making money with like $1 to $10 risk where maybe you're making $10 a day, $20 a day, you know, $30 the next day, 10 the next day, 40 the next day, right? And you're seeing that results are starting to come in. Now, a big mistake that traders make is that they go from like$1 to $10 risk to like a $100 risk or a $1,000 risk instantly. You don't want to do that. In fact, if you can't make money with $1 to $10 risk, you won't be able to become profitable with $1 to $1,000 risk. Keep that in mind. And you want to raise your risk gradually. And you don't want to just, you know, quadruple your risk overnight. If you're risking like one to $5 per trade, go from like one to five then to 5 to 10. If you're risking $10 a trade, go to 15. If you're risking 15, then go to 25. Right? do it gradually. And I would only raise your risk when you have more than two weeks of consistency and when you're feeling strong psychologically. I get asked this question all the time, Emanuel. When should I raise my risk? I feel like I'm ready, but I'm not sure yet. If you're in doubt, don't raise your risk. You want to be raising your risk when you're feeling good. You're feeling confident. You have consistency. You now have a track record of success with smaller risk. And that justifies you raising your risk. If you're kind of in doubt and you're not sure, don't raise your risk. You should be raising your risk when you're psychologically strong. Okay? And in the beginning, your risk is actually going to increase rapidly and pretty quickly where I've seen a lot of traders go from, you know, let's say $10 risk to a hundred or even $200 risk per trade rather quickly within a few months. But as you raise your risk more and more and more, that uh rate of increase is going to slow down where you might go from $10 to $100 risk pretty quick, but then it's going to take more time going from 100 to 300 or 300 to 500, etc. So, the higher your risk is, the slower it's going to take to actually raise it. Because when you're dealing with big risk, that's going to come with a lot of emotional and psychological impact where if now you're risking $1,000 per trade, that's going to feel completely differently than when you're risking $100 per trade. And you have to understand that the overall process of becoming a profitable trader is exponential. So let's say we have this little graph here. We have time below, okay? And then we have profits here. Most people think that this process is linear. these steps that I just showed you in the steps in this video, it works like this. You put you're putting in a lot of time, you're practicing, you're building your system, you're building your edge, but you're not really seeing any results. You're not seeing any results. And then all of a sudden, your results just go exponential as soon as things click. And you don't want to quit trading before this happens. you want to put in and thug it out and, you know, go through all the struggle, put in the time, put in the work ethic, be disciplined throughout this entire stage right here where you're putting in a lot of time, but you're not seeing results because at some point your results are going to go exponential. And when this happens, it can completely change your life. So, going into step five, at this point, maybe you're feeling really good about your trading. You raised your risk from $10, now you're risking $100 per trade. Everything is clicking. You're feeling invincible. you're making, you know, four or 500 bucks a day. Maybe you're even making a,000 or $2,000 pretty consistently and you're feeling great. Well, this is going to happen next. And that is you're going to see something like this where you see a dip in your trading and that goes into step five, which is your first major setback. Okay? And when you think you have everything figured out where you're making money, you're feeling good, you're feeling invincible, you become complacent and unfortunately you stop putting in as much effort towards the other steps of the process like the data collection like raising risk gradually or focusing on the application and journaling. Maybe you're starting to ignore that because hey, everything's figured out. You're making money. And what happens is you fail to adapt when the market changes. And I see this all the time where profitable traders, they lose their profitability. They become losing traders because they're not able to keep up with the market. You have to understand that the market is constantly changing from week to week, month to month, from year to year. And you need to always be sharpening the tools in your toolbox. You always need to be working on your trading. You always need to be journaling. You always need to be refining your process and working on your system. The moment you stop doing that, and that usually happens during this parabolic stage because you put in all this work, you're seeing those results going parabolic, then you relax, you become complacent, you stop working on your trading, and then you see a major dip and you refuse to adapt. In fact, a lot of times, most traders just force the same strategies that made them money before. But those strategies, they're not they're not as effective anymore. And you always have to be okay with lowering your risk, accepting, hey, I'm not seeing the same results like I did 5 months ago, right? You have to be okay with going back to the drawing board, refining your system, and changing things around. And this happens to everyone. It even happened to me where I had a really nice parabolic move in my results. I was making money consistently and then all of a sudden the market kind of changed and I saw a big setback in my trading and from there and I wasn't losing money right keep that in mind the reason I'm profitable is because of how good I am at limiting my losses during the setback I really lowered my risk and then it kind of went like this and then I kept putting in more time more time working on my system working on my system before the next parabolic move up and that's kind of the journey as a trader you put in this work you see a big uptick in your results you see a little setback, you put in another, you know, a lot of time, a lot of work, and then you see another parabolic shift in your results. You have to be okay with adapting to the market. You have to be okay with change. In fact, the only thing that is constant is change. And I'm going to be completely honest, during this first major setback in your trading, it is going to hurt your ego. You're going to think that you got lucky. You're going to think that, oh, well, maybe I'm not so good of a trader after all. And it's going to be tough to adapt and go back to the drawing board. It's going to be tough to accept that you have to lower your risk and kind of reset everything in your system. And a lot of traders quit here or a lot of traders over risk over trade and then they end up giving back all of their profits during this exponential stage in their results. Right? You want to avoid that. Make sure during this setback you are protecting the profits that you made here. Make sure you lower your risk. Maybe you even have to go to paper trading for like a few days or a week just to kind of reset. On the other hand, when you overcome this setback and you see your results starting to go up again where you've adapted your trading, you've re-raised your risk and you're starting to become profitable again. Well, that's going to give you so much confidence and it's going to completely almost shift the way that you look at trading. You're going to be like, "Yeah, I am a profitable trader. I stayed resilient and I overcame that setback." And then any new setback that you see from here is going to be way shorter than this one because you have confidence in yourself that you can adapt to the new environment and you can overcome any obstacle within your trading. Let's go to step number six. And I have a lot of personal experience with this one. Mentorship is going to expedite every single step of this process. And I'm going to be honest and blunt. If you don't have a mentor, it's likely to take years to figure this out. And the way that I know that is because my father went through that path. It took him seven years to become a consistently profitable trader because he had to learn through trial and error. He had to experiment with stuff and he never really learned correctly from the very beginning. But when he taught me, it only took me three and a half months to begin making money with trading. And I don't care who your mentor is. I don't care if you pick your friend or someone else on YouTube. That doesn't matter to me. All that I want to emphasize here is make sure that your mentor live trades with you where he or she shares the screen and you're able to ask questions in real time and you could actually watch their execution. That is the best way to learn how to trade. It's by doing it with your mentor. So, like I said, I don't care who your mentor is. But if you do want to learn from me, I have hundreds of hours of free education online on my YouTube channel, but also in my free 10 plus hour trading course that I mentioned earlier in this video. But if you do want to work with me personally, you want me to take you under my wing, I do personally help coach and scale traders from zero to consistently profitable where my students trade live with me every single day. So, if you are looking for a personal mentor, you could apply for my mentorship in the description of this video. This was by far the most important piece of advice that my father told me when I was a beginner trader. And for anyone that doesn't know, my father was the one who taught me how to trade at the time. And this was four years ago. He had been trading for about four to five years full-time. And now, four years later, it's close to a decade. And I remember us sitting in our sun room and he was teaching me, he was showing me different strategies, teaching me his methodology. And I remember he told me this really important piece of advice that completely changed my perspective as a beginner trader. And it helped me reach success significantly faster. And I want to share that with you guys. I want to genuinely help you guys learn how to trade. And sometimes you know with trading especially since since it's so much about your psychology your you know your emotions and your mindset that sometimes your skills are not even what has to be changed in order to become profitable. Your mindset is what has to be changed. So I hope especially if you guys are beginner traders this completely changes your mindset. All right. So a lot of people want to go from beginner trader and they want to immediately become a profitable trader. Their number one goal is to make money which makes sense. I mean we all are doing this to make money. We want to become profitable. We want to make money. We want to buy you know whatever the cars, the watches. You want to take care of your family, go on vacations, have a full-time, you know, do this full-time. Whatever the case is, this is generally what people want to do. go from beginner to profitable. But my dad told me that this is not the way that you should be going about trading. Instead, you're actually skipping a very important part in the middle. And because you're not focusing on this part that's in between being a beginner and being profitable, you're actually, you know, kind of going against yourself. You're actually, it's actually counterproductive. All right. So I want to explain what this is. So let's go ahead and erase this. And my dad told me that your first focus as a trader should not be to make money. It should be to consistently not lose money. And that in other words is called breaking even. And my dad told me that if you're able to break even consistently every single day, you're able to not lose money, you're like 70% of the way there towards being a profitable trader. So, honestly, we should actually uh move this. Let's see if we could actually uh let's move this 70%. It's more like down here, right? If you're able to consistently not lose money and consistently break even, you are like 70% of the way there to being a profitable trader. All right? Because not losing money consistently is huge, right? And that means you already have a pretty good risk management system, right? We'll do RM, risk management system. It means you're able to limit losses, which is huge, right? And you probably also have a pretty good trading management system. Trading management, right? So, this should be your mindset. Instead of going into the markets every day thinking about, oh, am I going to make money today? Am I going to be profitable? Is this the first day I'm going to make my first thousand dollar? Instead, focus on, okay, my goal today is to not lose money. by the end of the day I either should be at zero dollars on the day or maybe up five $10 a small amount right and you should approach you should think about break even days as winning days especially if you're just starting out right so if you're breaking even consistently right I want you in your mind to consider that a win consider that a victory right and then if you have one whole week where you where you didn't lose any money where you broke even the entire week. That's that's a winning week. That's a good week because a lot of traders, that's especially as beginners, you're not going to be able to make money right away. It's just not that easy. It's not that simple. As a beginner trader, 3 weeks later, you're making money. It's just not it doesn't happen, right? But a lot of traders when they're just starting out because they're not immediately profitable, they're like discouraged. they like almost don't want to trade anymore because they're not making money, right? And they're and when they do break even, let's say, they don't really think of it as anything good. They're just like, "Oh, whatever. I didn't make money. Today was a horrible day." And that alters their mindset, right? And instead, I want you guys to treat break even days in the beginning as profitable winning days. And if you're able to consistently break even, break even, break even, right? There are there are probably just a few small fixes that you have to make in your trading to become consistently profitable. All right? And honestly, this is the way that I thought about it. And even when I was even if you're paper trading, even if you're paper trading, right, which is trading with fake money, you're not trading real money. It's like practice trading. I still want you to focus on breaking even every single day. Okay? You can experiment. You could try different strategies. Of course, if you're experimenting, and if that experiment doesn't work out, yeah, you're probably going to lose money. But over time, if you're continuing to paper trade, I still want you to focus on breaking even consistently. All right? And that's what I did. I paper traded for 3 to four months. I think in hindsight, that was a bit too long, but I can't really [clears throat] go back in time and change that. But even when I was paper trading, I considered every single break even day a winning day. I considered that a victory. I considered that progress and it gave me momentum. Me thinking about breaking even in that way, right? Actually, you know, gave me more motivation. It gave me more momentum to continue studying, continue improving. You know what I mean? And I think that's I think that could be really helpful for helpful for essentially any trader. All right. And I remember at some point I'm like, "Wow, I've been breaking even for a few weeks now." And then boom, I had my first winning day. I had my first consecutive winning days. And then all of a sudden I had my first week where I I made money every single day or with paper trading of course, but and that gave me even more momentum. And then when I started trading uh with real money on my first day guys, I made $711 which is insane. Um it completely changed my world. But it was because you know for 3 4 months I was paper trading. I had the right mindset and I was focusing on consistently improving. Okay. And of course I had my dad, right? That's really, you know, the game changer. You really ideally need a mentor if you want to be able to succeed super quickly. All right, guys. Um, so yeah, hopefully this helps you guys focus on breaking even if you're a beginner trader. That will give you momentum to eventually become profitable. If you guys haven't started watching my free 8 plus hour course, it's listed on my YouTube. It's also in the description of this video. You can hop into my free community. You can watch the course, interact with other students, interact with myself. I do free classes every single Thursday. They're live and I teach you kind of the framework on how to make your first $10,000 with trading. Make sure you go to those classes every single Thursday. Very, very important. And yeah, if you're looking to take this a little bit more seriously, you're maybe you went through all my free uh courses and all that and you want to trade live with me every day, you want me to take you under my wing and mentor you, shoot me a DM on Instagram. I'm going to list that below, Emanuel Trades, and I can give you more information about my mentorship program. All right, hopefully this video helps. Hopefully this video kind of changed your perspective and hopefully gave you a lot of motivation, especially if you are someone who is a break even trader. Uh, this should hopefully have definitely helped you. So, see you guys on the next video. Welcome to the price action chapter of this free course. And in this chapter, I'm going to teach you everything you need to know about reading and interpreting price action. And keep in mind, as traders, we only look at price action when it comes to making our decisions. We're not looking at financial documents. We're not reading the news. We're not reading income statements. We are solely focusing on reading price action. And I'm going to teach you how to read candlesticks. I'm going to teach you what indicators I use. I'm going to teach you how to read volume, how to read support and resistance, relative strength in the markets, and everything you need to know to be a price action professional. So, make sure you pay attention and let's hop right into this chapter. What is going on, guys? Hope you guys are having a great day and I'm very excited that you're watching this video and that you have committed yourself towards learning this course. And today we are going to be talking about a very very crucial element of price action. And remember price action is the only thing we use to perform technical analysis and you know analysis for trading when when it comes to trading stocks or crypto. Okay, these are the very fundamentals that you have to innately understand if you want to succeed with trading. This is the meat and potatoes of trading. It's the absolute basics. So my recommendation is get out get out a notebook, grab a pen or a pencil and make sure you take some notes so you really can digest this information. You need to understand this to move forward with the course. Okay. So I have the pres presentation ready to go. So grab the pencil, grab the notebook, and I'm going to turn off this camera real quick. Very good. And let's get started. So we are going to be talking about candlesticks. Okay. And why do we use candlesticks? And candlesticks are the bars that you guys see on all of the price charts that, you know, we're viewing in the community or that you may have seen in the past. And those bars are, you know, they're candlesticks. And I'm going to give you guys a little bit of history of the candlesticks, why we're using them, and what they mean. So, number one, we're using Japanese candlesticks. And they focus on the open and the close of a bar. Okay? And we have to remember that, you know, when we're looking at a candlestick that represents a time frame. So, we're looking at the open of that time frame and then the close of that time frame. It's going to make a little bit more sense in a second here. So, Japanese candlesticks, what they present is they show a graphic representation of the supply in demand for each time period's price action. And we have to remember that's what a that's how a market operates. It operates off supply and demand. Supply meaning the sellers and demand meaning meaning the buyers. Okay? That's how a market functions. There has to be buyers and there has to be sellers. And obviously if there's more buyers than sellers then the price is going to go up and if there's more sellers than buyers the price is going to go down. This is how a market functions. Okay? and candlesticks they give us a representation of that you know supply and demand of those buyers versus the sellers. Okay? And maybe a lot of you guys have seen bar charts um and versus candlesticks but or maybe you guys have seen like hyenashi candlesticks. I always 100% recommend Japanese candlesticks which are just the regular candlesticks on Trading View or whatever platform that you guys are using. They're way more visual. They give you a very clear picture on the price action that's occurring. And like I said, they emphasize the relationship between supply and demand. Okay? If we understand the supply and demand of what we're looking at, of the stock or crypto that we're that we're looking at, then we could take advantage, you know, of that supply and demand and make a profit. That's the whole point. And that battle between the buyers and the sellers, right? This supply and demand element that I'm talking about, it's the most important part of technical analysis. This is what makes technical analysis. That's why it's so crucial for you guys to really pay attention and understand how to read these candlesticks. So, how are they formed? Right? And depending on which time frame you're looking at, a candlestick represents the price action that occurred during that time. So, if we're looking at a five-minute chart, right? Each candlestick on that chart represents five minutes worth of time, right? So, for example, you know, we talked about kind of the open and close of the candlestick. Let's say it's uh 10 10:00 a.m., right? And a 5m minute candle started forming. At 10:00 a.m. the candle obviously the 5minute candle started forming and then at 10:05 the candle stopped forming and then the next candle started forming at 10:05 and then at 10 10 that one closed and then another one starts forming. So you can see that every candlestick u represents you know a unit of time and obviously on fi on 15-minute chart charts every candlestick represents 15 minutes worth of time and on daily charts every candlestick represents one day worth of time. You guys get the idea and if you might if you're asking yourself why are we looking at different time frames? I'm going to be talking about that later in the course, but it's very important that we're looking at several time frames and reading the candlesticks that are on uh several different time frames. And we're going to get into that a little bit later in the course. So, let's start with the absolute basics on how to read candlesticks. Like I said before, candlesticks emphasize the open and the close of a bar, right? So if it's a green candlestick, that means price went up in that time frame, right? In that candlestick's time frame. So if it's a five-minute chart, that means price went up in that 5 minutes. If it's a 15-minute chart, price went up during those 15 minutes. Okay? So the bottom of the candle or the the the body of the candle, this is known as the body. The bottom of it is where price opened. The top of it is where price closed, right? And these little lines here, you can call them wicks or tails. They represent the absolute lows during that time right here. And the upper wick represents the absolute highs of price during that candle uh during that candle's time. Okay. So, if it's green, it obviously it it closed higher than it opened. So, that's why the you know, this is where it's closing. This is where it's opening. And the wicks, like I said, highs and lows. If it's a red candle, that means it opened at a higher price than it closed, right? That means it went down during that time frame. So, it closed at a lower price than which it opened. These wicks, they represent the the same thing, the absolute highs of that candlestick and the absolute lows of the candlestick right here. Okay? So, if it's red, it went up. I'm sorry. If it's if it's red, it went down. If it's green, it went up. Okay? And the one question we always have to be asking ourselves here is who won the battle, the buyers or the sellers. Okay, so let's look at this diagram to have a better understanding of what different candlesticks mean and how you know different candlesticks can form. So first and foremost we have uh this is called a wide range bar. And this is one example where the candle opened at this price and closed at the absolute highs up here. Have you guys see there's no tails, right? There's no wicks. Meaning it opened at the absolute lows and it closed at the absolute highs. That's why we don't have any tails. This is a very bullish candle. Remember bullish means indicative of strength. meaning there's a lot of buyers. So, this is a, you know, a buyerheavy or buyer dominant candlestick. If you look at this one, we have here what's called a topping tail. Okay? And we're going to talk about how topping tails are formed during the next slides, but let's let's try to understand how a topping tail is formed here. So, we open at the absolute lows. We rally all the way up here to form a high. And then the sellers come in and they bring bring it all the way back down to close here. Right? So we opened here. We went all the way up. Then we dropped and and closed here. So open here, closed here. So you know this is a green bar, right? A lot of you guys might be thinking, oh, it's green. That must mean it's bullish. It must means it's a buyerheavy candle, right? Buyer dominant candle. But in reality, what happened here is we opened here, we got bought, and then the sellers came in, right? And they brought the stock or crypto all the way back down to close here. So although it's green, right, it's a very sellerheavy candle, right? So this is a topping tail. So if we go here, topping tail, it's a clue that the sellers have taken control, right? Cuz the buyers brought it up to here and then the sellers are bringing it all the way back down. and the sellers have taken control. If we look at this candlestick, [cough] excuse me, you could see that the tail is actually on the bottom. So, this is a excuse me, guys. So, this is a bottoming tail and bottoming tails are a clue that the buyers have taken control, right? cuz we opened at this price. The sellers sold it and brought it all the way down to here just for the buyers to come back here and bring it all the way back up. Right? So, the sellers tried to bring it down, but then the buyers brought it right back up to finish at the highs. Okay? And then right here, we have a dogee bar, right? where it's kind of um the battle between the buyers and sellers are even, right? Because it opened here, it went all the way up, then it went all the way down, and then it finished here. So, a dogee bar shows kind of uh uh a battle between the buyers and the sellers and a battle that nobody really won. They kind of finished even. Okay. Same thing with this bar. Obviously, the buyers won a little bit, but it's mostly it's kind of like a, you know, the sellers and buyers were very even. So, what I want you guys to ask yourself is looking at this candlestick, right? We know that it opened here and closed here. In this case, it opened here, dropped, and then closed here. So, I want you guys to ask yourself and maybe even pause the video, which candlestick out of this one and out of this one is more bullish. which one is uh more indicative of strength? So, pause the video, think about it, and uh come up with an answer, and I'll go over it just in a second here. I'll give you guys a chance to pause it. Okay, very good. If you guys chose this one, then you would be correct. This one is a stronger candle than this one. And the reason is is for this one, right? It opened here. The sellers came in and then the buyers, you know, them were like, "Hold on, you know, you can't bring this any lower." And they brought it all the way back up. You can think of this bar is battle tested, right? The sellers actually showed up, but the buying pressure was so strong that it negated all the sellers and it brought the stock all the way back up to make new highs. In this case, we opened here and we sold here, right? We opened here and we closed here. We don't know if there were that many sellers during this bar. Maybe the sellers were sleeping. They weren't there, right? This bar is actually battle tested, right? We had sellers shown up, but they were irrelevant. Here, we just kind of closed at the highs after opening at the lows. So, this one is way more bullish. Something to something to, you know, the buyers have really taken control. It's very buyerheavy. Looking at the red candlesticks, guys, it's the absolute same idea. We open here and then we close all the way at the bottom. There's no tails, meaning we open at the absolute um you know, we opened at the absolute highs, we closed at the absolute lows. Okay, if we have a topping tail here, what happened was we opened at this price, the buyers showed up, they brought it all the way up here, and then the sellers came in and brought it all the way back down. So, a topping tail, guys, is a clue. The sellers have taken control. So, the sellers have really taken control. There's a lot of selling pressure during this topping tail here. It's kind of the same thing. It's a dogee bar. The buyers and sellers are mostly even, right? There's there was a battle, but nobody really won the battle, right? In this case, what we have here is we opened we opened [snorts] at this price. We dropped all the way back down and the buyers came up. you know, they bought it down here. They brought it all the way back up and we still closed under the open, right? So, that's why it's still a red bar, but since the bottoming tail, guys, it's a clue that the buyers have been taking control. So, even though this is a red bar, it's still a kind of a bullish bar. And although this is a green bar, it's still a kind of a bearish bar because we know that a topping tail is where sellers take control. A bottoming tail is where buyers take control. Hopefully that makes sense guys and let's kind of uh go into how they're actually formed right so if we have a fivem minute candle and and this diagram really shows that the importance of looking at different time frames because candles can form in different ways right this five-minute candle is the same is as this five-minute candle but they were they formed completely differently right here you know it's the All right, we have five one minute candles make up a five-minute bar. And here five minute or five one minute candles make up this five-minute bar. But in this scenario, we have, you know, we have five candles that are going straight up, right? One after another, right? While here we have a big rally and then kind of, you know, consolidation up here. Meaning the candles, they're just staying at the highs of this candlestick, right? They're just staying here at the highs. So this just this kind of um proves the point that candlesticks form in different ways and that's why it's important to look at different time frames because these two setups are different, right? This has different implications than this does. Okay? And we're going to be talking about that later in the course. But I just want to stress the importance now of looking at different time frames because if you know the candlesticks have formed in different ways that's going to give you information of what it might do next. Okay. So that's really what I want to emphasize. They could form in different ways and that's important. So if we look at for example a 15-minute candle, this is another example of how they're formed. Right here we have three fiveminute candles. Here we have three fiveminute candles. You could see this one's a little different. It's kind of a uh you know, we have a rally and then we we just continue higher. Where here it's again rally and then we just stay at the highs. We don't really you know continue higher. So they're formed in different ways. Okay. And you'll see later on once we actually start talking about different strategies, you'll start to really understand the importance of how the candlesticks are forming and and the patterns that they're setting up in and how they look on the charts on different time frames. Okay? But I don't want to overwhelm you with all that information. Now, for now, just understand that different candlesticks form in different ways when you look at, you know, the smaller time frames or the larger time frames. Okay? So, that's what's important. So let's understand how bottoming tails are formed. So like I said, we open at this price, right? This is where we're opening and we drop. So right, so this is a larger time frame and by looking at the smaller time frames, we see more candlesticks. We see exactly how this candlestick was formed and what went into it. So we open at this price. Excuse me, guys. I'm just going to grab a sip of water. >> [clears throat] >> Sorry guys. So, we open at this price. We drop all the way down to make absolute lows. And then the buyers show up and they bring it all the way back up to make new highs. So, this is a bottoming tail, guys. Remember, a bottoming tail. It's a clue. The buyers have taken control. And this it kind of makes sense, right? The sellers came in, but then the buyers dominated. that brought it all the way back up to make new highs. So the these are this is kind of how this gives you insight on how a bottoming tail is formed. And at the end of the day, we see that the buyers have taken control. Even if it's a red bottoming tail, right, we have a a green one here. Even if it's red, you could still see that the buyers have taken control even though, you know, it still uh closed at a lower price than it opened. So, we opened here. We dropped all the way back down to make absolute lows. And then the buyers take control and they bring it almost back up to the highs, but you know, not quite. So, you could still see that the buyers have ended the move. The buyers have taken control. If we look at a topping tail, we open at this price. We rally, the buyers come in, they it rallies, we make absolute highs, and then the sellers come in, they dominate, and they bring it all the way back down to make new lows, and we close at a lower price than where we opened. That's why it's red. And we could see that the sellers have taken control. So remember, a topping tail, very important, topping tail is when the sellers have taken control. Okay, another example. Even when it's green, we open at this price. Buyers come in, they rally, we make absolute highs just for the sellers to show up and they end the move. And although it's green, we could still see that the sellers have taken control. Okay, with a dogee bar, we we talked about how dogei bar represents a battle that neither the buyers or the sellers won. And in certain circumstances, the dogee bar is a very effective reversal and entry bar. So, that's really important. They a dogee bar is is an excellent entry bar and we're going to be talking about that a little later once we actually start going through uh through the strategies. Okay, so that's that's the end of this beginner candlestick class. And if you guys are a little bit confused on what these candlesticks actually mean, how to read them in sequences or, you know, actually applying this information, just stay tuned. It's all going to make sense as the course progresses. But please just make sure that you understand what a dogee bar means. You know how topping tail what topping tails mean, what bottoming tails mean, right? Um and just understanding that candlesticks form in different ways and looking at how a candlestick forms gives us a lot more insight on what's going on uh with that stock or with that crypto. But we're going to be talking and going more into detail as the course progresses. Just make sure you understand everything we talked about today. Okay, guys. Uh, let me put my camera up one more time. So, I would suggest also re-watching this video if you don't understand it completely. Guys, let me know if you have any questions and looking forward to seeing you guys in the next section of the course. Thank you guys. What is going on guys? Hope you're having a great day. During the last class, we talked about the basics of candlesticks and we learned some of the fundamentals of what candlesticks are, why we're looking at them, and what they really signify. And just for a reminder, they signify and they show the relationship between uh supply and demand, between the buyers and the sellers. And if we can understand the relationship between the buyers and the uh and the sellers and the candlesticks and we could see the patterns and the way that they form and understand what that means, we could take advantage of it and find, you know, hopefully super lucrative trades. So dur during this class, we're going to be going to uh going into the advanced candlestick course. So, I'm going to share with you guys some additional details and some other types of candlesticks that are that are important to uh recognize. Okay. My recommendation is if you haven't watched the previous course, if you're still kind of uh confused on topping tails, bottoming tails, what candlesticks are, how they, you know, uh show different time frames, then definitely take a step back, maybe reach out to me, ask me some questions before you go into the advanced course. Okay. So I'm going to turn off my camera. Perfect. And let us begin here. So this is the advanced candlesticks course. Let's get right into it. So for mastering candlesticks, we have to really understand that some candlesticks are more important than others. And they give us uh different types of information that we could use to base off of when we go into trades. And there are very specific candlesticks that we are looking for when we time our entries into stocks or crypto, right? And later in the course when we actually talk about different strategies and different ways uh the candlesticks, you know, the different patterns that they could form, um it's going to make a lot more sense and you're going to really see why we look for specific candlesticks in certain situations. And there are also specific candlesticks that we look for when finding reversals. And there are also specific candlesticks that can enhance trading strategies and increase the odds of success for a trade. So something that we need to emphasize is the way the candlesticks form. Number one, they give you different information about what's happening in the trade. And they also make trades a lot more potent where if you find a specific pattern or a specific strategy, you know, having some specific type of candlestick that we're looking for can greatly increase the odds of that strategy working and you actually making money. So, that's why it's important to pay attention here and master the candlesticks that we're about uh to learn about. So as a reminder, topping and bottoming tails, really important that you guys know this. Topping tails right right here. Tail at the top suggests that the sellers have taken control, right? The sellers have taken control for both, you know, the green and the red bar. For bottoming tails, it's the opposite. It suggests that the buyers have taken control. Really important that you guys that as soon as you guys see these sort of candlesticks, you know exactly what they mean. And these bars are are going to provide you lots of insight on the price action that's occurring with stocks or crypto. Okay? And it's really useful when we pair these sort of candlesticks with with the strategies that we're going to be learning. It's all about pairing things together to create a more potent trading setup. Okay. So now let's go into narrow range bars. and a narrow range bar. They are bars that have a small distance between the high and the low of that candlestick, meaning there really isn't all that much price action that's happening, right? There's not, we're going to see an example in a second here. It's going to make a little bit more sense. Um, they are pretty significant when they occur after a multiar move because, you know, they might serve actually as a reversal candlestick. It gives you uh kind of more [snorts] evidence that a reversal might take place, right? And they're also especially useful uh useful for buy setups, one two three patterns, and reversal setups. And we are going to cover that when we actually start with the strategy section of the course. So let's let's look at what they are. Here we have normal ranged bars, right? You see a big bar like this opened at this price, right? dropped to these lows, went all the way up to these highs, and closed here. Same thing with this. These are kind of normal range bars. These are what narrow range bars look like. Whoops. You could see that there's not that much distance between the open and the close, right? The open and the close. They're kind of smaller candlesticks, right? So, these are what they look like. So, if you see a bar candle like this, just know it's a narrow range bar. Okay? Okay, make sure you you're able to identify that wide range igniting bars. Okay, this is also really important to be able to recognize a bullish wide range igniting bar is an above average size bar that has its open price near the lows of that time period and its close price near the highs of that time period. And it suggests that it's very bullish and that many traders are playing long. And we actually uh saw what this looks like during the beginner uh course. However, I'm going to show you guys another example in a second. A bearish a bearish wide range igniting bar is an above average size bar that has its open price near the highs of that time period and its close price near the lows of that time period. Suggest many player uh many traders are playing short. So, this is a great example of what they look like. Just give me one second. I'm going to have a sip of water. for one side. [snorts] So why are they bullish wide r or bullish or bearish wide range igniting bars? Because here the open is near the lows, right? And the close is near the overall highs, right? We don't have a large bottoming tail. We don't have a large topping tail. Same thing here. We opened near the highs. We closed near the lows. And these bars show you that there is um a new move that's being ignited, especially when it's coming from a consolidation. And we're going to I'm going to show you guys examples of that later. Okay? But the whole point what you just make sure you recognize that these are igniting bars, okay? They're bullish or bearish wide range igniting bars. Make sure you're able to spot one. Okay? And that's really all we're going to talk about. So, for this class, if you're still a little confused on how we're going to use these candlesticks, don't worry. We're going to address that. The whole point of these two candlestick lessons is to, you know, make sure that you guys familiarize yourself with with, you know, identifying, you know, for example, wide range igniting bars, narrow range bars, uh, bottoming tails, topping tails. You should know when you see a candlestick um that's for example a topping tail, you should be able to immediately say, "Hey, that's a topping tail. I know what I'm looking at." Or if you see a narrow range bar, uh it's important to look at that and be like, "Okay, that's you know, identify it for what it is." Right? So, once you understand all of these candlesticks, uh how candlesticks show you different time frames, right? What's the point of them, you're going to be able to move on to the next section. Okay guys, so hopefully this makes sense. Please reach out to me if you have any questions. And if you're uh you know, if you understand everything we've done so far with the candlesticks, you're finding it easy, then that's great because you already just learned a crucial part of price action, a crucial part of reading technical analysis, and you're well on your way uh to finding trades, understanding what the candlesticks are doing to certain patterns. And it's going to make a lot more sense once we go over the strategy section. But proud of you guys for uh sticking with it so far and I'll see you in the next class. Thank you. What's going on guys? Hope you're having a great day. For today's class, we are going to be talking about the three different trends that exist in trading and with price action. Okay. So these are super basic trends that you guys should know how to identify and you know you should know the implications of these trends as well. So let's get right into it. The three different trends. This is probably stuff that uh you've heard of you've heard of already. So when we're looking at an uptrend, it's characterized by two different characteristics. number one, higher highs and higher lows, and number two, a rising 20-day moving average. So, we haven't covered how to use the 20-day moving average, but just always keep in mind that we want a rising and a trending higher 20-day moving average. Okay, so as you can see, we have higher highs, right? We're making new highs and we're making higher lows, right? This low is higher than that low. This low is higher than that low. Same with the highs. Okay? And as you can see, this line, the black line, which is the 20-day moving average, it's under price and it's also uh trending higher. And we're going to be doing the 20-day moving average class next. So, just stay tuned for that. Okay, so this is what an uptrend is. Very simple stuff. We're looking at a downtrend. It's characterized by number one, lower highs and lower lows, okay? We have lower highs, right? And lower lows. So low here, low here, lower here. And as you can see, we have a declining 20-day moving average, which is this line. So, as you can see, during a downtrend, we want the 20-day moving average to be over price, right? And we see that during the downtrend, it sort of retraces, right? During the it always rallies right to the 20-day moving average, drops, rallies right to the 20-day moving average, drops, but we're going to be looking at the 20 MA uh during the next class. So, this is what a downtrend looks like. Lower lows, lower highs. Okay? And we also have a sideways trend which is characterized by relatively equal highs and lows. Right? We rally, we make a high, we drop right to the previous low, we rally to the previous highs, drop to the previous low. Okay? And once we talk about support and resistance, this is going to make a lot more sense. But this is what a sideways trend is. So sideways trend it's not you know we don't have u one particular bias we don't have a bullish bias or a bearish bias right overall we're just sort of fluctuating between the highs and the lows okay so this is what a sideways trend is um and usually sideways trends they uh lack momentum right so with uh uptrends and downtrends we clearly know what the what the momentum is right For an uptrend, there's clearly bullish momentum, right? We're we're rising. There's a lot of buyers, right? Over with a downtrend, there's a lot of bearish momentum. There are a lot more sellers. You know, the sellers are dominating the move. But with a sideways trend, it's it's really there's no clear momentum. We we don't know exactly are the buyers winning or are the sellers winning just because, you know, we're kind of fluctuating between the highs and the lows. Okay, here's an example of a of a uptrend. This is a real chart with candlesticks as you can see right. We can see that we made a high here. We made a low here. This low was higher than this low. This high was higher than that high. Right here also make a higher high. Higher low. And as we continue going up, you can see that we're continuously making higher highs and higher lows. This blue line is the 20-day moving average. Okay. And as you can see, there's probably a ton of candlesticks that you're already able to identify, whether it's a topping tail, bottoming tail, narrow range bar, wide range, igniting bar, which is really good, or dogey bar as well. So, if you're already looking at these candlesticks and you're able to identify the different ones that we've learned about, that's fantastic. Looking at a downtrend, or actually, this is a perfect example of an uh of an uptrend uh and that that's followed by a downtrend, right? We could see here this white line is the two uh is the 20-day moving average. We could see we're making higher highs, higher lows until we actually reverse. And now we make lower highs and lower lows. Right? So we're uptrending, then we go into a downtrend. And this is actually screenshot of the NASDAQ ETF, the QQQ. Um so this is this is a very recent snapshot. So you could see that we went from an uptrend to a downtrend, right? Uptrend is higher highs, higher lows. Downtrend is lower lows, lower highs. Okay, hopefully that makes sense. So just make sure you're able to identify whether an uptrend or a downtrend or a sideways trend is occurring. Okay, guys. And during the next class, we're going to be talking about the 20-day moving average, which is this white line. And I'm really excited to talk about that. It's uh extremely important and hopefully this all makes sense guys. And uh so now you guys should be pretty familiar with identifying several different types of candlesticks and also identifi identifying different types of trends that are occurring as well. All right guys, have a good day. See you in the next class. Bye. So I made $1,163 yesterday using all of the concepts that I'm going to teach you in this video. So, I highly recommend watching until the end of the video because this can truly be transformative for your trading. This is my think or swim screenshot on my phone. So, it shows you all of my winning positions. It also shows you all of my losing positions. And this is my Think or Swim screenshot on my desktop. As you can see, May 9th, 3:53 p.m., $11,163. And I've had a lot of people that have commented under my videos, hey, why don't you show your profits and your results on your actual brokerage account on your Schwab. So, I listened and here they are. Yesterday, May 9th, I made $10,831. The reason for the small discrepancy, it's around a $300 dis uh difference, is because Schwab takes off exchange fees um at the end of the trading day. So, this is my profits after fees. So, this is for yesterday, May 9th. May 8th, 2025, I made $4,98. May 7th, uh, Wednesday, I made $5,44. May 6th, that was on Tuesday of this week, I made $4,800. And May 5th, Monday, I made $2,879. So, if you do the math, it adds up to around $27,500 in profit for me this past week. And the reason I'm showing you this isn't to boast. It's not to brag, but it's to show you that I actually do this for a living. Everything that I'm going to be teaching you in this video, I personally do to make money in the markets. And there are way too many trading educators that try to teach you how to trade, but they don't actually trade themselves. I want to be as transparent and as real as possible. So, now that you know that this actually makes me money almost every single day, let's go ahead and hop right into the video. To preface this video, what I'm about to show you isn't revolutionary. It's not brand new. It's literally existed forever, but it is unbelievably powerful if you know how to apply it correctly. And the best part is it is extremely simple to use. And in this video, I'm going to show you how I practically use this tool. I'm going to show you trades that I took this week and how I was able to use this tool to my advantage and make $27,000 this past week. And this mystery tool is the 20 period simple moving average. And I guarantee there are people that are watching this video that are thinking to themselves, simple moving average, what? Like I thought he would be using MACD or RSI or Ballinger bands or VWAP or stochastics or Elliot wave theory, all these complicated indicators. And no, I do not. The only tools that I use are the 20 SMA, the 200 SMA, 200 period simple moving average and volume, but mainly it's the 20 period simple moving average. I like to keep my trading simple. Trading is already hard enough given the fact that it's so psychologically and emotionally demanding. Like you have to be really disciplined to be a good trader. That's already hard enough. Why would I want to over complicate my trading using crazy complex indicators uh you know super cluttered charts looking at four or five different things to analyze a stock? No, I don't want to do that. I like to keep it as simple as possible and that's why I use the 20 MA, right? It's because of the simplicity, but it is so powerful if you know how to use it, which I'm going to show you in this video. And what is the simple uh moving average, the 20 MA? It essentially tracks roughly the last one month of trading data data and it represents that price action in a line. That is all it is. It is a line that helps us trade. There are other moving averages like the 10 MA, the 50 MA, the 100 MA, the 200 MA. And I really like the 20 because it's not too reactive like the 10 MA. Like if you get violent swings in price, the 10 MA is going to react super crazy. but it's also not too slow like the 50 MA or the 100 MA. It's like that perfect uh sweet spot where it represents the last one month of trading data. Now, I also use the 200 period simple moving average mostly for support and resistance and that is kind of like my long-term moving average. So, I like to use the 20 SMA for my medium-term and 200 MA for my long-term moving average. And the reason I use the 20 MA is because it is the ultimate trend following tool in existence. And a lot of people ask me why does it work? Like a lot of my students when they learn how to use it, they apply it in their trading, they would ask me why does this actually work? Like what's the reasoning behind it? And I've wondered this as well. And I honestly think it's because it's like a self-fulfilling magnet. There are so many traders, institutions, algorithms that use it that price just respects it in an unbelievable way that you're about to see. And you know, at the end of the day, I'm not sure exactly why it works, but it works. And that's the only thing that I really need to worry about. So, let's hop into how to actually use it. Number one, the main point here is the 20 MA is not effective when prices are sideways. It is only effective when prices are in a strong uptrend or downtrend or there's strong momentum in one direction. We don't ever want to see a flat 20 MA. A flat 20 MA isn't really useful. It's not effective for our trading. What we want to see is a rising 20 MA if it's an uptrend and we want to see a declining 20 MA if it's a downtrend. All right, so like I said, this is the ultimate trend following tool in existence. And trends, whether that's an uptrend or a downtrend, respect the 20 MA in this fashion where you have the 20 SMA, it's under price, trending higher. All right? Right. And if you ever if you've ever been to one of my free classes, you've heard kind of like the jingle, the song that I use. Under price, trending higher, under price, trending higher, under price, trending higher. I literally want you to sing it to yourself so you can like cement it in your head. We want the moving average to be under price, trending higher during an uptrend. And the opposite applies during a downtrend. We want it to be overpric trending lower. Over price, trending lower. if it's in a downtrend in this way, right? Rising 20 MA and we have an uptrend. And what you're going to see is that within that trend, prices respect the 20 MA. They trade off of it where you could have a pullback into that rising 20 MA, right? You could also have a consolidation into that 20 MA. And the same thing applies if it's a downtrend. All right? So, we get a move lower [snorts] um and then we retrace into the declining 20 MA. move lower, retrace into the declining 20 MA. That's what you really need to understand. Let's go ahead and look at some examples. So, step number one, we have an established downtrend, and that's extremely important. We have lower highs, lower lows. Now, number two, what is the moving average doing? The 20 SMA is overpriced and declining. You could you could see how it is declining lower and overpriced. That's exactly what we want to see. So, we have this initial consolidation directly into the declining 20 MA right here and then we get the breakdown. Exactly what we want to see. Look at this. We consolidate directly into the 20 MA. Literally, as soon as it touched the moving average, that's when we broke down. And if you've watched my free 10 plus hour course, which I highly recommend that you do, it'll completely build the foundation behind your trading. It's 100% free. It is genuinely better than most paid courses on the internet. It's in the description of this video, so you could begin watching it literally as soon as you finish this video right here. I actually also teach about the 20 MA in the free course, but you could use all of that education and combine it with this YouTube video as well. But if you've watched it, you know that I only really trade two types of strategies, and they are correction strategies. And I'll get to what that means in just a second. But the only strategies I trade are really you get a move higher, you get a dip, then it sets up as a buy setup, and then I'll trade the continuation higher in that uptrend or it moves up, it consolidates, and then I will trade the breakout. This is essentially the foundation of my strategies. I keep it very simple. These are really the only strategies I trade, as you'll see later in this video when I break down my real trades. But that's what we got here. consolidation breakdown consolidation breakdown and I use the 20 period moving average as my way of knowing when to position myself into the trade. All right, let's look at a at another example here. And honestly, just just I don't even need to explain it. It's so simple to look at. Just look at how many times price respects the 20 MA within this uptrend. Like as soon as it started curling here, this was kind of like the start of the uptrend right here. It kind of almost touched it right here. Right here. Right here. It literally touched the tail touched it. The tail touched it right here and then immediately started moving higher. Right. Let me move this here. Okay. Same thing. So here again, hit the 20 MA started rallying. Hit the 20 MA. The tail touched the 20 MA. it it kind of broke through the 20 period moving average here, immediately got rejected to the downside, and then continued higher. Especially right here, you could see like it's obvious, it's simple, and that's the reason why I use it. Even like any beginner could look at this and being and be like, "Yeah, wow. Price really respects the 20 period moving average during an uptrend." And every single time it touched the 20 MA, if you went long, you would have made money, right? Just so it's a little bit clear. Every time it touched the 20 MA, if you went long, you would have made money every single time during this uptrend. And that's exactly why I used a 20 period moving average. I'm not saying you should have went long. I'm not saying every single one of these pullbacks, every single buy setup here is a quality setup, but if you just bought it every time it hit the 20 MA, you would have made money. This is actually a chart of Bitcoin at $30,000. I think this was like the 4hour chart or maybe the daily chart. I don't even need to explain it what's going on. It's simple enough for any beginner to look at this and immediately understand what's going on. Right? Let me get the pen tool. We moved up. Then we kind of retraced and then consolidated into the rising 20 MA. Right? What's the 20 period moving average doing? It's under price, trending higher, under price, trending higher, under price, trending higher. You got you guys get the idea. [snorts] Soon as it hit the 20 MA breakout did the same thing based directly into the 20 period moving average literally touched it boom massive breakout. So in this case how would I enter the trade? So for a breakout like this I would either enter above the base right here or if you want extra confirmation you could uh enter above the base here and then where's your stop loss? Below the base and I mean it would have made you a ton of money. Very high reward to risk trade. And this is why I use the 20 MA. It's simple, but it is a gamecher during uptrends or downtrends, during trending markets. And I would argue that we as traders should only be trading during trending markets. It's super cliche, but the trend is your friend. Why would you trade in a sideways market when there's no clear direction? I want to trade in the direction of the trend. the markets are telling me, hey, I'm going in this direction, whether it's higher or whether that's lower. I identify that and I think to myself, okay, cool. The markets are telling me prices are higher. We're in a trend. I want to go in the direction of that trend. Because the probability that I'm going to make money increases because I'm trading with the direction. It's like if you're driving on the highway, would you want to drive with the flow of traffic or against the flow of traffic? Well, if you drive against the flow of traffic, you're probably going to crash into a car. It's dangerous. The same thing applies for trading. Why would I try to catch the top and go for reversals when I could trade with the trend? Now, I still do trade reversals. However, they are inherently more difficult than trading with the trend. I see way too many beginners that only trade reversals. It's like you guys are making it harder for yourself. Trade with the trend. And once you get a little bit better as a trader, once you're, you know, you have a little bit more finesse, you know what you're doing, you have more experience, you have more reps, that's when you can begin getting aggressive with reversals. All right, hopefully all of that makes sense. Now, like I just showed you, I trade either breakouts or retracements, and that's how I use the 20 period moving average. And what you want to do is time your entries when prices are either at or near the 20 MA. don't need to be like literally touching the 20 MA for you to position yourself in the trade, but they have to be at or near the 20 MA. So, that's a rising 20 MA. If it's an uptrend, like we have right here, rising 20 MA, we want to be buying at or near the 20 period moving average, right? And the opposite applies during a downtrend. You have a downtrend, we want to be buying or in this case, shorting at or near the 20 MA, right? In this case, it perfectly touched the 20 MA, but you're not always going to get that. And then there's and and that begs the question, why why does it need why do prices need to be near or at the 20 MA? Because there's this concept called extension. The way you can think of this is the greater the distance uh between price and the 20 MA that is known as extension. You can think of extension as overbought if it's like you know in an uptrend going you know if it's moving up or oversold if it's in a downtrend. We don't want to be buying or positioning ourselves when prices are extended. We want to be positioning ourselves when prices have corrected when they're near the 20 MA. So you could use the 20 MA for that. You could use it for measuring how overbought or how oversold a stock or a crypto or forex pair or whatever your trading is. All right? And we ideally always want to be getting into it when it's near or at the 20 MA. So, you could actually use this idea of extension of prices being super far away from the 20 MA for reversal opportunities like this right here. Like take a look at this. Let me get the pen out and let me make it white so you could see it. Take a look at this. Look at how well prices have respected the 20 MA during the uptrend. Check this out. Literally perfectly perfectly every single time it touched the 20, it went up. You would, if you went long, every time it hit the 20, you would have made money. Except right here. Notice how it started to kind of go parabolic right here. and all of a sudden we had extension between price and the 20 MA. This is when a trend is exhausted. When a trend is exhausted, that means the trend is beginning to end. Funny enough that rhymes, but hopefully that makes sense. And the way you can measure whether a trend is exhausted is the distance between price and the 20 MA. Right? So in this example right here, you could see that there's kind of distance between price and the 20 MA. And if you want to see what happened right after, well, I have that screenshot. This is what happened. That's when the trend ended and we actually moved lower and then we ended up rolling over and kind of going sideways and almost actually starting a downtrend right after this, right? So, as soon as the trend was exhausted, this is actually a really good opportunity to potentially catch a reversal and go short. So, you could use the 20 MA for reversals as well, right? um by identifying when the trend is exhausted and then positioning yourself going against the trend because you know trend is exhausted there's not enough buyers there's not enough buyers we're probably going to see lower prices and that's when we can position short so in this case I would probably enter enter underneath the lows of this bar as a short stop-loss over the highs all right I don't want to get too into reversals in this video but hopefully that makes sense here's a really good example of that real fast before we hop into the more practical stuff I don't want this video to be too long We we made a massive move, right? The trend was kind of exhausted, massive distance between price and the 20 MA. And this is precisely where you can look to go and play the reversal and and uh capitalize on prices moving up and you know catching this long. So hopefully that makes sense. So we usually want to do the 20 MA within an uptrend or a downtrend. However, you can use it during reversals if the trend is exhausted, if there's major distance between price and the 20 MA. Hopefully, this makes sense. And let's go ahead and hop right into the reall life examples. One thing that I definitely want to emphasize before we continue is that when you are trading within an uptrend, whether it's a a breakout or whether it's a retracement, you're essentially trading the idea of price correction. the idea that if a if the market moves up significantly, right, we need to see a price correction before we can make another leg up. Like in this case, we moved up significantly, we retraced and then we consolidated into that rising 20 MA. As we were consolidating, we were correcting. Prices were performing a correction before it was ready to run the next marathon and have the next move higher. And that's exactly what happened next, right? We moved up. The market ran a marathon. The the market put the next leg up. It can't just continue higher forever. It needs to correct. It needs to rest. And that resting, that correction can either happen through a retracement or a consolidation. In this case, it happened through a consolidation into that rising 20 MA. And then we could trade the next leg up. So hopefully that makes sense. When we're trading within an uptrend, we're essentially trading this idea of price correction. This idea that once prices have finished correcting within that trend, we buy and we take advantage of the next move up if it's in an uptrend or the next move lower if it's in a downtrend. Okay, so I have my Think or Swim platform up. I have the daily chart right here. I have the two-minute chart. I have the five minute chart. And then I have the 15-inut chart. And a lot of you guys are probably wondering, okay, cool. I get all of that seems simple enough, but number one, how do you use it in practice? And number two, on which time frames do you use it on? And you need to understand that I use multiple time frames. This is called multiple time frame analysis. And we're looking for multiple time frame alignment. I'm not just using one time frame. Throughout the trading day, I am always looking at the daily chart. And then in the morning, I'm focusing on the one and the two-minute chart. And then as the day progresses, I focus on the five-minute chart and the 15-minute chart. All while looking at the daily and the hourly. I am constantly looking and analyzing my trades off multiple time frames because it gives me multiple perspectives of what's going on in that stock and that gives me a better idea on whether that trade is going to make me money or not. It just deepens my analysis. I have a better perspective of what's going on. All right, so a lot of the trades that I'm about to talk about, I'm going to go through this relatively quick. I personally made money on this week or I watched it this week or it was on our favorites list in the morning this week. So these aren't like cherrypicked examples from months ago. These were literally trades from either yesterday or Thursday. And this is how I used the 20 MA. So let's look first at the DCGO. Why did I focus on the DCGO yesterday? Well, number one, it was a really interesting gap down on Thursday. It closed at around 2:30 right here. Zoom in. And then yesterday it opened at 190. The reason I thought it was interesting on the daily chart is because it gapped down underneath support, underneath the all-time lows, directly under support, and it gapped underneath this move higher. I'll probably make another video going more into gaps and how I trade gaps on the daily chart, but this is why I was focusing on it. And right off the bat, if you just look at the two-minute chart in the morning, I mean, look at this. We dropped. I'm going to kind of zoom in here. Look at this. Just beautiful setup. We dropped, we kind of retraced, moved in, moved a little bit back down, and look at this consolidation. Beautiful base breakdown directly into the declining 20 period moving average. I went short right here and I put my stop loss uh right above the base and caught this move lower. Beautiful, beautiful setup. Now, once again, look at, for example, the five-minute chart, right? Even later into the day, and this was closer to like 12:30 to the end of the day, look at how well prices are respecting the 20 period moving average, right? You can see there it's just trading off of it. Look at the 15-minute chart right here. Um, we moved down, we retraced, dropped it a bit, and we just based based based based based right into the declining 20 MA. And then we got the breakdown. And this trade right here, I think this ended up making me like 600 bucks. I couldn't get that much size uh because [snorts] I couldn't get filled, but short under the base stop loss above it. Like literally on this trade, two different really interesting setups that worked that completely just consolidated into that declining 20 MA. Beautiful on the DCGO. Let's look at another example. Envax. This thing made me like $2,500 at the end of the day yesterday, right? This wasn't an interesting gap. It just started to move down. But what I really want to show you is this. Check this out. So, this thing was consistently downtrending all day. You could see like on the five, you could see how well prices are respecting the 20 MA. It's not completely declining, but it is more or less like, but you could see how well prices are respecting it. Now, right here, it started to break down 20 MA over price. This is the 5m minute. Even on the 15, if you look at the higher time frames, when we got closer to here, right, it got closer to the 20 MA and it was getting ready to break down. Then I went to the smaller time frame. This is how I use multiple time frames. Look at this 2-minute base right here. I mean, beautiful, unreal. Like, look at this. It dropped based right into that declining 20 MA on the two and we got this breakdown. I got like 14,000 shares right here and I caught this move lower. Ended up making me like 2500 bucks. really really beautiful trade. But you could see how I'm combining multiple time frames. Um downtrend on the five respecting the 20 MA right here. It's way too extended from the 20 MA on the 15 and needed to consolidate and correct before it did this breakdown. Right. Really, really nice. And then on the 2-minut, we got that 20 MA breakdown. Beautiful, beautiful, beautiful stuff. Next, [snorts] we got the PLX. Another really, really interesting setup here. All right, so let's kind of analyze it. What do we got? Nice gap down. Look at this. It closed at 289 the previous day. Next day opened at 240. Look at this massive move lower. Uh and the gap was the catalyst for that move. And look at the 15-minute chart. We dropped retraced based based based directly into the 20 MA. It didn't quite touch it, but it was at or near, remember I said near near the 20 MA. Then we got the breakdown and then honestly just time ran out and it didn't make that next move lower. You look at the five, look at this. We dropped retraced into the five minute 20 MA. Then we got another drop, but then the day ended. All right, even on the two-minute chart, you could see like it's how well right here it's respecting the 20 MA. This is why I use it. It's like multiple time frames are telling me the same exact thing. That's why I get so confident using it. Oh, the IOA. Uh the main thing I want to show you is actually the one minute chart. This was right off the morning. Check this out right here. Check this out. We dropped. This was actually one of my top watches. And I tried to scalp this three times yesterday. First three of them lost money. I was down 700 bucks and then right here it retraced right into that declining 20 MA. And right here it literally touched it. I went short at 94. I remember 94. I went short and I caught this whole move lower. made all of my money back plus another $1,200 on the IOA. I think that was my NPNL on it. Let me check. Uh let's see what was my NPNL on the IOA. Yeah, 1,200 bucks literally. All right, let's move on. So, that was really, really nice. Let's look at Oh, this is another This isn't even that high quality of a trade. But number one, look at the five. Began um the uptrend rising 20 MA, retraced right into it, moved higher. Even look at the 15. We moved up, retraced right into the 20 MA, bounced right into the 20 MA, bounced, and we continued higher. Beautiful, beautiful setup. And hopefully this just gives you an idea of how you're using it. Look at this. Open. Open was my biggest trade yesterday. Um, take a look at the two-minute chart and the five-minute chart. By the way, this is a beautiful gap down as well under support. Look at this. Dropped based right into the 20 MA drop. Based right into the 20 MA on the downtrend. Amazing move. This made me over 4,000. Um, and they opened right here on the 2-minut. Same thing. We we combined multiple time frames. Same thing. We based right into the declining 20A. It's the same things. You guys are seeing how freaking useful it is. Even the Kodak yesterday was which was really good. Look at this. We moved down, retraced, moved down, based at the lows right into the declining 20 MA and the 15 and then we got the follow through and the breakdown lower. Had a really interesting daily gap as well. It gapped under two green bars. So, it trapped all of the buyers from the last two days. Same thing with the five. You could see how it's declining. The GMAD was one of my best trades in the morning as a matter of fact. And if we look at this, I went short right here. And then you could see how well it respected that downtrend. But I went short uh let me clean it up. Uh right here when it consolidated into that 20 MA, went short and made money. Very good. Let's move on. CRVS, same thing here. Not even that great of a setup, but look, respecting the 20 MA on this 5minute move higher, especially here. Really nice little retracement. And then here as well on the 15. Beautiful. Respected the 20 MA. Not a high quality setup, but you guys get the idea. Lyft. Look at this lift. Power trend it. This was a big gap up on the daily chart. I think it had earnings gapped up, right? So nice bullish catalyst in the morning. Moved up based on the breakout. And look at this. I mean, every time it hit the 20 MA, moved up. If you just rode out this power trend, it would have made you money literally all day. Um, let's see what else. [snorts] Um, the go- go. Same thing with this. Um, didn't quite hit the 20 MA, but this was a nice breakout. Um, and then it respected the 20 MA as it was moving higher. We really want that 20 MA to be trending and not flat, right? Let's look at the CRVX. Same thing here. Just I mean, all of these, if you just look at every time frame, it really respects the 20 MA. Even this this is uh this actually got bought and then went climactic. Was a nice short. I didn't take it. And then even on the way on the on the way down, look at this. During the downtrend, perfectly respected the 20 MA. I mean, every single setup, I'm basically showing you guys this. It's the same exact thing. And this is what I do every single day in my trading. Now, I obviously don't just use a 20 MA. I have an I have exceptional mastery of knowing the quality of the setups, what criteria go into a high quality setup. You can learn all this in my free 10 plus hour course. Watch it in the description of this video. I also combined using level two. I made a YouTube video about that obviously with my knowledge on how to trade gaps on the daily chart which are bullish or bearish catalyst for that stock. Gaps can occur because of all sorts of reasons. I also have a YouTube video about that. Watch it. So, it's not just the 20 MA, but I'm combining the usefulness of the 20 MA with everything else that I know about trading, and it just just creates way more higher probability setups. It is truly unreal. And this is why I use it. It's the only indicator I use. Same thing here on the zip based right into the declining MA. Attempted to break down. Not much follow through, but you guys get the idea. Insane, insane stuff. Even this CTMX, look at this 20 MA starting to trend lower. This one's a little sloppy, but same idea, right? Hopefully you guys get the point. These were literally trades from the last few days that I was able to make money on using the 20 MA with my knowledge of setups, with my knowledge of order flow, and just knowing everything that um I'm good at with trading. Combine it all and it creates really high probability setups. This is what allows me to make money, guys. It it's what allows me to get results like this because I keep it simple and you should, too. Hopefully, you found this video incredibly useful. Please leave a like, subscribe to the channel. I'm constantly posting uh really educational and valuable videos that you could actually use to make money with. [snorts] Um, subscribe, like, leave a comment. Um, if you found this valuable, and if anyone who's watching is looking for a serious hands-on mentor that you could trade live with every single day, I do I will be transparent. I do have a mentorship where I help scale and coach traders from zero to making 10 to $50,000 per month. I I had plenty of students that surpassed5 to $20,000 this past week trading alongside of me, right? Like I made 11,000 or I guess $10,800 yesterday. I had plenty of students that hit anywhere between 500 to$7,000 with me just yesterday. If you're looking for a hands-on serious mentor that will work with you until you find success, there's a uh application below. Um, I'm very selective with who I work with because I only like to work with dedicated, disciplined, and professional traders or traders who want to be professional. So, fill out the application if you're interested, but make sure you also get started with my free 10 plus hour course. And hopefully you find found this very educational. I'll see you guys on the next video. What is up, guys? Hope you're having a great day. I'm very excited for this section of the course because we are finally going to be going into some of the more exciting parts about trading and specifically we're going to be talking about the 20-day moving average today. And a lot of people out there, they trade with different indicators. Some people use MACD, RSI, Ballinger bands, um, and other super fancy indicators. And frankly, I don't use any of those. I keep my trading extremely simple, but one of the main, I guess you can call it an indicator, uh, one of the main indicators I do use is the 20-day moving average. And we're going to talk about how to use it and how to really take advantage of it because I personally believe it is the ultimate and most useful tool in trading. Okay, so first let me show you guys how to actually put it on your Trading View charts. And let me turn off my camera. All right. So, once you have this blank chart, you've selected candles right here on Trading View. You're going to go to indicators and you're going to type in moving average. And you could just select the simplest one. It's going to pop up here. It's going to say MA. Just go to this settings tab, go to inputs, and change the length to 20. And let's make I'm going to make mine white. Okay. And there you go. The 20-day moving average is now on my charts, which is perfect. Now, let's go into how to actually take advantage of the 20-day moving average and how to use it. So, moving average, this is one of the fundamentals of technical analysis. This is, I would say, just as equally important as learning and understanding the candlesticks. It's just as important understanding how to use the 20-day moving average. So, let's talk about what are moving averages. Moving averages, they are lines that represent price action in a particular time frame. Okay? So, if we're talking about, let's say, the 20-day moving average, that line shows you the average price within the last 20 days, right? If you have a 200 day moving average, which is another one that I use, that shows you the average price of that stock or crypto in the last 200 days. So, it's calculated by taking the average of a set of prices over a specific number of days in the past. So, like I just said, 20-day moving average, it would be 20 that it would be the average price of the past 20 days. A lot of people also ask me about exponential moving averages. That's calculated through uh emphasizing more recent price action. So, the equation that you use for an exponential moving average, it puts larger weight onto the most recent price action and it's much more responsive to new information that's coming out with that starker crypto. Okay? It's it just weighs more recent price action, heavier in the equation. And it doesn't really matter which one you use. You could use either or, but just make sure you stay consistent with it. If you have the simple day moving average, right, make sure you keep that um across all of your charts. And if you use exponential, make sure you use the exponential on all of your charts. So, the moving averages, especially the 20-day moving average, it's the ultimate stock or crypto directional guide. It shows where a stock or a crypto is trending and how much momentum it has. So, it's a directional guide, right? And uh specifically, I know a lot of people they use the 10 MA, but I personally I only use the 20-day moving average and the 200 day moving average. We're going to be talking about the 20 during this class. So, let's talk about some key guidelines. A rising 20-day moving average is indicative positive market strength. Okay, that mean that means it's bullish. There are more buyers than sellers. We want to see price and the candlesticks above the rising 20-day moving average. Okay, that shows strength, positive market strength. A declining 20-day moving average trending lower shows negative market weakness. And in that case, we want to see price below the 20-day moving average. and that would show bearishness or a you know negative uh you know it would show market weakness. The sharper the slope of the moving average the stronger or weaker the trend is and we're going to look at examples of that. During a bullish uptrend, right? We know what an uptrend is. Now, during a bullish uptrend, stocks tend to retrace or pull back to the rising 20-day moving average. That's why we want the 20-day moving average above price. Because during bullish uptrends, we see price actually pull back or retrace to that rising 20. During a bearish downtrend, stocks, they tend to retrace or rally during uh to the declining 20-day moving average. Right? So during downtrends, they retrace to the declining 20-day moving average. Um, so whenever you hear the term extended, when price is extended, that means price is far away from the trending 20-day moving average. So if I ever say extension or extended, it means price is far away from the 20-day moving average. There's distance between price and the 20 MA. And in general, guys, always trade in the direction of the 20-day moving average, especially if you're a beginner. Trade with the trend. Don't go against the trend. So, this is an example here where we have a rising 20-day moving average and it is under price. You could see that the candlesticks are over price or I'm sorry, the candlesticks are over the 20-day moving average. And we can see that during a bullish uptrend, right, we have higher highs, higher lows. price tends to retrace or pull back to the rising 20-day moving average and then from there it increases again, pulls back to the 20-day moving average, increases again, pulls back to the 20-day moving average. Okay? And um so my question for you guys is, can you find the different types of candles that we've learned about narrow range bars, tails, or igniting bars? take a look at this chart and try to pinpoint some of the different candlesticks we've learned about. Go ahead and pause the video and just try to write them down. I'll give you guys a second to do that. Okay, so what we have here is we have a clear topping tail right here, right? Huge tail. The sellers have taken control. Price then dropped. And then we have right here an igniting bar, right? where the uh opening price is near the lows, the closing price is at the highs and it ignites a new move higher. We also have one here, right? Ignites a new move higher. And then right here we have two narrow range bars which you know are kind of our entry bars dur in this uptrend. And we're going to talk about entry bars later. Okay. But if you were able to identify these candlesticks then perfect. You're you're doing great so far. Let's look at the uh 20-day moving average when it's declining. Remember, when we have a falling or trending uh a falling and trending 20-day moving average that's, you know, trending lower, we see that price is under the 20-day moving average. And whenever price drops, it usually retraces to the declining 20, drops, retraces to the declining 20, drops, and then now we could see that in this case it based into the declining 20. So the 20-day moving average for both uptrends and downtrends, they could be kind of used as also support, right? It's kind of acting as support for the stock during an uptrend and it's acting as resistance for a stock or crypto during a downtrend. Hopefully this all makes sense guys. Uh this is a sideways trend, right? We have it's kind of fluctuating between highs and lows. Whenever we have a sideways trend, we also usually have a 20-day moving average that is flat and moving through price. Meaning there's no noticeable trend that's taking place. And usually guys, whenever you have a flat 20-day moving average, it shows that there's a lack of trend and you should avoid that. So don't trade if you see a a flat moving average. It usually suggests that um there's no momentum, there's no clear trend, and you know, you generally want to stay away from stocks or crypto that are not trending, right? The whole point something's trending, it has momentum, meaning we could take advantage of big moves higher [snorts] or we could short, you know, big moves lower. Okay, [clears throat] let's look at some examples. You could see right here, this is the 20-day moving average. We are trending higher, right? We are under price. You could see that every time price touches the 20-day moving average, every time it retraces to the 20-day moving average, it goes higher. So, if you guys were to buy it, every time price touched the 20-day moving average or got close to it, you would have made money. And once we go into the strategy section of the course, we're going to actually use the 20-day moving average and create a strategy, right? And the strategy is, you know, whenever it comes clo whenever it pulls back to the 20, that's what we buy. It's called a buy setup. We're going to be talking about that later. Okay. In this case, we have a declining 20-day moving average. This blue line, you could see how how it's over price. And you could see that, you know, price touches the 20 and drops. Prices the 20 uh touches the 20 drops bases into the 20-day moving average drops bases into the 20 drops. So you could see that the 20-day moving average is acting as resistance here and it's declining. It's trending lower and we would short it every time it touches the 20-day moving average. Let's look at another example. You could see how well price is respecting the rising 20-day moving average, right? right here. Base, right? Right. As soon as it touches the 20-day moving average, it breaks out. Same thing here. As soon as it touches, breaks out. And the main point here is that we could see that it's trending higher and it's under price. Okay. Slope and extension of the 20-day moving average is significant. And we have to remember slope, right? That is the uh the measure of steepness of a line, right? So, if you guys have ever taken math classes, you've I'm sure you guys have calculated the slope for different math questions before. But we got to remember 20-day moving average is a line, right? When we when we measure the slope of it, we measure how steep it is. So, we want to, you know, ideally we have something that's 45°. 45° is ideal because it shows that it's sustainable, right? The move is sustainable. The uptrend is sustainable. If it's higher than 45 degrees, right? Where if it's kind of like this is more or less 45 degrees, but if it's even steeper than this, then it shows that the move, the current move is not sustainable. If it's less than 45°, then it's going to be on the more flat side, and you know, it's not it's going to lack momentum. We talked about before how we want to avoid trading flat moving averages. flat moving averages specifically for the 20 for the 20 MA. Uh when it's flat, it shows lack of momentum. We don't want to trade stuff that doesn't have momentum. And the distance or extension between price and the 20-day moving average tells us if it's overbought or oversold. So, let's go into it. You could see we have a solid uptrend. The moving average is kind of it's a little bit it's not quite at 45°, so it's a little bit flat, but still price is respecting it. And you could see how it's getting steeper and steeper and steeper and eventually we have a large distance between the candlesticks and the moving average right here. This is uh extension, right? This is distance between price and the 20-day moving average. And you could see that um the moving average was getting steeper and steeper and steeper and eventually this move was no longer sustainable and we ended up I remember dropping after this. You could see how well price is respecting the rising 20-day moving average. Uh same thing here. I believe this is on Bitcoin. We broke out here. 20-day moving average trending higher. It's under price. Touched it here. Popped. You could see every time it retraces to the 20, it continues the uptrend. And right here is when we have extension. So, this is where you would want to look for a short position, right? We have extension from the 20-day moving average. And you can see the steeper it got, the less sustainable the move was. And we ended up dropping and base and, you know, starting to go sideways here. Okay, let's look at another example. Same thing here. We're uptrending. The 20-day moving average is under price, trending higher. Every time price touches it, it rallies. You can see how well it's respecting it. Here it got a little steeper. You could see right here it starts to get steeper. Then we have extension, right? We have distance between price and the 20. Here we don't really have any distance. Every time we have distance, it pulls back. But here we have, you know, pretty significant distance and extension. And then we ended up dropping from there. Okay. So, we would look for a short in this position. Another example. You could see how well it's respecting the 20. And then you can see the 20 is getting steeper, steeper, and steeper. And from right here, this is no longer sustainable. This is where we're going to be looking for a short, especially with the extension that we have. Okay. So, another uh very useful way to use the 20-day moving average is for spotting price transitions. When stocks or cryptos are ready to transition into an uptrend or a downtrend, the moving average will begin to curl and hug under price for a transition higher or curl and hug over price for a transition lower. This is really effective for the larger time frames and for longer term trades or swing trades. And you know, usually the time frames you're going to be looking at is the hourly, daily, weekly, or monthly. Let's look at some examples. As you could see here, this stock, I believe this is actually AMC. This stock is sideways, right? We don't have a clear trend, right? It's not really going anywhere during this time period. You could see the moving averages flat and moving through the candles through price until right here. You could see that we have a rally and the candlesticks were halted by the curling 20-day moving average. They stopped here and that's when we had the breakout. the price transition. As soon as we started curling under price and pointing higher, same thing here when the 20-day moving average is trending higher, you could see price is respecting it. But as soon as the moving average becomes flat and moves um you know moves into price through price, we could see it doesn't respect it until right here. We see price is starting to respect it. We're seeing it curl higher and that's when we get the breakout and we go higher. So, you can see that right before these big breakouts, the 20 MA is curling under it and starting to point higher. Let's look at PRTA. This is a really good example where um PRTA, we could see that the 20-day moving average is starting to curl under price, right? Starting to curl under and point higher. And we could see that this is clearly a price transition. And this is the monthly chart. So each one of these candlesticks represents a month. And that's where we had the big breakout as soon as it started curling under price like that. But if we go to the daily chart of PRTA, so every one of these candlesticks represents a month. If we go into the daily chart, right, then we see something a lot more interesting where uh when the moving average is going through price, it's flat. We don't have any moves. But as soon as it starts to curl higher and under price, that's when we get the transition higher. Okay? Same thing here. Soon as it moves under price and curls higher, that's when we make a move up. Same thing here. It's flat, trendless, nothing's going on right here. It starts to respect the 20 MA, starts to curl higher, and that's when we have the breakout, right? And you can see as soon as it started trending, that's when we started continuing higher. And uh okay, this is the last slide. So trade with the trend, guys. Your odds of success are greatly increased when you're playing in the same direction of the 20-day moving average. The correct entry is when price is at or near the 20-day moving average, not when it's far away. Let me show you an example of that. Right. So, we want to be buying it during this uptrend when the moving average is below price. We want to be buying it when price is at the 20 MA because when it hits the 20 MA, it goes up. When it hits the 20 MA, it goes up. When it hits the 20 MA, it goes up. So, we want to be buying it when it's at or near the 20-day moving average. Just like we want to be shorting it when it's at, right? Rallies into the 20, we short. Rallies into the 20, we short. Goes into the 20-day moving average, short. Goes into the 20, short. Okay? And as soon as we see some price extension, that's when we begin to rally because we're extended. Okay? Hopefully that makes sense, guys. Uh, let's go. And the 20-day moving average becomes extremely useful when you pair it with tradable patterns and strategies. So, we're going to be combining this 20-day moving average with a real trading strategy later in the course. So, you don't want to just enter because you have a rising um or declining 20-day moving average. You want to have a pattern. And there's specific things we look for in that pattern when you combine it with the 20. We're going to we're going to talk about that a little bit later. Okay. So, main points here is that it's an excellent directional guide and it shows you what's going on with the trend. If it's uh if we have a uptrend, we want the 20-day moving average under price and trending higher. If we have a downtrend, we want the move the 20-day moving average over price, trending lower. If it's sideways, it's not really that effective. Okay, that's kind of the summary here. Make sure you kind of watch this class a bunch of times. And my biggest recommendation, guys, is go and put the moving average, the 20-day moving average, right, on some of your charts and just start watching, you know, how price actually respects it during uptrends or downtrends, okay? And you'll just watch how price really trades off of it, and that's what makes it such a powerful and useful tool. So, make sure you do that. And this was an excellent class, guys. U looking forward to seeing you guys in the next one. Thanks. >> Let's hop right into the video. So step number one, you're going to go to indicators on your trading platform. Right now I am on tradingview.com. Now for my own personal day trading, I use Think or Swim. Now you're going to see tons of different complicated looking indicators. You're going to see crazy names like the Shandai Croll stop. You're going to see Elder Force index. You're going to see like Williams alligator and you're going to be overwhelmed. You're going to be confused. Which one do you actually use and you're going to want to actually ignore all of these fancy sounding indicators and your goal is to keep things simple. So, what you're going to do is look up moving average. Okay? You're going to look up moving average and you're going to see all these different types of moving averages. Now, what you want to do is doubleclick on simple. You're going to click it once, and then you're going to click it one more time. Once you do that, you're going to see these two moving averages pop up in the top left, and you want to hover over one of them, and you want to go to settings. And once you do that, all you need to change is you want to change the length of nine, change it to 20, and then press okay. Now, go to the other one and do the same exact thing. Hover over it, go to settings, and from here, change the length to 9, and this time you're going to change it to 200. And voila. These are the only two indicators I have ever used in my trading. Now, I also use volume. I don't really consider that an indicator, and I'm going to make a separate video on that. So, make sure you subscribe to the channel to watch that video as well. But, I've only ever used two simple moving averages. I think the simplest things in life are oftentimes the most brilliant. I have never used MACD. I've never used stochcastics or VWAP or RSI or Elliot wave theory or Fibonacci. I keep it simple. And a lot of you guys are going to watch this video and be like, "Oh my god, two simple moving averages. Like what? Like I thought I thought you would be using all these complex tools." No, I don't use any fancy indicators. I keep it simple. And funny enough, these are two of the most powerful indicators you will ever use in your trading. And I'm about to show you why. Finally, let's talk about the 200 period moving average. And this is actually even simpler. So, what we're looking for is for a flat 200 period moving average. The 20 MA, we wanted that to be trending whether it's uptrending or downtrending. And we don't want the 20 MA to be flat. It's the opposite for the 200. We want the 200 period simple moving average to be relatively flat. And the 200 MA could act as a ceiling for price whenever prices are trading below it. It could also act as a floor for prices whenever prices are trading above it. So what does that mean? Let's say you have a bunch of price action right here. This 200 MA could act as resistance for this price action where a lot of time prices will go to the 200 and bounce from it. Go to the 200 and bounce from it. So it could actually be a resistance area um for prices if prices are below the 200. Now the same exact thing applies if it's support. If prices are trading above it, let's say you have a bunch of price action. This 200 MA can act as support for price where prices will actually bounce from it and it's literally like a floor for price action. Now, this setup is quite rare. However, I do want to mention it. Every now and then, you'll get what's called a squeeze play where you have a flat 200 period moving average and then you have a 20 period moving average that is rising and going through this 200. And what you'll sometimes notice is prices will actually oscillate between the two where it's going to use the 200 as a ceiling, as resistance, and it's going to use this 20 MA as support. And they'll continue to oscillate and oscillate and oscillate and squeeze until the point where it can't squeeze anymore, and it's just going to break out. And these setups are quite rare. However, they're extremely powerful. So, you want a flat 200 MA rising 20 MA that's going through the moving average. And you want to see prices oscillate between the two until eventually they can't, you know, there's no more room to oscillate and then they break out. And this honestly works better for like swing trading. So, I'd look at the daily or weekly time frame for this. All righty. Let's look at some fantastic examples on how you could apply the 20 and the 200 MA into your trading. And I'm going to give you my thought process on how I apply it in my own trading. And by the way, these are not like cherrypicked examples. These are all stocks that I was watching or that I traded this past week. Like this uh KDP, this is CUREG. This had an overnight gap down yesterday where it gapped from $35 and the next day it opened at 3250. And notice how we gapped directly below the 200 and how we opened below all of this support. So I was going into yesterday with a bearish bias. And I actually really like gaps that open below the 200. But let's take a look at the fiveinut time frame. This is one of the main time frames that I use. And look at how well prices are respecting the 20 MA on the five, especially as soon as the 20 MA starts to actually establish a downtrend. As soon as the 20 MA is trending lower right here, basically notice how well prices are respecting the 20. So right here, this is a potential short opportunity directly under the base. Dropped kind of based into the five, not quite dropped again. Look at this. Consolidated directly into the 20 MA and the five. Next day we gap down a little bit and continue that downtrend. Now this is the 5m minute. Let's look at the two-minut especially today. And this is going to be shocking but look at this. Look at how well prices are respecting the 20 MA on the two-minut. I mean, every time it hits the 20 MA here, here, right here, right here, right here, every time it hits the 20 MA, it ends up dropping. And you could have literally went short every time prices hit the 20. And it would have worked for this absolute beauty of a power downtrend. And this is why I used the 20 during established downtrends. Notice how the 20 MA is trending lower, very, very strongly. If we look at the 15, it's basically the same thing. Um, where the 20 MA is trending lower. However, there's a little bit of distance between price and the 20 MA. So, the 20 MA isn't being like fully respected on the on the 15-minute chart. From there, you go to the smaller time frames to find your entries, but unbelievable daily gap that led to a beautiful downtrend where you could use the 20 MA for your entries to capitalize on this trend. Let's look at the BNS. This is a random stock that popped up today. This is the Bank of Nova Scotia. Um, and stemming back all the way from 2024 when this uptrend kind of reversed, you could see that we entered into a downtrend on this stock. And this is the daily time frame, by the way. Look at how well prices are respecting the 20 MA on this downtrend. The 20 MA is over price, trending lower. We drop, retrace into the 20, drop, retrace into the 20. Here we actually gapped down like 8% and it gapped right into the 200 MA on the daily time frame. So this 200 MA acted as a floor for price. It acted as support for price. We gapped right into it. Instantly got bought then retraced into the 20, hit it perfectly, dropped again, hit it perfectly, dropped, and then right here the trend reversed and we went into an uptrend. And you could see for yourself. Look at how well prices are respecting the 20 MA. I mean, I don't even need to explain it. It's literally obvious and it's simple. That's exactly why I use the 20 and the 200 MA. Even here, we had a gap up today. Literally today, we gapped up 2% on a really bullish chart, really bullish trend, on a nice gap up. Go to the 15minute time frame to find a potential setup. And even on the 15, look at how well prices are respecting the 20. We have a nice rally uh four bar red bar pullback. Nice little buy setup here. We kind of move up a little bit right into the 20 and then we take off and make new highs. And this is why I use the 20 and the 200 on the intraday time frames and even on the larger time frames because they're simple and they allow me to understand what the trend is. When I look at this chart, I know exactly what's going on. established downtrend, then an established uptrend, and I know where I could potentially get into the trend using the 20 period moving average. Let's take a look at this RR, which had a really nice breakout the last couple days. But let's go back to 2024. And this is a really good example of a squeeze play where we have a rising 20 period moving average, flat 200 period moving average. You could see prices hit the 200, then hit the 20, then hit the 200, kind of oscillated back and forth. It's not a perfect example, but once it broke out, it really broke out. And this thing rallied like over 500%. Which is insane. So, that's a decent example of a squeeze play, but that's not even what I want to show you in this example. Look at how well the 200 MA is acting as support and as a floor for this stock. Like, we hit the 200 here. Instantly, we bounce. Then we kind of chop around. We retest the 200. We bounce here. We actually almost break down through the 200. That's instantly rejected. We move right back up again. We try to break through the 200, rejected again. Right here, we try to break through the 200 to the downside, rejected, and then this time it led to a 62% move to the upside. And this is why I like to use the 200 MA. Whenever prices are above it, it acts as a floor. It acts as support. And by the way, this is the daily time frame. Let's look at a good example of using the 20 MA during the intraday time frame. So this stock had a very minor gap up. This was just a few days ago. It gapped up 2%. So it opened higher by 2%. It had a really nice green day. I'm seeing the 20 MA on the daily time frame is starting to trend higher. It's under price. So I went into this day with a bullish bias. And just take a look at this fiveinut time frame. just beautiful uptrend and it's beautifully respecting the 20 MA where we had a nice breakout here. We moved up, retraced to the 20, kind of chopped around, another move up, retrace to the 20, move up, retrace to the 20, move up, retrace to the 20. And it's just respecting the 20 MA almost perfectly. And every time it hit the 20, that was actually an opportunity to potentially go long. and just a beautiful uptrend with the 20 MA under price trending higher. Let's look at another example where we combine using the 200 MA on the daily time frame and then we use the 20 MA on the intraday time frame. So this MAT gapped from like 2018 and the next day it opened 6% lower at around 1890. Notice how we gapped directly below the 200. Literally directly below it. We didn't gap into it where it would act as support. We gapped right below it and we also gapped underneath a lot of this support as well. So beautiful gap down and from there we go to the intraday time frames to find a potential setup. So off the five here I mean again you could see how well prices are respecting the 20. The best setup was right here. Stop loss above basically. So this is the five. Even if we look at the 2-minut again, every time prices hit the two minute, 20 MA, we get a move lower. We drop retrace to the 20 MA and the two drop. Then right here, notice, check, check this out. Right here, we attempt to break above the the 20. We attempt to kind of end this downtrend, break over the 20. That was rejected. Then we continue to base the 20 acted as resistance and boom, we got another breakdown again right here. attempt to move past the 20 breakdown, attempt to kind of go through the 20, breakdown. And you could see how well prices respect the 20 MA during this established downtrend on multiple time frames. Even if we look at the 15, right? It's usually better to look at the smaller time frames for your entries into these day trades. But even on the 15, 20 MA is over price, trending lower, confirming that bearish downtrend. This is Coinbase from a few weeks ago. We have a rising 20 MA under price. We have a consolidation into that rising 20 MA. 200 MA is directly above. We gap above the 200 around 12% to the upside. Gap above the 200 triggering this base breakout on the daily time frame. 20 MA is under price. You go to the 15minut time frame for a potential setup and beautiful uptrend. Let's look at the five. And you could see, look at that five. how well prices are respecting the 20 MA. We have that initial move up. We consolidate directly into the 20 breakout over the base. Nice move up, retracement into the 20. Look at how well it's respecting the 20 and then we have another leg higher. We retrace another move up. So, you could see how well prices respect the 20 MA. And this is exactly why I use it on multiple time frames. Let's finish off this video by looking at the S&P 500, the SPY. So this bottomed out in April and since then we have been up only and during this uptrend what do you know look at how well prices are respecting the 20 MA even on the spy. So we have a nice move up retrace into the 20 nice move up here we consolidate into it. Then we have another breakout from the 20. We try to retest it on this tail. Instantly we move up here. We actually broke under the 20. This was a few weeks ago. We broke under the 20, instantly rejected. Have a another nice move higher. Here we have a retracement. Nice buy setup into the 20. Boom. And now it looks like the spy wants to continue higher. We can even look at like crypto. Let's take Ethereum. Look at how well Ethereum is respecting the 20 MA over the last few months. We have a rising 20 MA under price here. It kind of broke below, instantly rejected, and we had a nice move higher. We retraced right into the 20. literally hit the 20 instantly. We popped another red bar, hit the 20, boom, the next day we have a nice green bar. This was on uh the Jackson Hole um drone Powell speech. Then we retrace, hit the 20, boom. Um today, literally another green bar. Um even if you look back just a few months ago, I bought a [ __ ] ton of Ethereum right here because I saw that the 20 MA started to transition higher. It's curling up. The 20 MA is under price trending higher. We have a nice move up based into the 20. This was a beautiful breakout and what do you know? It hit target at the 200. So the 200 acted as a ceiling for Ethereum where it hit the 200 retraced. Hit the 200 retraced. Hit the 200 retraced. Hit the 200 retraced. Here we broke through. We kind of had a fake out and then a fake out to the downside. 20 MA is flat, so it's not that useful. And then as soon as the 20 MA begins rising and trending under price, that's when Ethereum starts respecting it and it resumes or resumed the uptrend. And I'm still expecting much higher prices for Ethereum. And that is exactly why I use the 20 and the 200 MA for every single one of my charts that I look at. I like to keep it simple, guys. All I use are two moving averages, the 20 and the 200. And by keeping it simple, that's what allows me to make money. So hopefully this could be transformative for your trading and hopefully this will help you keep it simple. So make sure you subscribe to the channel if you enjoyed this video. Leave a comment if you found it valuable. Leave a like. That's going to help the YouTube algorithm. And hopefully you learned a lot and I will see you on the next video. Thank you very much. What is going on guys? Glad that you've made it to this section of the course. And today we're going to be talking about multiple time frame analysis. And I've mentioned this in previous classes, the importance of using several different time frames while you're trading. And that is an extremely important concept. In fact, I will say that it is probably one of the biggest beginner mistakes that I see is that traders are not using multiple time frames when they're analyzing a specific stock or crypto. they're only using one time frame and then they're making bad decisions from it because they're not considering the overall context, overall landscape of what's going on with that stock. Right? So, let me turn off my camera here and we're going to get into multiple time frame analysis. So, key concept here, guys, like I said, like I just mentioned, not checking multiple time frames when you're trading. One of the largest largest beginner mistakes you can do. You are literally trading blindly if you're only considering one time frame prior to taking a trade. You really are. And the probabilities of a trade working in your favor significantly increases when there is multiple time frame alignment. When several time frames are all saying the same thing about a stock or a crypto, that's when you could look to take advantage of a potential move either higher or lower. And you don't want to take trades where there's a conflict between the time frames, right? So, let's kind of talk about that. So, what is multiple time frame alignment? It means it's when you know several time frames are aligned. They're all saying the same thing. They're either all saying that it's bullish or they're all saying that it's bearish or they're all saying that, oh, there's no momentum. It's actually a sideways trend. Okay, so let's go over one example here. The daily chart is bullish. It's uptrending. And the 20-day moving average is trending higher and is under price. The hourly chart is also bullish with a rising 20 MA under price. Right, the 15-minute and the five-minute are also both very bullish with rising 20-day moving averages. And the 15-minute chart also has a breakout pattern, which we haven't learned about that yet, but uh we will learn about that. So, it also has a beautiful breakout pattern, right? So, let's compare this example to example number two where the same thing. The daily chart is bullish. It's up trending. the 20 MA is rising and uh trending under price. However, the hourly chart has a declining 20-day moving average that's curling over price, right? And remember, when it's declining and when it's curling over price, that suggests, you know, bearishness. It suggests that prices are going to go lower. The 15-minute chart is sideways and has a flat 20-day moving average. And remember, when it's flat, that means it's trendless. there's lack of momentum. And the five-minute chart, however, looks bullish with a trending 20-day moving average that's underpriced. Which trade has a higher probability of succeeding, right? The example one where every single time frame, you know, doesn't matter if it's the larger time frames such as, you know, going at the uh daily or hourly chart or the lower time frames, that's the 15 minute or five minute chart. All of them are screaming bullish. All of them are the, you know, are giving you the same information that the stock or crypto looks higher. Or are you going to choose example two where you have one time frame showing higher, another time frame showing lower, one time frame showing that there there's no momentum at all, and then this time frame saying that it's higher. Right? You could see that there's we don't have multiple time frame alignment in example two. And we obviously we would prefer seeing example one. So you can quickly see the importance of having multiple time frames all giving you the same information. And here we have a great example of uh of conflict between the time frames, right? We have different time frames telling us different different uh types of information. Okay? So obviously example one has the higher probability of succeeding. So let's talk about what time frames you should actually be looking at. And we're going to be talking about crypto uh day trading first. So something to note, crypto markets are 24hour markets, meaning they don't close. They operate on a 24-hour schedule. There's always buying and selling in the crypto markets. So step one, always check the higher time frames, meaning the daily and the weekly charts to see the overall context on how the how the crypto is trading. You're looking at the long larger term or longer term trend, right? Step two, you're going to move on to the hourly chart, see what's going on there. And then step three, you're going to go to the five and 15 minute charts. And if you're scalping, which is taking really, really short trades, really quick trades, then you're going to be looking at the one or two minute charts. So the point is here, guys, we're starting at the larger time frames and we're moving to the smaller time frames, right? We're seeing what are the larger time frames telling me, and then we're going to go to the smaller time frames and see if those time frames are telling you the same thing and if we could potentially find a str a strategy or an entry. Okay. So, hopefully hopefully that makes sense. For stock day trading, um it's a little bit different because the stock market uh in the US equities market is open from 9:30 a.m. to 400 p.m. Eastern, and that's Eastern time. Okay? So, as a result of that, there are going to be price gaps that occur. And we're going to be talking about price gaps a little bit later, but just know that in the US equities market, you know, it opens and closes at a specific time. Okay. So, step one, what you're going to be doing is always look at the daily chart first to see if the stock is gapping and for overall context on how the stock is moving. So, once again, we're starting at the larger time frames. Then you're going to move to the hourly chart for further context to see if you can get any information from that to see if the hourly chart u aligns with the daily chart that we did in step one. And [snorts] while you're, you know, keeping an eye on the larger uh on the higher time frames, and this is of course Eastern time zone, from 9:30 to 10:00 a.m. you want to be looking at the 1 to 2 minute charts. From 10:00 a.m. to 11:30 a.m., you're going to want to be looking at the 2 minute and the five minute charts. [snorts] And from 11:30 a.m. to 4 pm, you want to be looking at the 5 minute and 15 minute charts. Okay? So, just write this down and keep these time frames in mind. But even if you're trading at, let's say, 2:00 p.m. and you're looking at the five and 15 minute charts, you want to always have a look at the daily chart to see if it's gapping and what's going on with the daily chart, right? What overall trend is is seen and you know, how is it trading? For crypto and stock swing trading, you number one, you you're going to want to look at the daily chart and the weekly chart, okay? And identify potential setups. So, go to the daily and the weekly chart, see what's going on, see how it's overall trending, try to find specific setups, and step two, then look at the hourly to find potential entries. So once you found the strategy or the setup that you're playing on the daily or the weekly chart, then go to the hourly to find some potential entries so you can take advantage. Okay, so main time frames are the hourly, daily, and weekly charts. Okay, so now we're going to practice. Now we're going to analyze some more stocks in crypto for you guys so you guys can get the hang of uh hang of it on how to of how to practice multiple time frame alignment. and we're going to be kind of showing you what it looks like when multiple time frames are aligned and what it looks like when we actually have conflict between the between the different time frames. Okay, so hopefully this all makes sense guys. This is uh this is a very very important topic. Okay, so make sure just please make sure you're always looking at different time frames. Okay, and just follow the framework that I set. Always start at the larger time frames and then move to the lower time frames. And when you have the larger time frames saying uh bullish and then you have the smaller time frame saying bullish and the 20-day moving average looks good and the 200 day moving average looks good and you have an actual playable pattern, which we're going to learn about soon, then you could actually take the trade and make some money off of it. But you could see the multiple time frame alignment part of it is key. It's crucial that all of the time frames are telling you the same information. It increases the likelihood of success for that trade. All right, guys. We're going to do a practice session next. So, see you then. And we're going to actually uh you know, learn how to do this not just in theory, but in practice as well. So, thanks, guys. In this video, I'm going to completely reshape the way that you look at time frames. And what if I told you that I don't actually use one specific time frame for all of my trades? And to show you how you should perceive using time frames, we're going to use an analogy. Imagine we have a mountain right here. And let's say you are at the bottom of the mountain. This is you chilling. You're at the bottom of the mountain. I have a question for you. Are you truly going to have a perspective of what's going on around you when you're at the bottom of the mountain? Like, are you going to understand what the landscape is around you, where the hills are, where the birds are, where the, you know, creeks are, the lakes, the rivers, whatever. Are you going to have a perspective of what's going on around you? Well, not really. You're literally at the bottom of the mountain. Like, imagine being at the bottom. You can't really see what's going on around you. But as you move up the mountain, right, let's say you're right here. Are you going to have a better perspective of what's going on beneath you at this point of the mountain? Well, absolutely. You have a much better perspective. You could somewhat see the landscape, the trees, the lakes, etc. You have a better perspective than when you were at the bottom of the mountain. Now, let's say you're at the top of the mountain. Are you going to have a better perspective? Well, of course. In fact, you're going to have the ultimate perspective of what's going on beneath you and around you because you're at the top. You see everything that's down below. You know what the landscape is. You know where the rivers are. You see everything because you're at the top of the mountain. You have the ultimate perspective. And this is the way that I would perceive and understand time frames. When you're at the bottom of the mountain, that's like looking at smaller time frames in your trading. And then as you move up and up the mountain, that's like looking at the higher the larger time frames in your trading where the larger time frames they give you perspective on what that stock or what that crypto whatever you're trading whatever it is doing. It gives you the ultimate perspective. It gives you the kind of long-term bias of what's going on. And then as you go down the mountain, you could, you know, your perspective kind of shrinks and shrinks and shrinks. And this is the way that I would think about time frames. And the, you know, the point that I'm trying to make here is it's not about using one time frame. There are so many videos on YouTube that will tell you use exactly these time frames and you'll find success. No, that's not what trading is about. Trading is about multiple time frame analysis. Right? And this is one of the biggest mistakes that most beginner traders make. They don't look at multiple time frames before they enter into a trade. And frankly, you are trading blindly if you're only considering one time frame before taking a trade. I want you to think about the last, let's say, 10 trades that you took. How many time frames did you look at before you entered into those trades? What were you just looking at the five minute chart or the one minute chart and you entered and then ended up being a loser and you were like, uh, why was this a loser? I want you to ask yourself, be honest with yourself. Are you actually looking at multiple time frames? And if not, why not? And what we're looking for when we're reading multiple time frames is alignment. Alignment. This is called multiple time frame alignment. Where multiple time frames are telling you the same thing, right? They're all telling you what the stock is doing. They're not conflicting, right? So alignment would be like five minute is uptrending, 15-minute is uptrending, hourly is uptrending, daily is bullish. That's alignment. Conflict would be like five minute is is in a downtrend, 15-minute is sideways, um daily is in an uptrend, hourly is sideways. Like that's not alignment. That's conflict, right? And we're going to be looking at really specific examples of how this works. All right? So, what I want you to focus on in this little example, in this exercise here, because this concept is actually extremely simple. Looking at multiple time frames is really simple. And don't worry, I will tell you what time frames, what multiple time frames I use in my trading every single day. That's a little bit later in the video. This is equally as important. I want you to look at the current time frame in each one of these examples. And what we're going to be doing is considering and asking ourselves, are we going to take this trade on the current time frame based on what the lower time frame is doing and based on what the higher time frame is doing. So let's look at this first example. What's the current time frame? Well, it looks like we're in a very strong uptrend. We have a rising 20 MA under price and looks like we have like a buy setup retracement pattern. This looks bullish. It looks like we're we want to go long on the current time frame. So let's think about should we go long? What is the lower time frame doing? Well, the lower time frame is in a downtrend and looks bearish. Okay, looking like it's actually going to drop. Declining 20. Higher time frame is essentially doing the same thing, right? In a downtrend, declining 20 bearish. Are we going to take this trade on the current time frame should be absolutely obvious. No, obviously not because the lower time frame is bearish and the higher time frame is bearish. Make sense? Easy enough. Let's move on. What about this situation? The current time frame, same exact thing. We're looking to go long for a buy setup retracement play. Strong uptrend. We want to go long and make money to the upside. Lower time frame looks good as well. Almost identical. Bullish uptrend looks good. Higher time frame is bearish and in a downtrend. I want you to pause the video. Are we going to take this setup? And the answer should be no. we're not going to take this setup. The, you know, we always put more emphasis on what the higher time frame is doing. So in this case, the higher time frame is bearish. If the higher time frame is bearish, that's like the upward perspective, right? That's like the top of the mountain is bearish, right? And then the bottom of the mountain is bullish. Are we going to take this trade? No. Right? Because the higher time frame is just way more important than the lower time frames. This is what gives you the bias. We always want to be trading in the direction of the higher time frame. All right, makes sense. Should be easy. Higher time frames more important than lower time frames in terms of direction. Next, we have the current time frame right here. Bullish looks higher. Great. Lower time frame looks bullish. Higher uptrend, great. Higher time frame, bullish, uptrend looks great. Perfect. This is excellent. This is exactly what I want to see because the lower time frame is bullish in an uptrend. Current time frame is bullish in an uptrend. Higher time frame is bullish and in an uptrend. Excellent. This is obvious. Exactly what we want to see. This is multiple time frame alignment. Now let's look at this example. And this is going to be interesting. Current time frame looks good. Uptrend same exact, right? We want to go long. Higher time frame looks good as well, right? You know, uptrend bullish uptrend looks great, right? Current time frame and higher time frame looks great. Remember, we put more emphasis on the higher time frame. Everything's looking good. What is the lower time frame doing? Well, the lower time frame is bearish in a downtrend. So, what do we do here? And you actually have two options. Your number one option is you could say, "Hey, I don't care about the lower time frame. The current time frame looks excellent. The higher time frame looks excellent. The old, you know, the longer term bias is on my side. I really like the quality of the setup. I don't care if the lower time frame is bearish because the current time frame and the higher time frame looks good. I'm taking the trade. That's option number one. Option number two, you can be patient, maybe pass on the initial setup and wait for the lower time frame to turn bullish. Wait for this to uh um uh what's it called? Uh end the downtrend and begin an uptrend or wait for the 20 MA to start curling up. Right? You essentially wait for the the lower time frame to begin aligning or you uh you wait for the lower time frame to begin aligning with the current time frame with the higher time frame. Jesus, the words mixed me up, but you guys get my point here, right? We wait for the lower time frame to begin looking bullish and that will give us our final confirmation to go long. So those are your two options in this case where the current time frame looks looks good, higher time frame looks good to go long, lower time frame is bearish, you could just take the trade anyway because you know you like the current and higher time frame or you wait for the lower time frame to turn bullish. Wait for the 20 MA to begin rising, wait for the downtrend to end and for an uptrend to begin forming. Those are kind of your options. And this is the way I look at every single scenario, every single trade um in the markets. Excellent. Let's go ahead and look at some reall life examples. And this was actually a trade that I took the other day or that I was considering taking the other day. So let's look at this EOS on the 15 minute time frame. All right. What do we have? We have a declining 20 period moving average. Looks good. We dropped, we kind of retraced that drop. We moved down and then we began basing into the declining 20 MA on the on the 15minute chart. And we were gearing up for a breakdown. It looks like this wanted to break the lows of this base. That would be our entry. Stop loss above this pivot. It was looking good for a breakdown, right? I was actually considering this. Now, let's look at the daily time frame. What do we see on the daily? Well, the day before we had a, you know, nice gap down, big move lower. I actually made money on the EOSC this day. The next day, this is this day right here. So, this stat, uh, this setup is on this day right here. we gap down again and then we start, you know, we attempt to move lower. Now, notice how we have the 200 period moving average acting as support. So, this is an example where the 15-minut time frame looks good to break down, looks good for a short, but the daily time frame is directly into the 200 period moving average, which is acting like support for this stock. And this is an example where we use multiple time frames. 15-minute looks good, but we have to check the higher time frame, which is the daily chart. And then we see that, you know, this stock is into support. So, what was the outcome of this trade? Well, it didn't end up working. It actually ended up failing, right? It almost it basically triggered kind of triggered and then immediately failed and it would have hit your stop-loss. But that trade could have been easily avoided by just looking at multiple time frames by looking at the current time frame and then looking at the larger time frame to see do we have support below. What is the overall trend on the larger time frame? Does it look good or not? Right? In this case, the overall trend was bearish, right? We had a gap down. We were continuing lower even on this day, but we had support at the 200. So the setup ended up failing and I ended up avoiding this loss. Why? because I looked at the higher time frame. I used multiple time frame analysis. Let's look at another example here. So, this stock actually gapped up on this day right here. Right? You could kind of see the 20 MA starting to curl under price. It looks like it's starting to form an uptrend, right? We have a low, high, low, high, low, high. Right? We have an uptrend. And [snorts] then we have a kind of like a retracement buy setup here where we move up, we retrace. We ended up actually gapping right here, right? And I saw this um on this morning, right? I this this was like last week. So on the morning, I saw that we were opening at this price around $27. This was before the market actually opened. So this was the pre-market price that I was seeing for this stock. So what did I do? I went to the daily time frame and I checked, you know, does this stock have room to actually run? Where is the next resistance area if I decided to go long on this stock? And remember, I'm a gap trader. So, as soon as I saw this gap up, you know, it's kind of clearing this little resistance here. I was interested in potentially going long on it. And I looked to the left and I saw, hey, we have a bunch of resistance here. This is the next resistance area. And let's see how the trade ended up playing out. All right. And we ended up, you know, moving higher. We we had that gap. We opened right here. A gap is an overnight change in price. So, you could literally see that there's a gap in price. Maybe I think this happened because of earnings or some news. That's irrelevant. I only really look at the price action, but we gapped up. I saw that we had room to run to the next resistance area, and that's exactly where we ended up kind of finishing off that uh that day's move. From there, once we established there was a gap on the daily time frame, the gap had room to run to the next resistance area. We go to the smaller time frames, the uh in this case, the two-minut chart, right? And we found a setup. We had a move up retracement and this is just a picture perfect buy setup. Picture perfect retracement pattern, right? 40 to 60% retracement, multiple entry bars. Entry would have been over the highs of these dogee bars. Stop loss would be below this bottoming tail and we saw just an amazing move higher. And I actually teach the buy setup and this retracement pattern in my free 10 plus hour course. It is genuinely better than most paid courses on the internet. I 100% recommend that you watch it. It'll actually build the foundation for your trading. It is 10 plus hours of just pure sauce. Watch it and combine what you learn in my free education in my free course with everything that I teach on my YouTube channel. But hopefully you guys are kind of getting the idea here. I don't want this video to be too long. I kind of want this to be a rapid fire video for you to learn from. But hopefully this makes sense. We start off looking at the daily chart. We identify the gap, identify what the next resistance area is. It was a gap up above resistance. Love it. Then I went to the smaller time frames to find a potential entry. In this case right here, I found an entry on the intraday time frame. I checked the larger time frame to see if it looked good, to see what the trend was, to see if we had support beneath us, and we we ended up having support. and I ended up avoiding this trade and I avoided um losing money on this position because I checked multiple time frames. And this is kind of the system that you want to use. Now, let's go ahead and cover what time frames I actually use for trading stocks. And right off the bat, I am always looking at the higher time frames for everything that I do. I'm always keeping an eye on the daily time frame and the hourly time frame for every single one of my trades. So, when the market first opens, I am primarily focusing on the 1 minute and the two-minute chart. And, you know, closer to 10:00 a.m., I'm definitely focusing on the five minute chart as well. Then, from 10:00 a.m. to like 12:30 p.m., I'm focusing mainly on the 2-minut and the 5 minute, primarily, really the five. And then, of course, a little bit of the 15. As we move towards 12, 12:30, I'm more and more looking at the 15 minute time frame. And then from 12:30 to 4 p.m. I'm mainly looking at the five and the 15 for my entries and for my setups. All right. And I do occasionally look at the one and the two-minute charts as well just for extra confirmation. And you know this is what I do. And I'm always looking at the daily and hourly. Right? So it's in conjunction. It's not like only this time frame or only that time frame. We're looking at multiple time frames. And that's what gives me an edge compared to other traders. I'm really good at analyzing multiple time frames because every now and then you'll get a setup that looks amazing on the five, amazing on the 15, even looks kind of good on the daily, but then the hourly will be into resistance, right? Or the opposite. Maybe the intraday time frames aren't that great. Maybe the five and the 15 are okay setups, but the hourly and daily chart have, you know, a fantastic setup where it was a high quality gap up or gap down. The hourly chart looks amazing, but the 15 and the five don't look as good. Sometimes I'll still take that setup um because of how good the higher time frames are. Does that make sense? So, it's really, you know, I'm always emphasizing the higher time frames and the current time frames. All right. And don't get hung up on the exact time of day, right? It doesn't matter like if it's like 9:57, you know, that's not like there's no like exact time where I transition to another time frame. It's kind of like flexible. I'm very free with my trading. I'm kind of looking at all of them to be honest. In terms of swing trading, we're primarily looking at the hourly time frame, daily time frame, weekly time frame, or monthly time frame. Monthly time frames are a bit much, right? A lot of times you don't really need to look at the monthly. It's mainly hourly, daily, weekly. If you find a setup off the weekly time frame, you want to go to the daily time frame to find a setup. If you find a setup on the daily time frame, you want to go to the hourly time frame to find a setup. Right? So, let's say you find a setup on a particular time frame, on a higher time frame. You can go to the smaller time frame to find an entry for that setup. And this will allow you to find potentially a better entry. And you could also even get a tighter stop-loss, right? So, let me kind of show you um an example of this. I'm gonna kind of draw it out. Let's say you have like a nice little uptrend and you get a buy setup. And let's say this is the 15minut time frame. Maybe if you go to the five minute time frame right here, you get, you know, I don't know, a tighter stop where you can maybe put your stop here, entry there. But if you did it on the 15, your entry would be here, you know, does that make sense? So, you're able to use a tighter stop um and as a result have a better reward to risk. This is not the best example. I'm kind of just drawing off the top of my head, but you guys get the point, right? You see a setup, you can go to the smaller time frame to find an entry into that setup, find a stop-loss into that setup, and as a result, have a tighter spre, right? Hopefully, this makes sense. So, if sometimes if I see a really nice daily setup, I'll go to the hourly for my entry. I find a nice weekly setup, I'll go to the daily for my entries. So, you could play around with this. You could use multiple time frames and get creative with your entries. In summary, guys, this concept is actually incredibly simple. Always look at multiple time frames. And this will allow you to filter out a lot of the lowquality trades that you're taking because I guarantee you're taking trades that look maybe amazing on the 15-minute time frame, but then when you look at the daily or the hourly, it doesn't look good at all. And maybe, you know, by using multiple time frames, that would save you from taking the trade and save you from losing money. Does that make sense? It's it's a really simple kind of concept, right? And these are the time frames that I use in my trading. And it's all about just using multiple time frame analysis and always looking for alignment. You always want, you know, ideally you want to see this. You want most of your trades, 80% of your trades to look like this. Lower time frame is in sync. Current time frame is in sync. Higher time frame is in sync. Everything looks good. There are multiple qualities that are converging together to make it a high probability setup. And you're probably going to make money most of the time trading this quality of a trade. And the other setups you should be taking are like this where maybe the current time frame looks good, the higher time frame looks good, but the lower time frame isn't quite ready yet. In that case, you could be patient and wait for it to set up. And realistically, guys, unless it's like a small scalp, you should never really be taking setups when the higher time frame is uh in conflict with the current time frame and the lower time frame. All right, today we are talking about support and resistance lines. And as traders, I'm sure you have heard plenty and seen plenty about support and resistance and how you could potentially use it to your advantage. However, during this class, I'm going to be teaching you exactly how I use support and resistance and some of the theory that you need to understand before actually applying it to your trading. Okay. So, what is actually support? What does it mean? So support can be defined as a price level or area or you could think of it as a price zone where a historical price action has shown that in that area there's way more demand than supply. So in other words in that area there are way more buyers than there are sellers. Okay? And when a stock actually hits support, you can either buy it or you can either look to, you know, buy it or you can even look to short it, you know, using support. And we're going to be looking at both of those examples. So the key thing about support is that you and resistance, as a matter of fact, is that we have to make sure that price is actually retesting that support level. So looking at this, we have one rally. Okay. And as we are dropping down, price actually retests this support and then rallies from there as well. Okay. So as soon as we have two tests of support where both you know both tests actually rallied from that support level then we can actually use and uh trust that support level. Okay. So that's what we need. We need two tests of a support or resistance level before we can actually trust that it's actually serving as resistance or support. And this is an example of buying using support where a price level actually or price touches the support level you can look to purchase it. Right? Obviously, this is a super basic understanding of it. You know, if it hits a support, we're going to buy. there's obviously other uh strategies, other factors that we're going to use as well um in order to justify actually buying it at support. But I think and I think the number one mistake people make using support and resistance levels is that they solely base their decisions, their entries, their exits off support and resistance. And I think that's a mistake. I think using support, you know, you have to use support and resistance to your advantage, but that shouldn't be the only uh, you know, indicators or the only factors in trading that you're looking at. And that's what traders do. They they tend to just use support and resistance to base their entries off of. You kind of have to use support and resistance with the other knowledge and skills that you possess in trading. And when you combine, you know, you know, the other strategies, you know, with support and resistance, that's when you can make uh, you know, a lot more higher quality decisions. So, don't just use support and resistance. Use it alongside the other strategies you're going to learn in this course. Okay. So, this is one example where you could buy using support, where to retest the support, you could look to purchase it. An [clears throat] example of actually shorting at support is let's say we have a you know huge drop and we start to kind of base kind of consolidate at this level. We can kind of think of the top of the base as resistance and the bottom of the base as support. And whenever, you know, it actually breaks the support level, we could actually look to short it, right? And because breaking support suggests that there are now more sellers than buyers, right? Because during this support level, we could see that during, you know, in that area, it keeps getting bought, right? Like once price touches that zone, it gets bought. But right when price decides that okay you know once it actually tears through that support it suggests that okay there are no more buyers left right the sellers are really dominating like there's way more sellers and buyers now in that zone so we're going to actually look to short it and make money as it continues to fall. Okay so you can either you know you could use support to either buy or short. In this case we're buying it when it retests the support. In this case, we're shorting it when price uh, you know, goes through support. Okay? And I'm not saying that you should be buying whenever we do have a retest or shorting every time it breaks support. These are just two ways you can actually play support. Okay? And you might be thinking, okay, then how what you know when do we know when to short? How do we know when to buy? Well, that's when we combine the other strategies that we know in this course such as, you know, such as the some of the skills we took from the breakout or breakdown or the buy setup or sell setup and the other knowledge that we've learned in this course, level two as well. Okay, so let's continue on and we're going to be talking about resistance. Okay, so resistance is a price level or area or zone where historical price action has indicated that there's actually way more supply than demand when price actually reaches that point. So in other words, there are way more sellers at that point than buyers, right? And once again, you could either buy or short using resistance. So for example, you could look to sell your position at resistance. Let's say you bought it down here. You could look to sell your, you know, you you bought it at support, you could look to sell it at resistance or let's say it hits a resistance level, you could also look to short it, right? And you have to make sure there's two tests, right? Price tested the resistance level twice before we can actually uh determine that it's uh it's a viable resistance level. Okay, hope that makes sense. And this is another way where we can, let's say we have a huge rally and then we begin to have a consolidation. The bottom of the consolidation could be looked at as support. The top of the consolidation could be looked at as resistance. And we're going to purchase it, right? Purchase when price actually breaks the resistance level. Okay? Because it suggests that now there's way more buyers than sellers at that resistance point. Right? We had a lot of selling pressure when price hit that resistance before. But now that selling pressure has seemed to disappear. It's no longer there. And that's when we actually buy it because now we have confirmation that there are actually way more buyers than sellers. And you can kind of pair this right away using uh the breakout method. Right? This is a breakout. We are playing above the consolidation. So you can kind of see how res, you know, support and resistance can help you with your breakouts and breakdowns and how they kind of relate to one another. Okay. Now looking at another example when let's say we actually have an uptrend, right? So let's say we have a rally and then we have a pullback. That high the previous rally high right here is now going to serve as resistance. Right? Okay. So now this is resistance. Okay. And then let's say we you know from there we also continue we have a pullback right and then we break the resistance we continue to rally. Okay. And we begin to actually pull back again. What we want to see is we want to see this prior resistance from here right this prior resistance now turn into this pullback's support. Right? So here the resistance level right this resistance level from this high is now turning into the support for this low right so this resistance is becoming this support now so this is really what we kind of want to see during um during uptrends okay so exactly like I mentioned this is this resistance level it turns into this pullback's support and during these retracements right like this pullback is technically called a retracement We want it to retrace 40 to 60% of the prior rally. Right? So we have this rally. We want this retracement to be you know we want it to retrace 40 to 60% of this rally which it has. I mean this kind of retraced around I would say probably probably right around 50%. Okay. And we want to see that retracement be between 40 to 60%. We don't want to see deep retracements. We also don't want to see super shallow retracements. Okay. And we kind of talked about that during the buy setup classes. Okay. And right and the whole idea of this turning you know this resistance now turning into support is that we want price to actually retrace to the prior resistance level which is now being considered as support. Right? We want this res we want price to retrace to this resistance. And once it does retrace and respects that resistance it be it becomes support. Same thing here. We have a rally, right? We have this prior resistance and we have we retrace back to that prior resistance now. Therefore, making its support and we rally again. So, this is something we want to see this um during uptrends or downtrends, right? We want to see the prior we want to see retracements that retrace to the prior resistance. Okay? Just like and we're going to examine a downtrend as well, right? where we have, you know, we have a drop, then we have a we kind of have a retracement here, a rally higher. And this support level, right? This support level right here is now becoming, you know, this retracement's uh resistance level. So this support here right is now becoming resistance for when this stock you know after this drop it's going to become resistance for um for this retracement or this rally higher right so it's the same thing this support level becomes resistance here and we want price to retrace to the prior support level right this was the prior support level we want it to retrace to the prior support level here and now it will it's turning into resistance we also So like I said just like uh same thing we want a 40 to 60% retracement right this this is a drop we want it to retrace 40 to 60% of this drop right straight to this new resistance level which was the prior support okay and it's basically the same idea this is what we want to see during a downtrend we want to see retracements to the prior support which is defined by you know this low right same thing here we have a drop right and then the retracement ment and the retracement it it goes right into the prior support level which is now resistance. Okay, hope that makes sense and we are actually going to head into the conclusion here. So support and resistance is a very important tool and resource that you can use to benefit your trading, right? And what we should do is combine support and resistance with other strategies with the other information that we are learning in this course. And a huge mistake traders make is that they solely trade and rely support and resistance levels, right? They they only use them, which is foolish, right? Support and resistance is incredibly useful when we actually pair it with other strategies. That's the key thing. That's the key here. We're pairing it with other strategies. We're not just using it by itself. Okay? We should not be trading anything in a vacuum. We shouldn't be using one piece of information. We should be using a collection of different factors, different strategies that we're learning in this course. And once you know using that collection of strategies, we're able to make a lot more higher quality decisions, a lot more higher quality trades. So, please use support and resistance to your advantage, but don't solely use it. And you should be right combining support and resistance knowledge with other strategies for the best results. And I'm going to include a video next actually looking at stocks in practice, looking at real stocks, drawing support and resistance lines, and kind of trying to analyze what we learned during this presentation in theory. We're going to try to bring it into practical knowledge, okay? and into you know into um you know more practical application of support resistance. So that's in the next video. Okay and I will see you guys in the next class. Thank you. All righty. Let's dive in into more ways we could actually use support and resistance to our advantage and we're going to kind of get into the more practical elements of using support and resistance. So I've made a few examples in the slides and in the next class I'm actually going to be looking at real stocks and showing you how you could apply some of these support and resistance um you know teachings or this education that you've been seeing how we could actually apply it into real life charts. Okay. So key points, you know, and specifically for, you know, determining targets. In this case, we're going to be talking about how to use support and resistance to determine targets. Some key points is that, you know, determining targets and determining, you know, where you think a stock is going to rally to or where you think a stock is going to drop to. It's based completely off support and resistance, right? And if you're playing long, right? You're you're buying a stock. What you're going to want to do is check the next resistance level and use that as a potential target. Okay? And if you're playing short, you're going to want to check the next support level and use that as a potential target. Right? So, our targets are simply based off looking at support and resistance. All right? And what you know what you're going to want to really do is look at several different time frames, right? Because let's say you're trading off the five minute chart and you don't see any resistance above. Let's say you're playing long, right? And you don't see any resistance above on the five-minute chart. Well, what you should be doing is looking to high, you know, looking at the higher time frames and then seeing if there's resistance because you might not see resistance on the five minute chart, but if you go to, let's say, the hourly or the daily chart, you might end up seeing resistance and that's going to affect whether you're actually going to take that trade or not. Okay? So, like I said, we're [clears throat] going to be looking at higher time frames to check if there is support and resistance above or below. And you're going to in general, you're going to want to, you know, look at the higher time frame. So, specifically the daily chart and the hourly chart. I wrote daily chart here, but you could also check the hourly, right? Um, so always check the daily chart first, right? Or you could check the hourly first and then the daily. It's really kind of up to you. Um, but you're going to want to check the daily chart and determine if there's enough room for the [clears throat] stock to rally or drop to the next resistance or support level. Ultimately, when we're let's say we find a trade that we like and we're trying to figure out targets and we're looking, you know, let's say we're playing long and we're trying to figure out the next resistance level and so we take a look at the daily or hourly chart and we determine what the next resistance level is. We have to then ask ourselves based on, you know, the size of our stop-loss or the size of our risk, is the trade worth it? Is there actually that much room for the stock to go up before hitting resistance? Right? Or is resistance literally directly above, right? And if resistance is directly above, well, that's when the stock, you know, assuming it hits resistance, that's when it's going to have a tough time, you know, continuing higher, right? Because if it's hitting resistance, you can think of that as kind of like a ceiling, right, for the stock. So, or if it's hitting support, that's kind of like a floor for the stock. So, it's going to need, you know, additional, I guess you can call it effort or a lot more additional buyers for it to actually rip through resistance, right? So, our goal is to make sure there's an ample enough uh room before the stock actually hits resistance, right? So, before there's actually enough uh you know, room for it to go up for us to make a profit before it hits our target or resistance. So, just to reiterate, if you're playing long and you see that there's a resistance level directly above, you should reconsider taking that trade, right? Or, you know, maybe you know, rethink the trade a little bit because if there's resistance right above, right, directly above, there's really not that much room for the stock to go up before it hits it, right? And that's going to, you know, that's going to uh decrease your reward to risk. And if you're playing short and you see that there's a support level directly below, well, you're going to re want to reconsider taking the trade because if there's support directly below and there's not that much room for the stock to fall until it hits support, the your reward to risk might be affected. And this of course all depends on the actual uh what your actual stop-loss is. Okay? And I kind of I went a lot more into detail with this in the risk management video. So definitely go back to that if you're having some confusion around this. But and another something else I want to talk about is what what what I want you guys to do is check for over overlapping candles. Overlapping candles or you can call it maybe a consolidation or a base that represents resistance or support. So let's look at this example. Let's say we have a stock. drops, then it begins to consolidate. And after this consolidation, it continues lower, right? And let's say here, you know, we're looking at potentially playing this long. This is just an example, right? I'm not I'm not saying it only applies to this situation. This is just an example. You know, we're playing long from the bottom and we wish to determine the next resistance level, right? We're playing long and and we're asking ourselves, what's the next resistance? Well, we're going to look at the next area of over overlapping candles. And these overlapping candles, they can represent support or resistance because it kind of represents an area of uncertainty, right? Where we have a drop and we have a kind of a we kind of have a consolidation. Some people played ended up playing long here. Some people played short and you know, let's say someone who played long, they ended up getting stuck in the position and ends up going against them. as soon as the stock ends up, you know, reaching back to their entry point because remember if they're playing long from here and they're and then it ends up dropping, they're down on the position. Let's say they don't exit and the stock goes right back up. Well, you know, they might end up looking to get out of their positions, break even, and there's a lot of different uh details, a lot of different there's a lot of uncertainty that occurs during these consolidations. So, that's why we use it as support or resistance. So when looking at something like this, if we're playing long here, we're looking at our next target is the next resistance, which is these overlapping candles. So this is just an example of, you know, what you what uh how to determine if something is support resistance. It's check for overlapping candles. Okay, so this is definitely one way to look at resistance or support. This is another example here where, [clears throat] you know, I kind of talked about assessing your risk using support and resistance. Well, this is a really good example where we have a consolidation, right? We have a bunch of overlapping candles, then we get a tremendous drop, then we get a rally, and all of a sudden now we have a breakout or, you know, a base breakout potential for a base breakout. Uh, and our entry is over the base. Our stop loss is under it. And where our next target, well, it's going to be the next resistance area, which are these overlapping candles. Okay? So this is going to be our first target, right? So what we have to assess when looking at a trade like this is okay, what's our entry? What's our stop loss? Right? Then determine the size of the stop, which we would, you know, subtract the stop loss from the entry point, right? So let's say our entry is $4. Our stop loss is 3.90. That's a 10 cent stop. And let's say um right so our entry is $4. Our stop loss is 390. Let's say our target is um let's say 44 410 right this resistance starts at 410. Well our entry is at four. Our stop loss at 3 is at 390 and our res the next target the first the next resistance area our first target is at 410. Well that point we're risking 10 cents to make 10 cents right? So obviously that wouldn't be worth it because you know after watching the risk management video you guys should know that our risk should be 2:1 right so let's say our entries at $4 our stop loss at 390 that's a 10 cent stop we want to make sure that we that there's at least 20 cents of room before it hits the first target or the first resistance area. Okay, I hope that makes sense. Like I said, watch the risk management video if you're still kind of confused on that. But now that we know how to determine our targets, right? How to determine what the next resistance area is, we can now h, you know, um, manage our risk a little bit better, where we're trying to assess, okay, what are we risking versus what's our potential reward. And our potential reward is well, however much room there is between our target, right, or resistance area from where our entry is. And you know, I just want to reiterate here, this is a base breakout, right? We play long over the base and we place our stop loss under the base. So long over the base, stop loss under the base. The target is the next resistance level, which are the overlapping candles above. We must consider whether our target is worth the risk of taking on the trade. We just talked about it. Assessing the stop-loss, assessing where our targets are. And refer to the risk management video. We want the potential of making 2:1 return uh or 2:1 reward on our risk. Okay, so I hope this makes sense. Uh this is just a an example of how we could apply resistance and support where we're we're looking at the next resistance level for our target and then we're determining whether the trade is actually worth it dependent on our actual entry and stop-loss. Okay. And another uh thing that I wanted to another topic I wanted to discuss is if a stock is rallying into all-time highs, there is no resistance to the left, right? It's into all-time highs. The stock has never been at that point before because it's like I said, it's all-time highs. So, there is no resistance to base our targets off of. So, we cannot accurately accurately determine our targets. Just like if a stock is dropping into all-time lows, there's no support below and to the left, there is no support because the stock has never been at that price before. So therefore, we cannot accurately determine our targets, right? So if it's an if the stock is in is into all-time highs or all-time lows, we're not going to be able to determine targets that well just because there is no support or resistance to base that off of, right? And as a general rule, this is really going to help you understand where there is support resistance is always look to the immediate left for support and resistance. And that's a key word. Look to the immediate left, right? And this, you know, this this is one of those things that you it's all about practice. It's all about actually looking at some charts and looking at support and resistance. But like I said, we're going to be looking at the immediate left for support and resistance. And what I want to do is actually go through a bunch of real life charts and, you know, give you guys some examples of all of the theory that we've learned about support and resistance. You know, looking for overlapping candles, looking for targets, trying to look at, you know, trying to assess risk to reward using support resistance, right? looking into some all-time highs or lows and and like and also looking to the immediate left when um you know when analyzing support and resistance. So the next class I'm going to be looking at specific stocks and we're just I'm just going to analyze draw some support and resistance lines and show you some of the theory that we have learned so far. See you in the next class. All right, guys. We're going to go over some real life examples, some real life charts, showing you guys how to apply some of the [clears throat] support and resistance theory and knowledge that you've just obtained. Okay? And we're going to be first looking at Facebook. I kind of picked random stocks. So, um, these weren't pre-selected. I kind of just found a list of random stocks that we're going to go over here today. And um just one example looking at this. Let's say you're looking at this and you know you're looking at potentially taking a short, right? Let's say it dropped where you know we had a big drop here. It's kind of consolidating here. And let's say I'm not saying this is a great short opportunity, but let's say you intend to play this short. You want to play it short under the consolidation, right? So you short it when it breaks the consolidation and you want to put your stop loss, let's say, above it, just like that. So this is just an example um just out of just to show you um how to apply some of the theory. So let's say that's your this is your entry. This is your stop loss. Okay? And our goal is to assess uh you know what's our target? What's the next support level because remember we're shorting it. So like I said the general rule is look to the left right and in this case when you see something you know we're on the daily chart here. If you're seeing the stock and there's nothing, absolutely nothing to the left, what you're going to want to do is go to the higher time frame. So, we're going to go to the weekly chart now. Okay. So, now all of a sudden, we actually have a little bit more clarity on where our next support level is. Like on the daily chart, when we looked at it, well, there was nothing to the left, right? We can keep scrolling for a long time and we might not get anywhere with it. But we go to the weekly chart, we can immediately see, you know, what's to the left, right? So, we're taking a short position here, right? And Facebook does look lower. We the declining 20-day moving average, right? We have a huge drop. It does look lower. However, how you know when's where's the next support? How much lower does it look? Well, looking at it, our next support level is right around here. You know, you want to say this entire area, right? So you want to say this is our next support area, right? I don't want to I don't I don't want to say it's one line, but you know this general area, right? So let's let's kind of draw it maybe here. Okay. So this is our next support level. All right. Well, let's see if the trade is actually worth it, right? So this is our next support and this is our stop loss. This is our entry. So now we're going to do some calculations. We're going to see, okay, what's our stop? We're going to subtract our entry from the stop loss. see what our actual stop is, see what our reward is, and we're going to determine if the trade is actually worth it. Right? So, that that's a really good example of uh, you know, try how to figure out whether it's actually worth uh, you know, the the risk of taking the trade. So, this is our next support level. And if we look to the left again, our next support level is right here, right? So, this is our first support level. Our next one we're going to look to the left is directly above below is right there. So, that's a good way of figuring out where support is. We're going to, you know, and when in doubt, when you don't see support or resistance to the left, like in this case, go to the higher time frame, go to the weekly chart, or if you're on the five minute chart, go to the 15-minute chart, or go to the or go to the hourly or daily chart in order to analyze what the resistance or support is. Okay, so that's a great example. Um, another uh example here. Let's see if we're looking at this uptrend, right? We we kind of talked about in the first resistance video how um how you know resistance and support is used during uptrends or downtrends where our you know previous resistance right becomes the new support right so let's let's look at an example here uh you know we we could uh I guess we could actually use this as an example right here right we have a consolidation right here we have a rally consolidation so this is our resistance right this level right here, right? Cuz we had it it retested that resistance basically almost three times and the third time it actually went through it. But notice how when we actually had a pullback, it pulled back maybe not exactly to this resistance, right? But around in that area. So this is a great example of resistance, you know, now becoming support on the pullback. And that's what we want to see. We want to see the pullback, you know, actually pull back to the previous resistance, which was right here. So, this is a great example, right? Um, let's look at another example here where Oh, whoops. Another example here where our our resistance is actually right here. Right. Oh, sorry for the text, guys, but our resistance is right there. and our pullback occurred to you know we we had the rally and it pulled back to the previous resistance and now that is the new support. So this previous resistance became the new support for the stock. Okay, I hope that makes sense and this relates to the first video where we talked about you know resistance becoming support. So these are two pretty pretty good examples. But I think actually this this is even better example right here we have a rally then a pullback right notice how the pullback it pulled back to this previous support this resistance area. So this was resistance and now it became support here. Right? This is now the new resistance and this new resistance. Notice how the stock pulled back to this resistance now becoming support. Right? And if this sounds a little confusing, go back to the first resistance video and that's where I really talk about it uh more. You know, it's it's a more of a theoretical approach, but it's it's definitely I give a a bit more detail. But the general idea is is that the previous resistance level, right? Like this previous resistance level becomes the new support when the stock actually pulls back. So it pulls back to the prior resistance and that now becomes support. Okay, so those are two good examples of that. Um, another example that I want to just show you here is this kind of relates more to the 200 day moving average, but um, this uh, 200 day moving average right here is acting as support, right? We have the stock pulled back here, retested it, that's one. Then it retested here and rallied. That's two. And again, it retested actually here. So now this has been a proven support level. So, this is a really good example how you can use the to the 200 day moving average as support to your advantage. Okay. And uh I guess we could talk about one more thing. Let's say all of a sudden uh we're looking at let's say we're going to reverse back in time and we're here, right? Let's say this drop hasn't this drop right here hasn't occurred yet and we're here in time. If you're looking at this and thinking, "Okay, do I want to play it long?" Well, either way, you're not going to play it long because we have a declining 20-day moving average. It's a downtrend. But let's say you decide to play it short and you want to short it here. Well, you know, if you're going to you're going to be looking you're right here. You're going to be looking directly to your left, which is these candles and then these candles, right? So, right away, if you're trying to short it from here, we have support here and here and here, right? We have a support level here. We also have support down here. So, you know, if [clears throat] you're looking at this and you're thinking, okay, do I want to play it short? Well, you got to ask yourself, is there a lot of support below? And in this case, there was a lot of support below. You had all these candles, then plus you had these candles, right? And then you had this low. So, the answer is, yeah, there was a lot of support. And you would now consider that you're like, okay, there's tons of support below. Do I really want to short it? you know, am I that confident that's actually going to go through the support? Okay, let's look at another stock real quick. We can look at PLTR and kind of uh look at what's going on in this case. You know, if we're if we're looking let's say let's say for example, we actually want to short this, right? Because the 20-day moving average is above if the 20-day moving average was to theoretically start to curl over price, we could actually probably look for a short position in theory, right? Not saying we should do that, but you can. Now, if I'm looking at this, right, I'm looking directly to my left. We have this entire support, right? Cuz remember, we look directly to the left. If we're here, we're going to look to the left. We have this entire support, right? Not only that, but we have this low, right? So, we have two kind of support levels right in front of us, right? Let's say, let's say it actually breaks through the support, right? It ends up going lower. it it actually breaks through this entire support level. Our next support is right there. So, the question is, does it really have that much that much room to drop before it hits support, right? And that's something that you're going to have to figure out like does it have enough room like if you put your stop loss here, entry here, well, it doesn't really make sense from a reward to risk standpoint because are the the next support levels directly below directly below. So, you would probably be a little more hesitant on actually taking this trade because of that because support is right below because, you know, and let's say it hits support. Well, the likelihood that it's just going to rip through the support level and continue lower is kind of low. It might, you know, go down to support and then bounce and stuff like that, maybe rally a bit off support. We want to have, you know, let's say our support level is actually down here instead. then we would have ample enough room for the stock to drop before it's actually hitting that support level. Okay, hope that makes sense. I hope that makes sense. This is a good example right here of we have a a we have a drop. Then this is a clear support level. You could see how much it's retesting and bouncing. So, this is a support level and as soon as it broke this support level, well, this is our short position, right? We short it right there. as soon as it breaks this support because it's kind of like a consolidation here, right? We probably put our stop loss around right here, right? And you could see that ended up really dropping. But if we're looking if we're in this area, right, and we're looking at uh like let's say we're we're looking to short it here, maybe actually wouldn't have been the best position because we did have this support to consider, right? Because if we're looking at this, right, we have to look directly to the left at the next support level. The next support level is right here. Luckily, it ended up actually completely breaking through it. But still, that's how we're going to be looking at support resistance. Look directly to your left and look at the next support or resistance level. Okay, let's uh see if there's any other examples that I can make from here. Uh, not really. We can move on to the next stock. We'll probably do one or two more here. Right. Um I think this is okay. This is interesting. Well, we can we can kind of go through this right here. If we're looking at right, let's say we're looking at this point right here and we're looking to play long, right? Well, if we're looking to play long, our next support level is going to be right there, right? Because if we're buying it down here, let's say it's a buy setup, we're buying it here. Our next support level is the previous highs, right? So that's our previous resistance. I'm sorry I keep saying support. This the resistance level. So the previous we're going to look to the previous resistance level which is right here. That's going to be our target number one. Right after that we're going to look at the next resistance which is basically you know we're going to look to the left. It's this next high. So this is our next resistance level. And as you can see the stock actually went up to that resistance level and ended up dropping down. Okay. So, I hope this I hope this is starting to make sense and and we could you're you're beginning to understand how we could apply support and resistance, right? So, if we're playing it long from here, our our we're going to look to the left. This is our first resistance level. The next one, we're going to look even more to the left. Okay, this is our next resistance level. And it ended up rallying straight to that resistance and dropping. So, that would have been a perfect target. Okay, so in general, guys, um I'm not going to go through all of these. You guys get the idea. It's we're going to be always look to the left. Always look to the left and to to specifically the immediate left to check for support and resistance. And you're going to be using it as targets, right? If there's a lot of support below and you're shorting it, maybe reconsider the trade, right? You don't want there to be tons of support below because the likelihood of that trade actually working is a lot lower. Just like if you're playing long, right? You don't want there to be tons of resistance above because it's going to be, you know, the likelihood of the trade actually working out in your favor is a lot lower, okay? Because there's tons of resistance above. Resistance resistance is going to stop the stock. It's going to stand in the way of the stock really continuing higher, right? And that's why I personally like trades that are going into all-time highs, right? So, let's say uh we have a um stock that, you know, it pulled back Right. I'll kind of paint it out like this. Okay. Boom. Let's say we have a rally, then a pullback, and then another rally, and it's basing at resistance at the all-time highs. That is extremely bullish, right? So, I'm going to actually write that. This is going to be kind of another quick little lesson here. A consolid base at the all-time highs is a very bullish quality. Okay. And similarly, a base at the alltime lows is a very bearish quality. Okay. So, let's say, like I said, this is here. I'll I'll even write it. I'll even write it here. Boom. Right. So, let's say we have a rally, then a pullback, and then we have another rally, and it's basing at the all-time highs. That is very bullish, and we like that. We want to see that. And the reason it's very alluring is that let's say it actually ends up breaking out. Let's say it breaks out. Well, there is no resistance to the left, meaning this has unlimited room to go higher. Excuse me. And that's the great thing. There is no resistance to stop the stock from actually continuing higher, right? The since there's no resistance, the stock could easily continue higher as much as it wants. Okay? Just like in it, it it work the same way if it was the opposite. If it was a base at the all-time low and it started to break down under the base, there's no support below. So, it in theory has unlimited room to continue lower, right? And we and that's that's a great quality because since there's no support below, I mean, on the one hand, we can't really pick targets all that well, but there's no support to, you know, stop it from going lower, which is great if we're shorting it. Okay, hope this all makes sense. I'm going to try to find maybe an example here. Uh, we could find an example here. Let me look. H maybe. Let's see. Let's look at this one. No. Okay, this is actually a nice a fine example. We could look at Hood for example. Okay, let's say we were shorting Hood under this base just as an example. Not saying I would do this, but let's say that's what you were going to do right? Well, there's no support at all under this base. There's nothing to the left of it. So, this in theory, there's no support to base our targets off of, but there's no support that's going to stop it from continuing lower. So, this can in theory go lower all the way to zero if it wanted to. Obviously, it's Robin Hood. It's probably not going to do that, but you guys get my point. There's no support stopping the stock from dropping, which is great if we're shorting it. Or just like the opposite, if we're playing long and there's no, you know, and we're into all-time highs and there's no resistance above, well, there's no resistance that's going to stop the stock from continuing higher. So, the point is is that a base at the all-time highs or the all-time lows is a very bullish and bearish quality. Meaning, if it's at the if it's a base at the all-time highs, it's very bullish. If it's a base at the all-time lows, it's very bearish, right? And we want a breakout into the all-time highs because there's no resistance to the left stopping it from going lower. And similarly, we want to short under the all-time lows, especially if there's a consolidation at the all-time lows. We want to short under that consolidation, right? Because there's no support stopping it from continuing lower. All right? And let me know if you guys have any questions about that. And uh hope this helps. We've kind of took some of the theory we already learned and put it into more practical information. Okay, let me know if you have any questions. Thank you. What's going on, guys? Hope you're having a great day. And today, we're going to be talking about another tool that I use on my charts. Okay, we already talked about the 20-day moving average. We talked about the 200 day moving average, and we talked about how to read candlesticks. But I also use another very important tool, and that's called volume. Okay. And a lot of people kind of overhype the utility of volume. They say that, oh, you know, they kind of come to these random conclusions about what's going on with the stock or crypto based on volume. Well, this or they'll say, oh, because we see a volume spike, this, this, and this is going to happen. And most of what you're going to hear about volume out there is complete nonsense. Okay? But I'm going to give you guys the actual way you could use volume to your advantage and the situations where volume is actually pretty useful. Okay? And by the way guys, before I start the class, I just want to tell you a lot of what I'm teaching doesn't only apply to volume. This is stuff I've learned through experience. Okay? So you might catch me throughout this class kind of citing specific instances of, you know, different things that have happened to me when with volume. And it's very experience-based, okay? This isn't stuff that I'm just finding on Google, okay? This is stuff that I've actually gone through through, you know, taking on thousands of trades and through my years of experience. So how can volume be a powerful tool? And there's there's really only a couple ways you could use volume. And what is volume in the first place? It shows you how much a stock or a crypto is being bought or sold. It's showing you how many shares are being bought bought or sold. Okay? And volume is one of the primary ways of predicting price reversals. Okay? And using volume will greatly increase the accuracy of picking tops and bottoms with precision. Okay? There's this really interesting idea of finding tops and finding bottoms, right? Where you're buying at the absolute lows or you're shorting at the absolute highs. A lot of people want to do that. And if you're one of those traders where you just have uh, you know, affinity towards finding those type of reversal plays, you're going to be using volume and looking at volume a lot. All right. And another thing that you know another uh you know way you could use volume is that it can indicate when a move usually it's a rally or a drop in price when it's beginning ending or continuing. Okay? And we're going to get into that. So first I want to kind of classify different uh I guess you could say different um versions of volume. I guess that's the best way to put it. So the first classification is amateur buy volume. Okay, where let's say we have a multi-m move or a multi- bar bar move towards the upside where we have 1, two, 3, four, five, we have five green bars in a row and we start to get a spike in volume towards the end of the move, right? towards um like after you see the five green bars in a row and you get a huge spike in volume that suggests that that is the end of that move and a reversal might take place. Okay. And you can think of this increase and this spike in volume. And the re you could think of it as the last group of buyers who have finally bought the stock or crypto and that stock or crypto is running out of demand. Right? You could see that the green candlesticks. And the reason we call it amateur volume and you know specifically amateur buy volume is because what do the amateurs want to do? What do the novice traders want to do? Right? They hate missing out on moves. When they see a stock or a crypto go up one, two, three, four green bars in a row, right? What do they do? They're like, "Oh my god, I don't want to miss out on this rally. This this stock or crypto is going to continue higher. I don't want to miss out." And what do they do? They start buying at the highs, right? That's what amateurs and, you know, people who really don't do this professionally, that's what they do. They buy at the highs and they sell at the lows losing money. So you could think of it, these candlesticks, this is amateur volume. These are the amateur traders who are buying it at the highs with the fear that they're going to miss out on this move, but they already missed out on the move, right? The professionals are buying it down here before the move, right? The amateurs are the ones that are buying it at the highs, right? So you could think of this as the last group of buyers. are finally getting into the stock. And this is really also effective when this rally is right into resistance. If this rally is directly into a resistance level, it's much more potent, right? If you see this amateur buy volume, it suggests that we're probably, you know, going to see a reversal here. And like I said, think of it as novice or beginner traders finally buying their position. They saw the move already go up without them. they're finally buying the position up here when they, you know, when the professionals are actually selling it up here, right? Someone, you know, someone is selling um their shares or their coins, right? Right. Their crypto coins to these amateurs and those are the professionals. The professionals are buying it down here and they're selling their shares or their coins to the amateurs up here. And you could see that that's when we get the uh sharp reversal lower, right? So let's continue. We also have amateur sell volume where let's say we have a multiar multi- red bar move lower and we start to get that amateur volume. Uh you could you could you know this spike in volume at the end of the move suggests that a reversal might take place. And you could think of this as the last group of sellers who have finally sold their stock or their crypto and the stock is running out of supply or the crypto is running out of supply. Okay. And it's very effective if this uh if this is actually kind of dropping into support and we also get that amateur buy volume with you know multi multi uh red bars lower. Okay. And think of it as novice or beginner traders. They're finally selling it, right? They were these beginner traders, these amateurs, they were down on their positions here, right? They were losing money here, but then they see the stock or the crypto continue going lower, continue going lower, and their losses are increasing. They're increasing. They're increasing until eventually they can't stomach, right, that huge loss. And they're like, you know what? I'm going to exit the position. And as soon as they're exiting the position, right, they're selling their shares to the professionals who are buying it down here. Okay, hopefully that makes sense and that's why we get that sharp reversal higher. Okay, so quick summary guys. If you have several green bars in a row or several red bars in a row and you get a huge volume spike um towards the end of that huge move higher probably means that you're going to get a reversal, right? And these are the amateurs who are buying it at the top, right? Because they they have the fear of missing out on the move. But remember, we're trying to be professional traders. We're the ones who are either shorting it up here or selling our positions that we bought down here. Okay. Same thing with amateur sell volume. Uh maybe the people who right they're los they're they're taking big losses on their position. It's dropping. It's dropping and dropping. They can't stomach their losses. They end up selling it down here. And those are the last, you know, group of sellers and then we get a pop higher. Okay. Um so another um version of volume it's called igniting or classification of volume is it's called igniting volume right and we talked about an igniting wide range bar an igniting wide range candlestick we already talked about that okay so what you want you what you guys want to do is couple the wide range igniting candlestick with igniting volume. Okay. So, this volume is igniting a brand new move or direction. The professionals, they don't enter a stock at the end of the move. They enter at the beginning. We talked about this. The professionals, they're not buying it up here. They're exiting here. And if if anything, they're shorting it up here. They're not selling it down here, right? If anything, they're buying it down here. Okay? And so it makes sense, right? The professionals, they're entering at the beginning. And this is also a very potent reversal signal where you're often going to see amateur volume, right? Followed by igniting volume, right? So this is amateur volume right here where the sellers are trying to get out of their position and the professionals start buying it here and this ignites the move higher, the reversal higher. There's also something called continuation volume and this really only applies to a base, right? So we already learned about the base breakout or the base breakdown. Okay, so this is something that you want to uh combine with the base breakout where let's say you have a rally higher, right? You have pretty high volume during the rally and then you start to get a base, right? You start to get a base. What you want to see during that base is very low volume. It indicates that there's not that much selling pressure. So when the stock does have a breakout and that igniting volume, it's more likely to succeed, right? So you don't want to see high volume during a base. You want to see very low volume during a base because that is continuation volume. And then when the stock breaks out over the highs of the base, that's when you want to see igniting volume. and this igniting volume, it sparks a new move higher after you haven't really had any volume or any buying and selling at all during the base. Okay, hopefully that makes sense. So, if you have a base, you want to have low volume. When you have that breakout, you want it to you want it to have igniting volume. Okay. Uh we already talked about the shakeout bar, uh but let's kind of talk about it again. Why not? So happens when a stock attempts to break down from a bullish base on large volume and fails to break down, right? So you can combine volume with the shakeout where you have a base with low volume. All of a sudden you get that shakeout bar, right? This bottoming tail. It triggers everyone's stop losses. We get that drop, right? We have large volume during the shakeout and then it comes right back to the highs to finish here and then we continue basing and then we have the real breakout where we have huge igniting volume. Okay. Why is it called a shakeout? Most people who are in their long positions who are expecting the rally to continue higher, they're placing their stop losses under the base. Right? When the stock attempts to break down, the stop losses are hit, propelling the stock lower, right? All those sell orders, those stop losses are hit. It causes an influx of selling. The stock or crypto drops. And if the stock is still able to get bought and return all the way back up to the highs, then there's clear confirmation that we're going to continue higher. We already talked about this guys, but this is kind of a reminder. So, it's okay to see large volume during a shakeout before we have the igniting volume during the actual breakout. Uh let's also talk about um potential reversals when we're looking at a base. So, this is something I can guarantee you you're not going to learn anywhere else. There's really I don't I would highly doubt there's any other course in existence that teaches this very topic because this is something I personally learned. This is something that over over the years I saw this so often that it's almost it's almost become just like its own trading strategy almost. Right? So, if you have a base, right, we have a a rally, we have a base, we're setting up for a base breakout, right? That's you're looking at it, you want to play it as a breakout, and you have a sudden volume spike that does not lead to a breakout. This can be indicative that a stock or the crypto will reverse in price. And this usually applies more to intraday trading, meaning the smaller time frames, right? So, we know about we want to see igniting volume during the breakout, right? Right? When we actually make the move higher, we want igniting volume. But let's say we all of a sudden get igniting volume, we get that volume, huge volume spike, and you're seeing, hey, this this stock or this crypto, it's not breaking out. What's going on here? When you see something like that, you should be very cautious because it usually means that we're going to actually end up getting a reversal because right, if this is a volume spike, if this is igniting volume, these are people buyers that are trying to get in and buy the cry stock or crypto and propel it higher, right? And if this is buying pressure, it's a green volume spike and it doesn't go higher, well, why, right? Like, there has to be something going on. and just be cautious. It usually ends up leading to a um reversal. So, if you're if you're in a position, right, and all of a sudden you see a huge [snorts] volume spike and the stock isn't going in your favor, it probably means it's about to go against you. Okay? So, keep that in mind. Um so, let's now talk about breakout and breakdown failures. If you have, let's say, a base breakout, right? you have a rally and you're you're basing, you're trying to go for the breakout. Let's say you get the breakout, right? It hits your entry, you're in the position, it breaks out, okay? And you get that igniting volume. But let's say this igniting volume doesn't lead to a continuation move higher and in fact you end up failing and you end up starting you end up getting a red bar that's going lower right with a huge volume spike. It it basically confirms that this is a failed breakout. If you get a rally and then a sudden drop, right? Like let's say you're in it, it goes up and then it drops against you on huge volume. Then you should maybe immediately exit that position and maybe even play it short. Okay, it's considered a failed breakout and it suggests that the prices are going to actually continue lower. So just just understand that if you're if you're in a position and it breaks out on igniting volume but then immediately starts to drop and come back in also on huge volume it suggests that that's a breakout failure and get out of the position. Okay. So a lot of the times you can pinpoint uh failures by just looking at volume and let's say all of a sudden um you know we have a huge a huge volume spike and then it starts going against you in huge volume you can maybe exit before it hits your stop loss right cuz then you're like oh this is a breakout failure let me get out. Okay. So, let's look at some examples here uh on how we could use volume, right? You could see that uh we dropped right into the 200 day moving average. We know that that acts as a floor, acts as support for our stock or crypto. We drop oh boom, we got a volume spike right here. This led to a reversal, right? All of a sudden here, check this out. This volume spike correlated with this reversal. we drop, right? We don't really have a rever uh any volume reversal here. Okay, it's not going to happen every time. Then we drop we uh we rally again on large volume. We start to get a big volume spike, right? We drop. It's not too prevalent here. I think this is the best example because we actually have a multiar move lower. Like here it's it's green bar, red bar. We have a bunch of dogey candles. There's not that much momentum here, but here we're we're getting, you know, huge red bars in a row. And you could see that you could see the clear amateur volume and the clear igniting or professional volume, right? We drop, right? We're getting that big amateur volume. All of the people, they're finally selling their position after they took a huge loss. And then boom, we have an igniting move higher. We have ignite on green volume. And boom, we continue higher. So you could see how this is really, you know, it's it's really h it comes in handy when you're picking reversals. Let's look at another example. We have a large move lower, right? Aside from this green bar, this is all straight red bars in a row. We drop hard, huge volume spike, we reverse, right? Right here, huge volume spike, we end up dropping. Um, and I think it's really prevalent here, right? We have a huge one, two, three, four, five. five red bars in a row with we also have a bottoming tail here which suggests that this was you know this was selling off at some point we were all the way we were you know selling off to down here before the buyers started coming in right so we made a huge drop on huge volume right so notice that whenever you're seeing huge huge volume right you could see this is much uh greater than any other volume that we've had here drops huge volume that's when we get the reversal Right? And you can see these red this red volume. That's amateur volume. And then you can see the green volume that's sparking the new move higher. Those are the professionals buying down here. Let's look at another example. I mean, this is perfect. We have a huge move lower. We have a double bottom. We have a bottoming tail on huge volume. We get the reversal. So, we didn't really get amateur buy volume here or amateur volume. We kind of did maybe with this candle, but we get a lot of igniting volume that ignites the new move higher. Same thing here. We drop huge spike in volume and ignites this move higher. Okay. Um, so let's let's go over the example where we talked about continuation volume and igniting volume. Notice we have a rising 20-day moving average. We have a really tight base, beautiful base that's at based right into the 20-day moving average. uh as it's rising, we get that breakout. Notice how during this base, look how low the volume is. It's beautiful. And then boom, we break out on huge volume and we continue higher. Sparks this new move higher. Beautiful. Let's look at another example. Let's let's not only talk about volume. There's a bunch of stuff stuff to talk about here. Rising 20-day moving average. That's underpriced. Check mark. right here. We have huge volume igniting this move, right? We end up getting a pullback and we get a buy setup, right? We get a buy setup right here. Um, it's right at the 20-day moving average. Really nice buy setup, right? We have one, two, three red bars in a row. Um, kind of a deep retracement, but it's right to the 20-day moving average. Really nice entry bar. We rally to resistance, right? Because the previous highs is resistance. We start to base that resistance. And where do we base into? We base right into the 20-day moving average, the rising 20-day moving average. Beautiful with continuation volume. Um, you know, really, really low volume. Um, and then we get that huge spike in volume during the breakout, right? We continue higher and then we get a buy setup right here, right? Pullback pattern. Beautiful right to the 20-day moving average. Dogey candle. Really small entry bar. really nice risk uh reward to risk rally. Everything is beautiful about this chart. Let's look at another example here. This is actually a gap up. So, this happens with stocks. We'll talk about that later. But you could see, right, we're kind of down here. We're we're we're kind of just sideways down here. We get a gap up and on huge volume. And this is professional volume, right? This is these are these are the professionals starting the new move higher. It gapped right to the 200 day moving average and ignited a new move higher. Another example, we get a drop, it ignites a new move lower. You could see huge volume spike. Okay, so something that I really want to emphasize here, guys, is like I said, volume is really useful for reversals, especially when it's a, you know, when you get a huge move, like for example, you get a huge drop that a big volume spike usually means we're going up, right? Huge drop. Volume spike usually means we're going up. Same thing right here. I mean, this is a perfect example. Huge drop. I mean, one, two, three, four, five red bars in a row. Nice amateur volume and then boom, we get igniting volume. Um, so notice how sharp increases in volume during major sell-offs or rallies lead to sharp reversals as well. Okay? And if you guys have noticed, especially looking at this chart, right, you're starting to notice how we're putting everything together in this course. We're putting the 20-day moving average, right? We're combining it with the strategies we've learned. We're combining it with volume. We've we're combining it with the 200 day moving average. We're combining it with reward to risk. Okay? So, towards the end of the course, I'm going to try to give you guys more practical kind of tests or cra practical uh quizzes on this stuff. But yeah, volume very very useful guys. Um, hope you guys kind of understand the theory behind amateur volume and igniting volume. Um, this is important stuff here. But just understand that it's mostly used for reversals. And if you have a base make, you want to see a base on very low volume. Okay guys, hopefully that makes sense. Have a good day guys. This was a great class. See you. Now that you've learned everything that you need to know about reading price action, let's use that information and learn how to identify high quality setups in the markets. And that's exactly what we're going to be talking about in this next chapter. I'm going to teach you every single trading strategy that I use on a dayto-day basis. So, let's not waste any time. Let's hop right into this chapter. What is going on, guys? Hope you're having a great day. We have finally reached the strategies section of the course where I'm actually going to be teaching you different trading setups that you can begin spotting on your charts and hopefully taking advantage of. Okay, so this is finally the most exciting part of the course. But before we go into some of the presentations that I have prepared for you guys, I want to talk about a very important concept. And this is going to kind of preface the uh other strategies in the other presentations that I have prepared for you guys. And that concept is price correction. Okay. So I have a I'm going to draw a diagram here for you guys. So what's under what we have to understand is that with price action whether it's for a stock or a crypto or a for or forex it really applies to any financial instrument on the market what we have to understand is that price always corrects itself in some way right can't just go infinitely higher at some point we are going to have some sort of price correction and That price correction could happen in two different ways. It could either happen through a pullback or a retracement or it can happen through u a consolidation or a base. So let's first talk about the pullback, right? So let's say we have a really bullish rally, right? We're in a we're in a very bullish stock. There's a lot of buying. There's a lot of, you know, strong momentum. after a really strong rally, right? At some point, we have to see some sort of retracement or some sort of base, some sort of uh price correction, right? So price can correct itself in the first way through a pullback where when a pullback happens right we get a minor drop where perhaps the reason of this is there's a lot of buyers who were buying it down here or buying it over here and you know they're enjoying their profits as the stock or crypto is rising and at this point they want to start taking profits right so all those buyers start taking profits which leads to a drop or in other words a price correction or perhaps there's a ton of people up here who are skeptical that the stock or crypto is going to continue higher. So what they do is they short it up here thinking they're going to make money, you know, if this thing drops in price. Okay, so that's one way we could have a price correction. And of course after the correction, right, ideally if it's if it's a really bullish uptrend, right, if there's a lot of buying pressure, a lot of buying momentum, we're inevitably going to continue higher, right? So our goal is to buy it where our goal is to buy it right down here, right? If we missed if we missed the opportunity all the way down here, our goal is to buy it during the correction, right? Why? Like our goal isn't to buy it at the highs. It's to buy it on the pullback, right? Because after you would you would assume that price has corrected corrected itself. We're ready to continue higher again. This, my friends, is called a buy setup. Okay, this is a buy setup. So, that is one of the strategies that we're going to be learning, right? Buying, you could think of it as buying the dip. I know that's a really popular phrase, but this is what that is. And that dip, like I like I mentioned, is a price correction. So, we are buying this price correction. So, that's one way price can correct. Another way price corrects is let's say we have the same rally. We have a huge rally. We can correct through time or in other words through a consolidation or a base, right? Where we actually just stay at the highs of this rally, right? Maybe at this point there aren't enough buyers to, you know, propel this stock or crypto higher. And there's also not enough sellers to, you know, cause it to pull back. So instead, we just sort of base. We just sort of stay at this in this price range, right? Where we don't have enough buyers to bring it higher, but we also don't have enough sellers to bring it down. So we end up just consolidating or staying near the top of this base, right? before we inevitably continue higher. And our goal, right, our goal is to buy it as soon as it breaks out of that base. Right after, you know, as it's consolidating, right? Right. When the price correction has finished, our goal is to buy it at this point and enjoy the move higher. And this strategy is called a breakout. Okay, a and specifically a base breakout. Okay, so this is kind of the fundamental anatomy of the two strategies that we're going to be talking about first. We're going to be talking about the breakout first and then we're going to be talking about the buy setup. But something that's important to note from listening to everything I'm telling you guys in this presentation is this is how price corrects itself, right? And based on how price corrects itself, we could find opportunities, okay? We can find opportunities to get into the stock and enjoy the next move higher, right? Because to be honest, guys, you're not always going to be able to buy it down here or buy it down here, right? Sometimes you're going to be late to the party. But you have to identify the points where price correction has completed and we're ready to continue higher, where price correction has completed and we're ready to buy the breakout and enjoy the next move higher. Okay, hope this makes sense guys and in the next class we're going to we're going to be specifically talking about the base breakout. Okay, so make sure you understand this concept and understand that price cannot go infinitely higher. It cannot go infinitely lower. At some point, there needs to be some sort of correction. Okay? And I'll see you guys in the next class, guys. We're going to be talking about the base breakout. Thanks. What is going on, guys? Hope you're having a great day. Today, we are going to be talking about the base breakout. And hopefully you guys understand what we talked about in the last class and how price corrects itself in two ways. Either through a pullback or through a base. Okay? Okay. And today we are going to be talking about the base breakout or the base breakdown setup. Okay. So let's get right into it. So the base breakout, what is it? This is one of the most potent and fundamental trading strategies that exist. In fact, this is my favorite trading strategy that exists. I make money off this setup every single day, okay? Because I see it all the time. It's a very, you know, well-known setup. And if you know how to play this setup correctly, I can promise you, you are going to make a lot of money trading, you know, either whether it's stocks or crypto or forex. Okay? It's that powerful of a setup. And like we talked about, a base or a consolidation is a period of time when a stock or a crypto is trading in a particular price range. It's not moving out. It's not moving above or below that price range, right? It's sort of staying at the same price level. And our goal as traders is to take advantage when price breaks out or breaks down out of that range, right? We're timing our entry when price breaks out or breaks down. This works on any financial instrument including stocks, crypto, and forex. Okay? This also works on any single time frame and it's a very good highreward to-risk setup. That's one of my favorite parts about it. So, let's understand the anatomy of the base breakout. And we kind of looked at this before, but let's try to get a deeper understanding. So, like we talked about, price corrects itself either through a pullback or through a base. Okay? So, in this case, we're talking about the base. So after, you know, a large rally higher, we have a base where price is sort of, you know, not it's not trading above or below this price range. We're just sort of chilling at the highs of this rally, right? And our goal as traders is to find the moment that price breaks out of this range and continues higher. So we want our timer entry over here. Right here. Okay. And we have to understand that in a bullish uptrend, right, if there's a lot of buying pressure in that stock or crypto after a large move higher, oftent times it's going to correct itself through a base. So, it's really important that you guys can identify when this is happening so you could take advantage of it and take advantage of this point right here so you can enjoy the next move higher and hopefully make a lot of money. Okay? And uh I believe that's that's all. So, just remember guys, during this process, price is correcting itself and as soon as it's done with the correction, we're ready to continue higher and this is where we're buying it. Okay? So let's this is kind of a little uh graphical representation of this. We have a rally and then we have a bunch of candlesticks that are trading in you know at the highs of this rally. We're trading in this price range and just understand that at the top of the base right at the highs of the base that is an area of resistance right because the candlesticks are sort of respecting that high of the base. So it creates a resistance and the same thing happens at the lows, right? The candlesticks are respecting the lows of the base, right? And that's going to be support. So if you ever see a base like this, just understand that over the highs of the base, we have an area of resistance there. And under the lows of the base, we have an area of support there. Okay. So let's talk about the actual base breakout breakout setup and our entry and stop-loss. Okay, so we have the rally, we begin to consolidate, right? We are going to place our entry over the highs of the base and we are going to be placing our stop loss under the lows of the base. Right? So let's say you have a base like this. Find the absolute highs, right? In this case, it would be over this candle and place your entry over the highs of that base. And my recommendation is, let's say the highs of the base is, let's say it's $6. You want to place your entry at about 602 603. You want to give it 2 or 3 cents room. Okay? So, you you give this you give the stock or crypto the actual, you know, room to break out and truly break out of this resistance. Okay? And the reason our entry is above the highs of the base is because that's when price is breaking that resistance, right? We're timing our entry with the break of this resistance. All right? And for a stop loss, we're placing our stop loss under the lows of the base because that's where we have an area of support. So this is super easy, guys. If you see a base and you want to, you know, you want to play it, you want to get into it, entry is over the highs. Find the absolute highest point of the base and place your entry above that high. Place your stop loss under the absolute low of the base. Okay, that's your entry and your stop loss. Pretty easy stuff. Now, let's talk about the 20-day moving average requirement. We already reviewed the 20-day moving average and how important it is. And we know that we want to see the 20-day moving average either trending higher or trending lower. Right? If we're bullish, we're in an uptrend, we want to see the moving average trending higher, ideally at a 45 degree angle and under price. Okay? So, that's what we need here for a base breakout. We want the 20-day moving average to be trending higher and under price. That is a requirement. You need to have that if you want to play the base breakout. It is the most crucial requirement. Okay? And the reason we want it is because oftent times during a really bullish uptrend, stocks and crypto, they tend to base into the 20-day moving average. They tend to just, you know, consolidate right into it. And as soon as it's at or near the 20-day moving average, that's when it ends up breaking out. Okay? This is just something that happens. Okay? Okay? And we're going to show you guys examples of it soon. So, something to understand is that at this point right here, right? Let's say we're right here. We are extended from the 20-day moving average, right? And by [snorts] extended, we learned about this prior is that we know that extension means distance. There's distance between the 20-day moving average and price. Meaning price is kind of overbought, right? It's a little extended. So, what do we do? We need to have a price correction. So, we end up basing and as we're basing into the 20-day moving average, price is correcting itself and it's getting ready to make the next move higher. So, our goal is to time your entry when price has based into the 20-day moving average or we just want at least the 20-day moving average to be near price. Okay? We don't want to be buying it here cuz right here, there's still some distance between the 20-day moving average in price. There's still some extension. We want to be buying when it's at or near the 20-day moving average when there's no extension. Okay? When there's uh we're not overbought at all. Okay? Hopefully that makes sense. So overarching theme here, guys, is for a breakout, make sure the moving average is trending and underpriced, and you want to be buying it at or near the 20-day moving average. Okay, let's let's continue here. And this is something that I often times see. What I see often is a rally higher, then we begin to base. We begin to consolidate. As soon as we hit the 20-day moving average, we have that breakout and our price is going to be at this resistance level, right? It's over the base. This line is directly over the base. This is our entry point. So, we would be entering as this green bar is being formed. We would enter right there and then we would enjoy these profits going higher. Now often times what I see is after this primary breakout after we break out of this resistance and we continue higher I often see us having another sort of price correction but this time it happens through a pullback. So after this rally we actually pull back okay and we form a buy setup or a you could call it a secondary breakout. We're going to be learning about the buy setup later, but oftentimes after this initial breakout, we pull back, we form the buy setup, and then we continue higher. And you can think of this as a pullback pattern, right? Like I said, we're going to be learning about that in the next class. But what I what I really want to emphasize here is oftent times this line right here, this entry point, this is serving as resistance, right? We're break we're buying it when it breaks the resistance of the base o over the highs of the base. But this prior resistance level right is now turning into support for the stock or crypto where we actually pull back to this prior resistance which is now support. So during this point it was acting as this resistance level was acting like a ceiling. As soon as we broke out of that ceiling, it's now turning into support and we retrace right back to that support level before we continue higher. Okay, now this doesn't always happen, but I think it's something to, you know, show you guys. I think it's important. Here's an example of that. Okay, where we have a large rally higher, right? Look at this. We have a rising 20-day moving average. We have a huge rally higher, okay? At this point right here, there's significant extension between price and 20-day moving average. Price needs to correct itself in some way. So, first we have a pullback and it sets up as a pullback pattern or a buy setup, right? That triggers higher that goes higher, but there's still there still needs to be some sort of correction, right? This was a huge move. It needs additional correction. So, what do we do? We base and we stay in this price range. And we stay in this price range until eventually the 20-day moving average, this blue line starts to starts to curl under price. It starts to trend higher and that's when we get the base breakout right here where this red line is the entry point. This red line is the resistance. We break out of that resistance and we enter right here. We rally higher before we have that pullback. And this prior resistance, which was our prior entry point for this primary breakout, it now becomes a a support for this pullback. Okay. Hopefully that makes sense, guys. All right. Okay. Very good. Next, excuse me, we're [clears throat] going to be understanding the base breakdown, which guys, the base breakdown is the absolute opposite of the base breakout. It's the same exact thing except it's the opposite. We're going to be taking advantage of shorting it, okay? But nevertheless, I'll go over it. As we know, price corrects itself in two ways. Either a pullback or a retracement or a base. So, we have a drop, right? Let's say we have this is a downtrend, right? It's clearly a downtrend. We have a lot of bearish momentum. There's a lot of selling pressure. We have a drop and we consolidate at the lows, meaning right, we have a drop. It wants to continue lower, but it needs to correct itself first. So, it corrects itself through the base. We're chilling at the bottom of this of this drop before right here. We have that breakdown. We short it. We have a nice move lower, right? We short it right here once it's breaking below this base. That's why it's a breakdown, right? We have a drop and then we start to base again at the lows of this rally, right? And we have another breakdown here where we're trying to enter when price is breaking down out of this bearish consolidation. Okay, so like I said guys, our goal is to catch the moment price breaks down and enjoy the next move lower and we're shorting it. Okay, and we have to understand that a bearish downtrend whenever we have a downtrend, price tends to base after a large drop. That's just what happens. Okay, that's the way price tends to correct itself. It tends to correct itself through a base at the lows. So the same thing here after we have a drop and we have this consolidation, we have these candles trading in this price range. At the bottom of the consolidation, we have an area of support and at the top of the consolidation over the highs of the base, we have an area of resistance. The same exact thing as we discussed before except the opposite. So what's the entry? It's the same exact thing except the opposite. Our entry is going to be under the lows of the base and our stop loss is going to be over the highs of the base, right? Cuz we are entering when price is breaking that level of support. That's when we're timing our entry and we are placing our stop loss over the highs of the base because that's where the area of resistance is. Okay. So yeah, to emphasize, we're we're trying to enter when it's breaking that support and that's where we enter and we enjoy this move lower. Okay, so entry under the lows of the base, stop loss over the highs of the base when we have a breakdown. Okay, very good. Let's continue. So just like the breakout, we have a very strict uh 20-day moving average requirement. Like I said before, we want the 20-day moving average to be trending lower and overpriced when we're in a downtrend or when we're bearish, right? We want it to be trending lower and overpric. So that's a requirement. [snorts] And oftent times stocks in crypto, they base into a declining 20-day moving average. This is the way they correct themselves cuz as of right as of right here, at this point here, price is extended from the 20-day moving average. And by basing into the 20-day moving average, we have that price correction and we're finally ready to short it as soon as it breaks under that base and we want to time our entry when price has already based into the 20day moving average. Okay, it's the same exact idea, guys. Um, and same exact idea here as well. Um, we have a drop, we base, right? our entry. This is our entry point, which is an right, the area of support. So, we're timing our entry. When it breaks this area of support, right? This is the primary breakdown that we're playing. We're at the 20-day moving average. We drop, right? Cuz remember, we shorted it here below the base. This is the primary breakdown. And oftent times, we have a retracement. And this retracement goes back to the declining 20-day moving average. and also it goes to the initial area of support right our entry that's now becoming resistance for this stock or crypto okay and this is our first retracement to the 20 this previous area of support has now become resistance okay this doesn't always occur but I thought it was important to share it with you guys and we're going to be talking about reward to risk in the next class what is going on guys we're going to be continuing the presentation exactly where we left off. And we're going to be talking about reward to risk. And this is one of my favorite parts about the base breakout is the reward to risk aspect of it. And my biggest recommendation guys is after you watch this class and later on in the course, after you watch my risk management and share sizing course, please come back to this section of the course after you understand the risk management, after you understand share sizing. And I think this whole section of the breakout is going to make a lot more sense. But nevertheless, I'm going to introduce uh this concept to you guys right now. But just keep in mind, you may want to come back to this uh to this part of the video in the future. So my question for you guys is out of these two setups, which one is better in terms of reward to risk? Okay, is it number one or number two? Right? and take, you know, pause the video, take a second to think about it. Which one do I like better from a reward to risk uh uh standpoint? Which one has a lot higher potential, a lot higher potential to be lucrative, right? Which one has the higher potential to make us a ton of money? That's what we're here to do. We're here to make money. So, if you guys have thought about it and you guys selected number one, this one right here, you would be correct. Let's talk about it. So, over the base, we have our entry point, right? We always place our entry over the base. So, for both of these setups, our entry is at $3, right? Over the base is at $3. Over this base, we have $3, right? But let's say our stop loss, right, is supposed to be under the base. In this situation, it's at 290, right? It's directly under. We have 290 as the price of our stop loss. However, in this situation, you know, the base, you could see it's a little bit of a larger base. Our stop loss is under it, but it's at $2.70, right? So, this one's at 290. This one's at 270. Okay? So, we have the same entries but different stop-loss prices. Okay. So, what is the size of our stop? Well, the size of our stop, all we have to do is uh subtract the stop-loss price from the entry price, right? So, $3 minus 290 is 10 cents. The size of our stop is 10 cents. So in other words, if we enter this setup, this breakout at $3, if that, you know, if our trade drops by 10 cents and hits 290, we are out of the trade, right? That is our risk. If it drops 10 cents from our from our entry, we are out of the trade. Now, in this case, our entry is at $3. Our stop loss is at 270. $3 minus 270, that's 30 cents. 30 cent stop size, meaning if we get in at $3, that's our entry point, and it drops 30 cents right to 270, the bottom of the base where we have support, that's when we exit the trade. Okay, so hopefully that makes sense. Stop size 10 cents here. Stop size 30 cents here. If we are risking $100 on both of these setups, meaning $100 is the maximum amount that we could lose for this trade, right? $100. Like, we can't lose more than $100, right? What are we going to do? We have to share size accordingly, right? So, if we're risking $100 with a 10 cent stop, right? Meaning if this if we get in at $3 and it drops 10 cents to 290, if it hits 290, we're out of the position. How many shares do you have to buy to ensure that if this drops by 10 cents and hits the stop-loss price, we only lose $100? And I'll make it easy for you guys. The formula is take your risk, your dollar amount risk, which is $100, divide it by the size of your stop, which is 10 cents. So, a,000 shares, meaning we could buy a,000 shares at $3 and if it drops 10 cents to our stop-loss price at 290, we will lose $100, which is the maximum amount we are willing to risk. In this scenario, we're still risking $100. The risk is the absolute same. We're risking the exact same amount in both of these setups. However, in this case, we have a 30 cent stop, right? because our stop loss is under the base at 270. So if we're risking $100 per trade with a 30 cent stop, well the risk unit $100 divided by the size of your stop stop size is 30. 100 divided by.3 is 333 shares. Meaning if you get in at $3 and if this drops 30 cents with and you and you bought 333 shares and it drops 30, you will lose the maximum amount you're willing to lose, the $100. So looking at what I've presented you right now, you must have an immediate conclusion. And that immediate conclusion is the tighter the base, meaning the smaller the base, right? that you could see how this one is all sloppy. It's all over the place. It's it's it's a large base. It's not tight like this one. You can see this one's tight. It's small. It's there. It's clean, right? It's not sloppy and uh you know, with a lot of tails and all that, right? The tighter the base, the tighter the stop-loss, right? In this case, the tighter the base, we have a smaller stop size here than there, the better the reward versus risk. Because think about it, we're risking $100 in each of these setups. However, because we have a smaller base here, we have a smaller stop size. With a smaller stop size, we're able to purchase more shares, right? If we're able to purchase more shares, well, that means our reward is a lot higher, right? Like, if this goes up a dollar, right, we're going to make $1,000. However, in this situation with this entry and with this stop-loss, if this goes up a dollar, we're only going to make $333. Okay? So, we're risking the exact same amount, but our potential reward with this tight base and this small stop size is significantly higher. So guys, always look for tight bases, you know, really clean, tight bases, uh, as opposed to really sloppy bases that are all over the place because the risk-to-reward is going to be way better. And honestly, the tight bases, the clean looking bases that are not sloppy, they tend to work a lot more often, too. Okay. And like we talked about, we have the share sizing formula. It's going to be your risk, your dollar amount risk divided by your stop size. Okay? And in order to calculate stop size, just subtract your entry from your stop-loss price, right? $3 minus 290. And how are we setting how where are we getting $3 and 290? Well, remember the entry is over the base. The stop loss is under the base. So, when you see a base like this, draw a line over the base. See what price that is. draw a line under the base, see what price that is. Okay? And we're going to be talking about share sizing and risk management. And we're going to go a lot deeper into this reward versus risk concept a little bit later in the course. Now, let's talk about the shakeout bar. And guys, I can guarantee you there is nobody else talking about this, okay? There's nobody else presenting this sort of information to you. The reason I say that is because I learned this by myself. I learned this through experience. Okay? And the shakeout bar is an incredible enhancer to the buy to the uh breakout. Okay? This is something that I have just seen through my years of experience and through looking at thousands of different charts and looking at thousands of different breakouts and breakdowns. So the shakeout bar improves the quality of the base and it makes it a lot more potent of a base breakout or breakdown. This increases the odds of success for your breakout or your breakdown. And it makes the setup battle tested. That might sound confusing. You'll understand it in a second. And what it does really is it makes a bullish base, right? Remember, if we have a bullish base at the highs of a rally, it's going to make that that um base even more bullish. It's going to it's going to kind of give you confirmation that this is definitely bullish. This is probably going to continue higher. And it gives a bearish base, right? That's basing at the lows of a rally. It's going to make it even more bearish. It's going to show you that there's actual bearish confirmation and it triggers stop losses. We're going to uh you know talk about that in a second. And like I said, it's a trading enhancer. It's a trade enhancer, right? It makes me immediately more confident that this breakout is going to work or this breakdown is going to work. So, let's look at it. So, in plain view, this is the shakeout bar. And a shakeout bar, if you're looking at it, you might recognize it immediately. You might say, "Hey, listen. That's a bottoming tail." And you would be exactly correct. This is a just a bottoming tail. You're absolutely right. However, what does this bottoming tail do for us and what this bottoming tail does is picture when the as this breakout is forming, right? Let's say a bunch of people have already entered the breakout, right? Or let's say a lot of people they're in it long from here, right? They bought it down here. They they haven't sold it here. They're waiting to capture bigger profits. And let's say during this base, all of those traders, all of those buyers, they set their stop losses. I mean, where I mean, they're going to set it under the base, right? That's that's where we're supposed to set it. We're supposed to set it under the lows of the base because that's where we have an area of support and that's where they're going to be setting their stop losses. Now when this bottoming tail forms and right we know when when a bottoming tail forms it, you know drops in price before the buyers show up here and bring it right back up. Okay? So it shows us that the buyers are taking taking control. And what this bottoming tail does, right, as it's dropping, it's triggering every single stop-loss that is at this support level. And by triggering all those stop- losses, right, all those stop- losses, they're sell orders, right? They're sell orders to try to get out of the position, right? As you're triggering all those sell orders, it brings the stock or crypto even lower, right? Because if all of a sudden we trigger a bunch of sell orders, that's even more selling pressure. And as a result, we drop even more. But despite us dropping all the way out and you know breaking down out of this bullish base, if we end up rallying right back higher, that is confirmation that this stock or crypto is indeed bullish and we will continue higher. This is confirmation, right? This is showing you that the buyers, they're they're not allowing this stock or crypto to continue lower. No, as soon as it tried to drop, it went right back up. That is in essence what a shakeout bar h what a shakeout bar is. And this is when I say battle tested, meaning the sellers showed up. The sellers tried to bring this lower, but there was so much buying pressure that they brought it right back up and then it continued to base at the highs, right? And this is a very bullish uh sign, right? We want to we want to see this sort of bar when we are basing. Okay, just it's the same idea here after a drop, right? We have an area of resistance over the highs of this base. And a lot of people are placing their their cover orders, right? Let's say people shorted it here, right? um and they're enjoying their profits and now it starts to base and they want to capture additional profits. They place their stop-loss over the base as they should. And as soon as you know buyers start to show up and they trigger that stop-loss, a bunch of buying happens, right? Because that's where people are covering their shorts. So they're covering their shorts at this position and we see a rally higher. However, it ends up just being a topping tail. And remember guys, the topping tail suggests that that the sellers have taken control. So basically the buyers showed up. The buyers attempted to bring this stock or crypto higher. However, the selling the sellers said, "Hey, not so fast." And there was so much selling pressure, excuse me, that they brought the stock or crypto right back to the lows and it continued basing and then eventually finally break under this support and we continue lower. Okay? And you can also call this kind of a breakout failure. You can call this a breakdown failure. It's a topping tail as well. So, this is why it's so important for you guys to understand um and be able to identify the different candlesticks that exist because you'll be able to find information like this where if you see, oh, oh wow, we have a a a topping tail during a a very bearish base, that's a good sign that we're that's that's good confirmation that we're actually going to continue lower. Hopefully, that makes sense. Now, let's talk about a breakout or let's talk about breakout and breakdown failures, okay? And a bullish base that has a breakout failure, which is a in other words, a topping tail, especially on high volume. And we haven't talked about volume yet, but this is when we're going to begin discussing it. Whenever we have a bullish base that has a breakout failure on high volume, that is a sign that a reversal to the downside might occur. And with the opposite, let's say we have a bearish base, right, at the lows of a r at the lows of a of a um drop, right? If we have a breakdown failure, which is a bottoming tail, right? We try to go lower, but we fail, especially on high volume. That's indicative that a reversal to the upside may occur. And guys, this is also information you're frankly not going to find anywhere else because this is this is these are strategies that I personally found through my years of experience. All right, so let's let's kind of uh walk through this. We're first going to be talking about the um breakout failure with the topping tail. So, we have a large rally and we begin to base at the highs, right? So far so good. All of a sudden, we break out, right? The buyers, they bring this stock up or crypto up and we break out of the base. However, this is very short-lived and then the sellers take control at the top here and they bring the stock or crypto right back down. Right? That's what a topping tail is. It suggests the sellers have taken control. So during this bullish base rally higher, we're basing bullishly. We're basing, okay, everything's looking good higher. We finally break out, right? But ends up leading to a topping tail like this. This is a breakout failure. And the market speaks loudest in its breakout or breakdown failures. It speaks loudest in its failure patterns. Right? So we we uh base we have a breakout leads to a topping tail. The breakout has failed especially if this is occurring on high volume. We're going to be talking about that more in the volume class. But this is usually indicative that that this move is done. This move is over. It attempted to break out and failed. What does that tell us? If it attempted to go higher and failed, it tells us, hey, this is probably going to go lower. And this is indicative that a reversal might take place and this will actually drop just like here. Let's say we have a excuse me let's say we have a [clears throat] drop in price. We are basing uh bearishly right we're basing at the lows which is uh some indicative of weakness. We attempt to break down. However, it leads to a bottoming tail. Meaning, we we attempt to break down, but we just shoot right back up, right? Leading to a bottoming tail. What does a bottoming tail tell us? It tells us that the buyers have taken control. And it usually it's indicative of uh reversal and uh a reversal to the upside. Okay. Well, I mean, and it's really not too difficult, guys. Think about it. If we're we're we drop we're basing it's looking lower. We attempt to go lower, right? We attempt to break down and drop lower. However, the buyers show up here. They bring prices right back up. And you know, that usually means it might mean that we're actually going to end up reversing and continuing higher, right? I mean, makes sense. We we try to go down, we fail, it probably means we're going up. If we try to go up and we fail, probably means we're going down. Okay. So key characteristics about the breakout basing at the highs of a rally is bullish. If we make a rally higher and we're basing at the highs, that is bullish. It's a it's a it shows strength. It shows that there is positive buyers like there there's buying pressure. The longer it bases, the more bullish it is. Okay? So, we want if if we're basing at the highs, we want a long base. We want [snorts] a base that's, you know, ideally longer than shorter because it shows that, hey, this is just taking a little bit more time to correct itself, but there clearly aren't enough sellers to bring it down and make it break down out of the base. So, we're probably going to go higher. uh basing at the lows of a drop is bearish and the longer it bases at the lows, the more bearish it is. I mean, it makes sense. Okay, if it's at the lows and it's staying at the lows, it probably means it's lower. If it's staying at the highs for a long time, it probably means it's higher. Um, basing at resistance is bullish and indicates a break of resistance may occur if the breakout triggers. Okay. So, if we are at a previous resistance point and we're basing at that resistance, it probably means we're going higher, right? Cuz if we're at a resistance level, right, usually you would expect us to drop. But if it's basing at that resistance level, it probably means we're going higher. If we're at a support level, right, and if you've already identified support on maybe the other time frames, um, if it's basing at support and it continues to base at support, then it probably indicates that, uh, a breakdown is probably going to happen and we're most likely going to continue lower. Okay. And let's just want to make sure, okay, let's just make sure uh, we look at some examples. So, we have a rally. We begin to base. We enter above the base. We [snorts] enter. Oh, and now we have another base, right? We We're going to enter at this red line which is over the highs of the base. Then we get that pullback. We we saw a diagram of this earlier where this prior resistance is now becoming support, right? And this is a buy setup. We're going to talk about that in the next class. we rally higher and this is sort of a little bit of a base and another buy setup here. Okay, let's look uh here we have we had a rally before this. Um and another thing to note here guys, notice how the 20-day moving average is under price and it's trending higher. Okay? And we didn't quite I would never teach you guys anything that I don't personally use in my trading every single day. And what I'm about to show you is my personal favorite trading strategy. I literally trade this setup every single day in the markets ultimately because of its simplicity. One of the reasons I am a profitable traders is because I like to keep things simple. I think the simplest things in life are oftent times the most brilliant in that 1,000% applies to trading. I see so many unprofitable traders out there that struggle because they over complicate their trading. They use fancy strategies, crazy indicators, they use those buy and sell markers on their charts and they just overcomplicate their analysis. And what I'm going to show you is a fundamental strategy that I guarantee you've heard of. I guarantee most traders have heard of this, but only a small percentage of traders actually succeed trading this strategy. And I'm about to tell you why. And this setup, ladies and gentlemen, is, drum roll please, the base breakout, the base breakdown. And you might be thinking, "Oh yeah, I've heard of breakouts and breakdowns. Maybe I even trade breakouts and breakdowns." And you might be thinking, "Oh, don't all base breakouts fail?" Like that's a common thing I always hear. Oh yeah, breakouts fail. Well, yeah, there are thousands of breakouts and breakdowns that occur every single day in the markets, but our goal as traders is to only trade the highest quality of breakouts, right? The ones that are going to have a high reward to risk. They're going to be high probability. They're going to be high quality. And we want to avoid the low quality breakouts and breakdowns. And in this video, I'm going to explain exactly what to look for, what criteria to follow, how to identify highquality breakouts versus lowquality breakouts. And this is ultimately what's going to make you profitable trading this strategy if you're able to find what's called amplifiers. And amplifiers are essentially, you know, criteria that make a specific setup higher quality. And I'm going to go over every single uh amplifier for the breakout and the breakdown. But step one for trading this strategy is you need an established uptrend for a breakout and you need an established downtrend for a breakdown. This is really, really simple, right? What's an uptrend? Higher highs, higher lows, right? So what does the uptrend tell you? Well, uptrend tells you where prices are heading, right? And we as traders want to trade in the direction of the trend, right? You could be a reversal trader, but for the purposes of the strategy, we want to be trading with the trend. I mean, think about it. If you're driving on the freeway, on the highway, do you want to drive in the direction of traffic or do you want to drive against it? Well, if you drive against the flow of traffic, well, that could be very dangerous. The same thing with trading. If you trade against the trend, that could be very dangerous. And once you've identified that there's an uptrend or a downtrend, great. You need to understand why the breakout even exists, like what's the um concept behind the strategy. And to understand that, you need to know what price correction is and what price correction is within an uptrend or a downtrend. So, let's get into it. So, I want you to imagine that you just ran a marathon. Literally, imagine you just ran the New York City Marathon. What's that, like 25, 26 miles, right? Think about it. You just finished the marathon. Would you be able to immediately run another marathon? You So, you just ran 25 miles. Would you be able to run another 25 miles? Well, unless you're David Gogggins, you need to rest. You need to sleep. You need to eat. You need to hydrate yourself. You need to relax. You need to, you know, get some rest, right? And the markets move in very similar ways, right? Unless you're David Gogggins and you could just run marathon after marathon, you need to rest before you can run the next marathon. Well, the markets move in a very similar way. Whenever prices run a marathon or have a big rally, it can't just, you know, run up forever. They can't just move up, you know, like to infinity, right? Prices also need to rest. And you could think of this resting period as like a correction, right? Prices need to correct before they can run the next marathon or before they can have the next rally higher, right? And there are two ways in which prices can rest or correct. These are the only two ways. Either a retracement where the market runs a marathon and then it rests and corrects through a retracement. This is kind of like a buy the dip, right? That's the theory behind buy the dip, right? You get a big run up and we retrace, we correct, and then we get ready for the next marathon, for the next uh rally higher. The other way in which we can correct is through a consolidation, right? This is when you literally rest, right? The markets move up, they rally, and then they just stay at the same price. So the definition for consolidation is a period uh of time when the stock is trading within one particular range. It's not moving above that range. It's also not moving below that range. It is literally resting within that range. So these are the only ways in which prices can correct in which prices can rest. And you probably are already getting, you know, ideas of like, oh, I get this, right? Within an uptrend, prices are moving higher and we find corrections within an uptrend. And those are opportunities for us as traders. And you're absolutely right. And that's what we're going to go over right now. In other words, by trading a retracement, by trading a consolidation, in other words, trading a uh, you know, correction pattern, you're trading the continuation of an established trend. And in my opinion, that's the easiest way to make money with trading, to trade the continuation of an established trend. Always remember that the trend is your friend. And our goal is to spot retracements and consolidations or breakouts within established uptrends in order to make money. So hopefully you're starting to see this. And if you want to learn how to trade the retracement pattern, I actually teach it in my free 10 plus hour course. You could find that in the description of this video. My free course is genuinely better than most paid courses on the internet. So, it'll build the foundation for your trading and you could use a lot of what I teach in my free course in conjunction with my YouTube videos to solidify that trading foundation of yours and actually begin making money. So next uh what I'm about to talk about is very very important and that is your entry and your stop-loss for the base breakout for the consolidation which is what we're talking about in this video. And this is especially important because as traders it's important to have structure within your trading. I see so many traders out there who have random entries, random stop- losses, random targets, random execution, random management, and nothing in their trading is predetermined. They don't have structure. And yeah, I I see people online all the time that are like, "Yeah, I'm entering here." And there's no reasoning behind that entry. So, with this breakout setup, you're going to know exactly where you're going to enter and where you're going to be placing your stop-loss. And theory behind the entry and stop loss is as the stock is basing and consolidating, right? You could think of the top of the base as like a resistance area, right? It kind of retests that top of the range and it retests the bottom of the range. So the top of the range is going to act as a resistance area within this consolidation. And the lows of this range, the lows of the base is going to act as a support area. And the reason that theory is important is because for the base breakout, we want to time our entry as prices are breaking out of that range as they're breaking through that resistance resistance which is, you know, at the top of the range. And we want to be placing our stop loss below the base, below the range. In other words, below the support area at the, you know, bottom end of this base. So, entry over the base, stop-loss under the base. That's just an easy way to think about it. It's extremely simple. And just having this entry and stop-loss model within your trading, it's you're already ahead of like 70% of traders who just operate completely randomly. So, always remember you have a base breakout, entry over the base, stop-loss under the base. If it's the opposite, if it's a breakdown, it's entry under the base, stop-loss over the base. It's very easy, right? And with having a predetermined entry and stop, it's going to make your life a lot easier when it comes to risk management, which we're going to get into in a second here. So, easy enough, entry over the base, stop-loss under the base. All right. Next, we have the 20 period moving average requirement. And I actually made a separate video a couple weeks ago about the 20 period moving average and how I use it. So, I recommend actually watching that video after you watch this one. But essentially for the 20 period moving average for the uptrend that we've already identified for this setup, we want the 20 MA during the uptrend to be under prices, trending lower. We want a rise, I'm sorry, trending higher. So we want a rising 20 MA that's trending higher. Under price, trending higher, under price, trending higher, under price, trending higher. That's what we want to see for the 20 MA, right? So we see this really nice uptrend. We want the 20 MA to be under price, trending higher. And if you watch the 20 MA video, you'll see how well prices respect the 20 period moving average within trends. And the opposite applies for a downtrend. The 20 MA is over price trending lower. And that's exactly what we want to see for a downtrend. Over price trending lower. All right. So opposite for an a uptrend. Next, our goal is to buy, look to buy when prices are close to or near the rising 20 period moving average for a breakout. Right? So, we have that initial rally, the initial move up. At this point, we're extended, right? If you watched the 20 video, you know we're extended from the 20 period moving average. You could think of this as we're overbought. And from there, we need to rest. Prices need to correct in the form of a consolidation. And that's when we base, we base, we base, we rest, we rest, we rest, we correct into that rising 20 period moving average that is under price trending higher. And we want to be timing our entry with the consolidation with the base breakout when prices are close to or near the 20 MA. And this is exactly where we want to be timing our entry right here. All right, so easy enough. This is literally the only indicator I really use is the 20 period moving average and the 200 period moving average. Now the 20 MA, it's crucial for this breakout pattern. All right, so very important. You want that rising 20 MA. You want to see it consolidate into that rising 20 MA or if it's a downtrend, you want to see it consolidate into the declining 20 MA. All right. Now, one extremely important factor when it comes to the base breakout or uh base breakdown is the quality of the consolidation. We want to see tightly ranged consolidations. We want to see them tight. We want to see them almost like in a tight range. We don't want sloppy consolidations and we don't want a lot of bottoming tails or topping tails. And I'll show you what that looks like in a second. The tighter the base, the tighter the range of the consolidation, the tighter the stop-loss, therefore the better the reward to risk. And I'm going to explain how that makes sense. Right? So, what we want is a tight base here. Let me kind of zoom in. Right? We don't want a sloppy base. We want a base that's tightly tightly ranging and then we trade the breakout. We don't want it to be, you know, all over the place. All over the place and then we trade the breakout, right? We want tight bases. And this is why right it all comes down to your reward to risk. So right here we have two different consolidations, two different bases. This one is very tight, very clean. It's not ranging all over the place. This one is the opposite. It is ranging all over the place. It's up, it's down, it's up, right? So let's say our entry for both of these setups is $3, right? Over the base, $3 for both of them, right? However, let's say our stop loss for this tightly ranged setup is 290. However, our stop loss for this, you know, sloppy consolidation is 270, right? Cuz it's a wider base. You're going to have a wider difference between the entry and your stop. If we're risking $100 on both of these trades, right? What would be our sizing? And we're going to be using this formula, which I talk about in other videos. It's essentially your risk divided by your entry price minus your stop-loss price. This is how you size your positions. This is how um how much how many shares you need to buy for that position. So if it hits your stop-loss, you only lose your predetermined risk. I talk about this in other videos as well and in my free course in the risk management section. So watch that, right? But let's say $100 risk divided by what's the difference between the entry and the stop, right? $3 minus $ 290, that's a 10cent stop. $100 divided by 10 cents is a,000 shares. So for this breakout, we're able to get a,000 shares. However, in this case, since we have a wider stop, instead of it instead of it being 100 divided by 10, right? $3US 270, that's 30 cents. It'd be 100 divided by 30 cents, which is 3.33 shares. You're risking identical amounts of money in these examples. You're both risking $100 on both of these setups, right? It's an identical risk. the risk remains constant, but what changes is the amount of shares you can get. And this obviously has just a way better reward to risk. You're able to get more shares on the same risk because you have a tighter stop. And the reason you have a tighter stop is because you have a tighter consolidation. You don't have a sloppy consolidation like you do here, right? This is why we want tight ranges, tight breakouts versus, you know, crazy breakout uh crazy and sloppy breakouts like this. All right. And overall, when you have a tighter uh range, tighter consolidation, you end up getting way better continuation on that setup as well. So, that's also really important. So, here are a couple of examples of very sloppy consolidations, right? Like you're seeing this, it's like up, it's down. Uh, let me get the different color here. But, and let me make it super thick. Uh, okay. You see it's up, it's down, up, down, up, down. Right. It's it's all over the place. You could see that during this bass. It's like sloppy. Even during this, like we're up, then we're up. You know, it's it's not tight. It's it's a very sloppy base. So, these are good examples of sloppy bases. These are good examples of what you want to avoid. Even right here, right? Let me get the black one out. Right here, you get the move lower, you retrace, and you see how sloppy it is. It's all over the place before you break down. Right? So, in this case, the entry would have been below the base, stop-loss above the base. But that's such a big stop because it's such a sloppy setup. All right? Does that make sense? So, in summary, you want tight ranges, a tight consolidation for better reward to risk. All right? Make sense? Now, let's go ahead and just look at some examples of this, right? So, that's the strategy, right? We got the 20 MA requirement. We know where our entry is. We know where our stop loss is. And we know we want tight ranges, tight consolidations. Let's take a look at some examples here. All right. So, this first example is actually Ethereum. And this was literally just a few weeks ago. Take a look at this breakout right here. So, Ethereum was on a multi-month downtrend. And then all of a sudden, we bottomed here. Then we based and then we kind of had that initial breakout over the base. But this wasn't the interesting one. This was the interesting one. So we move up and then we consolidate. We consolidate. We consolidate right into that rising 20 period moving average and then we pumped like 40% on Ethereum. And you could see how tight of a range this is. It is such a tight base. So that's where your entry would go. It'd be uh over the base. You could put your entry here or over the base here. Stop loss under the base right here. And that would be your entry and your stop. An unbelievable breakout opportunity. Literally on Ethereum. Almost picture perfect breakout on ETH. And I was actually buying a ton of it throughout this entire area. I'm very very bullish on ETH, not only uh from a price action perspective, but long-term as well. Here's another really really good example. All right, on APLS, we kind of started to, you know, we moved down a little bit and then we started to uh base base base base into the rising 20 period moving average. I think this was on a gap up uh which I'll talk about in a second. So, this thing gapped up and then just consolidated and really really clean entry over the base, stop loss under the base and you would have caught that move. Very very nice. Let's move on. Uh this is another really really beautiful setup. I mean, take a look at how tight the base is. Not sloppy at all. Like right here, right? Take a look at this. We dropped, we retraced. So, it's kind of like a retracement pattern as well. And then we consolidated, then entry below the base, stop loss above it, right? Beautiful, beautiful breakdown, right? You know, maybe not right into the 20 period moving average, but remember, it doesn't have to be exactly at it. Just has to be near the 20 MA. And I consider this pretty near the 20 MA. So, excellent, excellent setup. I actually made money on this one. So, all these trades are trades that I've taken before. Here's another really, really excellent example. Um, as well, check this out. Consolidation breakdown right into the 20 MA, entry under the base, stop-loss below. Then, we dropped consolidation right into the 20 MA. We got a breakdown, entry below the base, stop-loss above. And that thing just just I mean from what 90 from what 90 bucks all the way to like $63. Insane move, right? And it's simple, right? We're essentially just trading the continuation of the trend in a really really intelligent way, right? Let's look at uh an example actually from yesterday's trading. So let me point exactly where this was. So this is the five-minute chart. And a lot of people might be wondering, hey, what time frames do you use for the breakout breakdown? It's all about using multiple time frames. I'm probably going to make another YouTube video about this, but it's not about using one time frame. It's about uh practicing multiple time frame analysis, and you are looking for multiple time frame alignment. So, um if you look at it, this was around 12:00. It started to base, right? So this thing dropped the entire day and then kind of you know did some sloppiness right here but then it started to drop and then it started to actually consolidate really fluidly. Now this was on the 5m minute time frame. So this kind of set the bias here right the 15 and the five set the bias that this was downtrending and then right here between 12 and 12:30. So this area right here I actually screenshotted the one minute chart. It was between right here all the way to right here. You could see on the one minute chart. Look at how well prices are respecting the 20 MA. And check this out. We have a base breakdown. We based right into the 20 MA. Slight small little breakdown. Continued to base. Small little breakdown. Continue to base. Small breakdown. And then that and then this is where it really accelerated where it based. Look at this. Such a tight base. It wasn't like this. It was literally like a very very tight base and then breakdown, right? very tight bass breakdown then based again breakdown braced again breakdown based again breakdown. This is what I call a stair step where you drop base drop base drop base drop. Um or the opposite where you go up base go up base go up base go up base. This is a stair step. If you ever see a stair step, it's literally some of the easiest money that you can make in the markets. Seriously. Um and unfortunately I actually missed out on this. I was away for lunch at 12:00 and I only came back at like 12:45, not even at 12:50, so I I was already late to the move, but unbelievable uh setup, honestly. Unbelievable. And this was literally yesterday, right? So, it's important to look at multiple time frames. And yeah, just beautiful. You know, you can see how well it's respecting the 20 MA. And and this is what I do every single day. I find established trends and then I find breakouts and breakdowns within trends by using the 20 MA uh by of course looking for really really quality setups, tight bases and then from there um I'm looking at multiple time frames and I'm also using level two which I teach in other videos. So yeah, and this is exactly how I do it. Now there's also another very very key amplifier that you could use when you combine these setups with gapping stocks. Now what is a gapping stock? That is an overnight change in price. So a stock, you know, uh closes at $5 yesterday and then the next day it opens at $8. That $3 difference overnight is a gap. It's an overnight change in price. You could literally see the gap in the chart. And I trade gaps. I'm a day trader. I love trading gaps and the gap sets the bias and then from there I usually trade that bias uh through a breakout on the intraday time frames which I'm going to show you a bunch of examples in just a moment. And 80 80 to 90% of the time I'm trading in the direction of the gap. There's this idea that all gaps fill. Everyone will tell you that. Oh yeah, don't trade gaps. All gaps uh ultimately fill. Maybe long-term you could find me a statistic saying that all gaps ultimately fill the gap, you know, over a course of a year or two. But in terms of the day of the gap, yeah, there are some gaps that fill, but there are there's a ton that follow through and continue with the gap like crazy. I've been trading gaps for 5 years. This idea that all gaps fill and that you should not trade gaps, that is nonsense. It is [ __ ] I'm going to show you examples of it right now. I trade gaps for a living. I trade the continuation of gaps. Meaning, if it gaps up, there's an overnight change in price to the upside. I usually go in the direction of that. I go long during the intraday. Or if it gaps down, overnight uh change in price to the downside, I usually go in the direction and I'll look to go short. I do this 85% of my setups are that. So, that is [ __ ] that all gaps filled. Not true. It's a myth. So, and this is what I do. The gap establishes a bullish bias if it's gapping up on the higher time frames. And then I trade that bias on the intraday time frames via a breakout or a breakdown. And the reason gaps occur is because of news, earnings, events within the company. There could be all sorts of reasons and why prices change overnight. I'm not really concerned with the reason. I'm concerned with what that gap is doing to price. I actually have another video on my YouTube channel. Uh, this strategy is boring but makes me 50k a month. That video goes over gaps and I go over how I combine gaps with this strategy as well. So, let's go over a couple from the last few days. So, I've had people comment under my videos saying that I cherrypick specific charts from like years ago that, you know, perfectly represent the ideas that I am teaching. But all the stocks that I'm about to show you are ones that I've either made a lot of money on over the last literally like two to three weeks or stocks that were on my watch list. They were on my radar and maybe I just missed them. But most of these stocks I actually traded and made money on. The first one was open. And I use the replay function just to uh make it less confusing and kind of go back to the specific day which this happened which was on May 9th which was just a couple of weeks ago. So open closed at 87 cents the previous day. The next morning it gapped and opened at around.7 cents 69 cents directly below this downtrend below support below into all-time lows. So since we were clearing support and gapping down that gave me a bearish bias. And then if you go to the five-minute chart you see just a few picture perfect breakdowns here. So, at first it actually got bought, then kind of settled down, and my first entry was right here, caught this move lower, and then I exited, took profits, and then I started shorting it again right here on this base. Dropped, based, and then look at this flush lower. This was my biggest trade on that day. I think this made me in total $4,600, something like that. Insane breakdown. It was beautiful at the time. And this was on such a tight stop. Literally, it was a penny stock and there was no spread. This the the stop was like 0.00002. It was like insanely tight. So, I got massive size. I had like 100,000 shares in this thing. All right. So, this was a really really perfect example of that. Here's another fantastic example on Coinbase. This was on May 13th, and this was actually my biggest miss of the week. I got shaken out of this trade and I wasn't able to fully capitalize on it. I will be transparent. It h it made me it was just crazy. It was crazy. I Okay this Okay, this next one is on Coinbase and this was on May 13th and this was an unbelievable play that unfortunately I will be transparent. I missed out on I mismanaged this and I wasn't able to capitalize. But take a look at this. We bottomed around 144. Then we started to kind of chop around. We had that rising 20 MA. We closed at 206 the previous day and the next day we gapped up around 12% which for Coinbase it's a $200 plus dollar stock. That's pretty significant. We gapped above this entire resistance area. Right. So let me get the tool. We gapped above this entire resistance and we also gapped above the 200 period moving average and we had just I mean we had no resistance until literally like probably this pivot even. It could have even gone higher. We had literally absolutely no resistance. It was an amazing gap up. So I saw the gap and this gave me a bullish bias. Then you go to the intraday time frames. Let's say the five minute chart and you could see just a beautiful breakout right here. You could have played over the highs stop loss below and what that's at 240 250 entry 238 uh stops. It's like a $4 stop and this thing ran to 260. So, it's like four or five RS and you could have even used a tighter stop as well. And in fact, there was an earlier entry on it right here. You could have said that, hey, rallied based a little bit. I remember I called this out in my group. I had a bunch of students that printed on this, but I I mismanaged it. Anyway, that's fine. I know exactly what I did wrong, but you could have uh entry over this base, stop loss above. Oh, I'm sorry, a stop loss below. So, entry over the base, stop loss below, and then you could have even added to it over this base and then moved your stop loss up. So, it was a fantastic, fantastic example. And you could even see how well prices were respecting the 20 MA on the pullback on the retracement right here, here, here. It was just, it was an amazing just power trend that day, ignited by the gap. So, the gap gave me the bias and then we traded the bias of that gap via a breakout on the intraday time frames. Here's another unbelievable gap and example. The previous day we closed at 232. Um, and then the next day we opened at 188. So, what this was like about a 20% gap and we were gapping directly below the all-time lows, directly under support. We were gapping directly below this move higher. It was beautiful on this DCGO. I think I used this example in the other video just because it's a picture perfect gap and it was a really nice setup on the intraday time frames as well and I was able to capitalize. I don't remember exactly how much I made but it was I remember I made at least I think it was 1 to 2,000 something like that. Um and and you could see the breakdown uh right here where we dropped then we kind of retraced moved back in and then we had a breakdown setup right here. It's probably a little bit cleaner on the 15. You could probably see it a little bit better. Yeah. So, we dropped, we based, and I remember this stock, it was hard to get filled on a lot of the times, but um entry below the base, stop loss above the base, right? And I think there was an even um there was another base breakdown, the smaller time frame. Yeah, the first one. It's going to look really weird on Trading View on my ThinkersW platform. It looked a lot cleaner. It's going to look super wild. It didn't look like this on thinker swim, but uh that was actually my first setup on it. I um stop loss here and then entry under the base and then we caught that move lower um in my group and that was fantastic. That was a fantastic uh play. So, same thing uh unbelievable daily gap down which set the bias that it was going to go lower, bearish bias and then we traded that bias on the intraday time frames via a 15minute and uh 2-minut breakdown. This video is getting long, so I'll do one more. And this was on Wolf. This was my biggest trade last week. Um, I remember distinctly because it was pretty recently. This was May 21st. So, it was only like a week ago, literally. Um, so I made I think $5,600 off the wolf. And by the way, I post all my results every single day on my Instagram story as well. So, I highly recommend following me on Instagram to see my daily P&L. Um, so this thing gapped down a lot. It gapped from what 312 all the way to like 110. It was like a 60% plus gap. I call this kind of like a mega gap where it's a massive massive gap. And whenever you have massive gaps like this that are, you know, 60 70 plus% they can actually go either way, right? I usually would have a bearish bias on a gap down, but when you have a really big gap down that's really under support, right? like this was super under support. Um you it could actually get bought. So we'll go to the intraday time frames and you're not going to see this cuz I did it off uh off level two as a scalp, but off the morning I got 5K shares at 110, stop loss 115. So I was only risking like 250 bucks and I was able to kind of manage this and I took profits around n around um what was it around 92 cents. So, off my first trade on it, I made like 750 bucks off level two and I kind of scalped it lower and held it and took profits around here. But the real trade in the breakout was right here. So, this thing dropped. It ended up bottoming at around 82. Um, I was scalping this on the way up, but off level two, but that wasn't the real trade right here. We moved up. We started to base. We started to base. Rising 20 period moving average. Entry above the base. Stop loss below the base. And I actually sized up. You know, I my risk is definitely discretionary. Uh sometimes I size up on really really um high quality setups. I sized up on this one. It also had a really nice level too. So I got in around 103 104 something like that. I think my uh by the end of it my average price was 105. I had like 25,000 shares. I sized up um and I got in using level two as well. Uh but the entry here is really breakout entry above the base stop loss below and I caught um this move higher. My first exit I remember was at 118. So I had 25,000. I took profits at 118 and then you see this little tail right here. We got back in off level two [snorts] scalping it and there was a a retracement on the intraday time frame. So, we got back in at 112, rode it to 125, and then I think we had one more move on it, but by the time it hit 140, I was more or less out of my full size. And this was a beautiful breakout as well. So, the idea here is we use gaps to set the bias and then we trade that bias via the breakout or breakdown on the intraday time frames. Hopefully, this makes sense. Video is getting a little bit long, guys. Hopefully, you know, you could begin applying this in your trading and use all of these things. So, in summary, we used the gap. We looked at a bunch of examples of really clean base breakouts, right? We don't want to see sloppy bases. We want to see clean, tight ranges because they give you a better reward to risk and it also gives you better follow-through. The less sloppy, the better it is, right? Um, so that that's what this covers. And then from there, we used the 20 MA to our advantage. Watch the 20 MA video. We want it under price trending higher for an uptrend. We want to see prices consolidate into the rising 20 MA. And of course, you understand the whole price correction thing. It's a very, very simple strategy. Like, you're probably looking at this video like, "Yeah, this is really simple. This is what I do every day. This is my by far my most profitable strategy, and it's the first one that my dad taught me." All right, guys. So, very good. Make sure you like, make sure you subscribe, make sure you leave a comment if you enjoyed this video. And I actually am a little bit sick. It took me like a few hours to record this video. Um, I'm a little sick, but hopefully you really enjoyed it. And if you're someone who's looking for a hands-on mentor, you want to trade live with me every single day, you want me to take you under my wing, teach you from A to Z, and scale you from zero to$10 to $50,000 a month with trading, that is exactly what I do with my mentorship students. I scale and coach them to become profitable traders and ultimately full-time traders. That is the purpose of the mentorship is for you to change your career and become a full-time trader. and I help you do that. I'm very selective with who I work with. So, if you're interested, if you want more details, if you're really looking to take that next step in your trading, uh there's an application below. There's also a video in there that'll give you all the details. You could apply, book a free call. No pressure. We'll see if it's a good fit for you. Um hopefully you guys enjoyed this video. Thank you very much. I'll see you in the next one. What is going on, guys? Glad you're watching this class. And today we're going to be talking about the buy setup and the sell setup. In other words, the pullback or retracement pattern. And I know we talked about the base breakout and the base breakdown during last class. And I believe the stream cut off uh while I was actually looking at some examples. So I want to go ahead and finish the examples that we were looking at before we continue on into the buy setup. Okay. So let's go ahead and do that. Um, okay. Play from current slide. So, we talked about this example. So, looking at this example, number number one, the 200 day moving average is under price. It's under the 20-day moving average. That's a bullish sign. You usually you usually want to see the 200 generally under price, right? You want the average uh the 200 day moving average to be below price and the price to be above that average. Okay. Um, we had a a prior rally here and we ended up basing, right? Our entry is above the base. Our support is or our stop loss is under the base. And notice that as soon as we begin to break out or right before we actually begin to break out, uh, the 20-day moving average starts curling under and trending higher under price. Okay? And that's when we start to see the breakout. And we're going to be talking about the buy setup today. Uh same thing here. 200 is all the way below price and below the 20. We have the 20-day moving average. Notice that as soon as it starts to break out here, it starts to rise under price. It's trending higher, right? You could see that there's clearly bullish momentum with the 20-day moving average. And as soon as we base into that 20-day moving average, that's when we break out. Okay. So our our u entry would be over the highs, stop loss would be under the lows. Okay, hopefully that makes sense. So those are just some examples of it. And um later in the course, we're going to be looking at some charts and actually pinpointing different breakouts, different buy setups, and also looking at other the other patterns that we're going to be talking about. So let's go into the buy setup. And the buy setup as you may recall is the one of the other fundamental strategies that I talked about. We talked about how price tends to correct itself in two ways. Either through time or in other words you know base it consolidating. We we already learned about that last class. Um now we have to understand that price can also correct itself through a pullback through a price correction. Okay. So what is it? And this is ultimately correctly buying the dip. We always hear that phrase buying the dip, right? I think it was coined in 2020 um when you know all stocks went up, all cryptos went up during the COVID pandemic, right? Or after it. Um and a lot of people, frankly, they lose money when they buy the dip. Most people, most amateurs, they lose money when they're buying the dip. But what I'm going to show you today is how to correctly do it. what characteristics you should be looking for when you're actually buying the dip. Because I'm making money buying the dip. I know other traders making money buying the dip. There's no reason reason you shouldn't be making money when buying the dip. And I'm going to show you exactly how to do that. This is one of the most potent uh trading strategies for day and swing trading. It works on any time frame for any stock, crypto, forex, any financial instrument that operates in a market. And it's really important to develop the skill set required to identify when to be buying the dip, right? When or or identifying what is a high quality buy setup or pullback pattern. So like we did with the base breakout, let's try to analyze the anatomy of the base breakout. I'm sorry, of the of the buy setup. Sorry about that. So, number one, we have a rally, right? A lot of the people people who bought it down here, they want to start taking profits. So, what they do is they start selling, right? They sell at this point and we see a minor pullback. What we want to do and during this pullback actually um this is price correcting itself, right? That's why it's pulling back. But what we want to do is time our entry for when the pullback and the correction is finished. So we buy here and enjoy the next move higher. Again we begin the pullback. We want to you know we want to buy when the correction and the pullback is finished and enjoy the next move higher. Okay. Uh also guys for the buy setup this is kind of a big uh you know this is a requirement. You need to have an established uptrend in order to trade the buy setup. You need an established uptrend, especially if you're a beginner. Make sure there is a present uptrend before you consider uh playing the buy setup. And the buy setup, of course, occurs after the pullback has completed right here. So let's go over some key criteria for the buy setup. And ultimately the buy setup really we're buying after a pullback, right? So following a rally higher, right? You want to have three or more consecutive red bars in a row and you want to have three or more consecutive lower highs in a row on the pullback. Right? So right now we're trying to analyze the quality of the pullback, right? We need we want to be looking for specific types of pullbacks when we're um analyzing a buy setup. Okay? So one of the criteria is like I said just now it you have to have three or more consecutive red bars, right? We have a red bar, red bar, red bar, red bar. We have four in this case. Perfect. And we you also ideally want to have three consecutive lower highs, right? What what does that mean? Right? We have this is a high of this red candlestick. Then this is the next high of the next candlestick. This is the next high of the next candlestick. And this is the next high. Right? Notice how every high is lower than the previous one. Notice also how every low is lower than the previous low. That's what we want to see. We don't want to see we're down, then we're up, then we're down, then we're up, then we're down. We don't want to see that. We want to see three red bars in a row and ideally uh consecutive lower highs and lower lows. Okay, key criteria number two. This one is very important. We want to make sure that the 20-day moving average is trending higher and under price. Okay, I can't emphasize this enough, guys. I keep talking about the 20-day moving average because it is extremely important, especially for this setup, okay? We want it to be trending and under price. And you're you guys are actually going to notice that price tends to retrace and it tends to pull back right into the 20-day moving average. Okay, key criteria number three, we have to look at the retracement of the pullback. The retracement is the amount that a stock pulls back, right? It's the measure of the amount or the, you know, I guess you could say the uh yeah, I guess you could say the amount of the pullback or how large the pullback is. That's what the retracement is. And we want to be looking for a 40 to 60% retracement of the prior rally. Meaning, let's say from the lows of this rally to the highs of this rally, that makes up 100%. We want this pullback to be in the 40 to 60% region of this rally, right? So, let's see. I would say this is about 60%. I would say this pulled back to around the 60% point, right? So, in general, you want it to be in this area right here. That's between I would say 40 to 60% of this rally with 50% being around right here. Okay? And the whole point of this is you don't want a really deep retracement, right? Like let's say after this rally you retrace all the way down here. That shows weakness, right? If we're really that bullish, if we're in an uptrend, if there's a lot of buying pressure, why would we retrace all the way back to close to the lows of the rally? That shows a lot of weakness. Furthermore, if we retrace um you know under 40% retracement, meaning we retrace to only right here, well, that shows lack of price correction because we're still going to have significant distance between price and the 20-day moving average, right? So, we want to have that golden spot of 40 to 60% retracement of the prior rally. Okay, hopefully that makes sense. Key criteria number four, let's talk about the entry, stop-loss, and targets. So, first step is to identify the entry bar and wait for it to completely form. We're going to be discussing entry bars on the next slide. But for right now, this is our entry bar. Okay. So, as soon as this entry bar has finished forming, what we're going to do is put our place our entry above the entry bars high, right? Like that's the whole point of the entry bar. This is where we base our entry off of. You want to put it over the entry bars high and you want to put the stop loss under the entry bars low or under the rising 20-day moving average. Okay. So, basically, once this bar is finished forming and the buy setup, like you see that there's a buy setup, you're going to want to just place your entry right above the highs of this bar and place your stop loss once you're in the position under the lows of that candle. So, you would be entering during this green bar as soon as it hits this entry and you would enjoy the move higher. Okay? And your target one is the previous high, right? So we rally, we make a high, right? This is a pivot high because we start pulling back. And our first target is the previous high because this previous high is now resistance, right? We go up, we drop. This now becomes resistance. So it acts as the first target. Okay. So let's talk about entry bars. The ideal entry bars that you want to see at the end of a pullback look like this. They're either narrow range bars or they're small bottoming tails. We want to see small bars, right? Either small narrow range bars or small bottoming tails. And this is where, you know, really understanding uh the types of candlesticks that exist. This is where it becomes really important. So, if you still don't know what a narrow range bar is or what a bottoming tail is, take a step back and go back to the reading candlesticks section of the course. So, after a pullback, we always want to see one of these entry bars because it enhances the buy setup. Okay? [cough] Excuse me. So, let's understand why. When looking at these two pullbacks, which one of these pullbacks is much higher in quality in terms of reward versus risk? Which one is better in terms of reward versus risk? This one or this one? And if if you're looking at this one, well, obviously this is the correct answer. The reason this is a better pullback than this one is because first the bars are becoming continuously smaller. That's another thing we want to see. If the bars are becoming right, these are red bars. If they're becoming continuously smaller, well, what does that mean? If the red bars are becoming smaller, that means the selling pressure is diminishing, right? Remember, we're trying to play long. We want the selling pressure to diminish. The other thing is we also have an entry bar. You can see this is a kind of like a dogee bar, very, very small bar. Okay, we could see that the selling is weakening and we have a clear entry bar. In this case, the selling is not weakening. We have three large bars in a row and we don't have an entry bar, right? There's no clean entry for us for us to actually go into the buy setup. So, let's understand why we want entry bars. And this once again, guys, is going to touch up on the reward versus risk aspect of this setup. And like I said with the base breakout video, later in the course when you're looking at my risk management in my share sizing videos, make sure after you watch those, you come back to this section of the buy setup and it'll give you a lot more perspective. It'll help you understand what I'm talking about here. But I think if you guys went through the base breakout, understanding everything, you guys should be good for this. So, entry bars improve your reward to risk. Why? Well, with an entry bar, we have a tighter stop-loss. And just like the uh base breakout video, with a tighter stop-loss, we have a higher reward to risk ratio. This is why we want small entry bars, right? So, let's understand this. Remember, our entry is always over the entry bar. Our stop loss is always under the entry bar, right? We talked about this here. Once we get this bar by the 20-day moving average, our entry is over it. Our stop loss is under it. So, in this pullback, we have an entry bar. In this pullback, we don't have an entry bar. So, what do we do? So, in this case, you know, in both of these setups, our stop loss is under the lows. Under the lows is 590 is 590. In this setup, we have the entry bar. So remember, our entry is above the entry bar's high. So it's at $6. Meaning after this bar has completed forming, we're going to be entering during this green bar. And as soon as it hits [snorts] the highs of this entry bar, that's when we're going to be entering and enjoying this move higher. In this case, we have a very, you know, the we have a we actually have an entry bar. So our entry is at $6. However, in this case, our entry has to be over this candle because we don't have an entry bar. So, in this case, we have a, you know, a larger entry. It's at 620 compared to $6. Our targets in both of these scenarios is 650, right? So, our stop loss is our stop losses are the same. Our targets are the same. However, because we have an entry bar here, we have a, you know, we actually have a clear entry price compared to this one. So in this case, we are risking 10, right? Because that's the size of our stop, $6US 5.90. We're risking 10, meaning if you enter here and it drops to 5.90, you're out of the position. It hits your stop loss, it hits your risk, you're out of the position, right? Uh you're risking 10 cents. In this case, if you enter at 620 and it goes all the way to to your stop loss at 590, that's 30 cents. So, right, because 620 minus 590 is 30 cents. So, we're risking in this scenario 10 cents to make 50 cents because our target is at 650. Our entry is at six. We're risking 10 cents to make 50 cents. In this scenario, we're risking 30 cents to make 30 cents. I don't know why this says 20. It should say 30. So, you could see that even though we have the same exact risk, because we actually have an entry bar here, we end up having a tighter stop-loss. Because we have a tighter stop-loss, we have a higher reward to risk because we're only risking 10 cents to make 50. While in this case, we don't have an entry bar. We don't have a clear entry. We're risking 30 cents to make 30. Why would you risk $100, let's say, to make $100 where in this case you're risking $100 to make $500? Okay, hopefully that makes sense. Now, let's look at some examples. So, we right here, we hit the 200 day moving average, which is acting as resistance for the stock. We drop to the look at this, the rising 20-day moving average that is under price. You could see that uh the 20-day moving average is halting prices from continuing lower. It's rising. It's rising. We get a rally and boom, we begin to retrace. And we have three red bars in a row. We have 1 2 3 four red bars in a row. We It retraces into the rising 20-day moving average. So, that's check. We al it's also retracing into the flat 200. So, that's a bonus. We have a 40 I believe what this is probably like a 50% retracement right if it rallied here pulled back to here that's probably 50% retracement I'd say right so that's a check it's uh there's consecutive lower highs there's consecutive red bars perfect and we have a bunch of entry bars here right we have a bottom uh uh bottoming tail then dogee bar then another bottoming tail and two other very small bars so we have a bunch of entry bars here whenever you get into this situation just put your stop loss under the absolute lows, right? So, this is the absolute lows of all these bars. Put it at the lows. So, your stop loss would go here. Your entry would be over this bar. And boom, what a move higher. Okay. Uh let's look at another example. We have a rising 20-day moving average. Check. We have a nice rally. Okay. We have three consecutive red bars in a row. Check. We have three consecutive lower highs in a row. Check. Um, let's see. This is probably, yeah, 50% retracement, right, of this rally. Check. Into the rising 20-day moving average. Good. Then we get a dogee bar/bottoming tail. Check. Very good entry bar. Stop or stop loss would be under this candlestick. Entry would be over this candlestick. And you would be entering during this green bar as soon as it hits the entry over that dogee candle. And boom, nice move higher. Our target is right here. Let's look at another example of this buy setup. We have a rally. It's kind of a deep pullback, but given the overall context of the uptrend, it's not a big deal. We have a rising 20-day moving average. Great. We have a really tight entry bar. Really small entry bar. Perfect. And look at that move. Beautiful. Uh we also have I, you know, two red bars in a row. You know, it's unfortunately it's two. or maybe this might be a red bar as well, but you know, it's not going to be perfect every time. Sometimes there's going to be bits and pieces missing, but it's important to look at the overall context of what's happening. So, beautiful buy setup here. Same same thing here. We rally, we retrace around, I'd say like 45%. Rising 20-day moving average. Nice. You know, it's not a perfect candle, but it's a nice smaller candlestick we can base our entry off of. And boom, what a nice rally. entry would be over, stop loss under. And check this out, guys. Uh, I believe this is the NASDAQ ETF, the QQQ. You could see that, you know, these are all buy setups. You could see we have a rising 20-day moving average. Um, we have a flat 200 that's under price. Every time price touches the rising 20-day moving average, we go up. So you guys are starting to see how we are combining different um elements that we are learning. We are combining our knowledge. We know that when the 20-day moving average is rising and trending higher, price tends to retrace back to it, right? Price goes up and retraces back to it. Price goes up, it retraces back to it. Goes up, retraces back to it. You guys get the idea. And we're combining our knowledge of how to use the 20-day moving average with the buy setup, with, you know, the 40 to 60% retracement, with the lower uh consecutive uh red bars, with the consecutive lower highs, uh with the entry bars, right? We're combining all of this information to produce a very potent setup. Okay, we looked at this example earlier. Take a look at this. We rally. We have a rising 20-day moving average right here. Nice dogey bar. We rally. We actually end up kind of basing and then retracing back. Another buy setup. Boom, boom, bam. And what we have to understand, guys, not every buy setup is going to be perfect. You're not always going to get exactly what we talked about in this class. However, just look at the overall context of what's going on. This is not a perfect setup. We had a bit more retracement than we wanted to. However, given that it's also retracing to the prior support, it's in a really strong uptrend. We have a really nice rising 20. It looks like a nice setup. Okay, so not every buy setup is going to be perfect. You have to look at the overall situation, the overall context. You have to look at multiple time frames. Okay, and yeah, make sure you take advantage of the setup, guys, and make sure you really understand everything we talked about today, okay? You can't have missing parts, right? And I'm trying to think of anything else I want to emphasize here. Something I really want to emphasize actually is play with the trend. Okay? If we're in an uptrend and several time frames are telling you that this is bullish, we're in an uptrend. On several time frames, we have rising 20-day moving averages that are trending under price, right? Let's say that's happening on several time frames. all the time frames are telling you that it's bullish that there's that there's uh buying pressure, right? Then look for buy setups. Don't look for buy setups if we are in a downtrend. If there's a lot of selling pressure, if we have conflict on the time frames, where one conflict says bullish, one conflict uh one uh where one time frame says bullish, one time frame says bearish, right? Uh one time frame is sideways. Don't play a buy setup in those conditions. play a buy setup when everything looks bullish, when we have a clear uptrend. Okay, hope that makes sense, guys. Thanks for the class. And we're going to be talking about the sell setup in the next class, which is the exact opposite of the buy setup. Buying the dip is by far one of the most popular strategies in trading. Yet, over 90% of traders have no idea what to look for when it comes to buying the dip. And frankly, most of those traders lose money trading this simple strategy. And in this video, I want to teach you the exact criteria that you want to look for when it comes to buying the dip. And I'm going to teach you how to differentiate between a highquality dip opportunity and a lowquality dip opportunity that's just going to continue to trend against you. And this could be applied for day trading. It could be applied for swing trading, for core trading. This could even be applied for long-term investing where if you like to dollar cost average into your retirement account or into your long-term portfolio, you could still apply this strategy, especially when you're DCAing into the market or your favorite indexes. This could also be applied for stocks, for crypto, for futures, for options, for forex. So, make sure you pay attention. Make sure you watch until the end of this video because this is something that I've been trading for over 5 years. This is one of my core strategies and I buy the dip. I trade the retracement setup almost every single day. And the first thing that you need to understand before I dive into the strategy is the idea and the theory behind price correction. And the best way that I could explain this is imagine that you just ran a marathon. You just ran 26 miles in the New York Marathon and you are tired. you just finished the marathon, right? Are you going to be able to run another marathon? Are you going to be able to, you know, finish that marathon, run the 26 miles, and then immediately run another marathon? Well, unless you're David Gogggins, unless you're superhuman, obviously not. You're going to need to hydrate. You're going to need to sleep. You're going to need to rest. You got to drink some water. You got to go home. You got to, you know, visit the doctor. Maybe you have some injuries, right? You can't just run two consecutive marathons. You need a resting period. Well, the markets work in a very similar way where let's say the market puts in a massive rally. The market just ran a marathon to the upside, right? The market can't just continue higher and higher and higher to infinity. No, the markets and stocks, they need a resting period. They need to correct in price. And there's two ways in which prices can correct. There's two ways two ways in which prices can rest. The first way is through a consolidation where the markets run a marathon. Prices are moving up. Everything is mooning. And then the markets rest and they consolidate. They base and they rest until that stock or the market is ready to run the next marathon. And this is a way in which prices can correct through literally resting and just consolidating. And this strategy is called the breakout. And this is one of my core strategies as well. I actually teach this strategy on this YouTube channel in a different video. So I would highly recommend watching that video as well. But the other way in which prices can rest or correct is through price action in the form of a retracement where the markets run a marathon, they move up, buyers are buying, buyers are stepping up to the plate and then once the market or the stock runs a marathon, it needs to cool off. It needs to have a resting period, a correction period. And one of the ways that could happen is through literally a retracement, through a dip. And this happens because buyers are probably or buyers from down here are taking profits. Maybe there's even some short sellers that think prices have topped and they're shorting which is causing downward pressure. But I would say it's mostly buyers taking profits. So the markets can rest, the markets can breathe before they're ready to move up again and run the next marathon, so to speak. So a retracement is a temporary pullback before the trend resumes. And you can think of this as the market breathing. The market is resting before the next leg higher. Because if the markets are just going up and up and up and up and up, that trend is unsustainable. Nothing can just go up forever. In the same way, nothing can go down forever. There needs to be a period of price correction. And if you really think about it, this strategy is really you just trading the continuation of an established trend. Remember, the trend is your friend. I see so many traders who gravitate towards taking reversals, especially beginners. Why? And to really paint the picture here, imagine you're driving your car on the highway. Do you want to be driving in the direction of traffic or do you want to be driving against traffic? Well, I don't know about you, but I don't want to crash headon into another car. I want to trade in the direction of traffic. Yet most traders want to, you know, drive against traffic, right? In the same way they want to trade against the trend. It is far easier trading with the trend, especially if you're a beginner. I'm not saying don't take reversals. I'm not saying you shouldn't have a reversal strategy in your plan. I do. I actually like taking reversals. I don't usually gravitate towards them, but you know, I do have a reversal strategy within my trading plan. However, I always prefer to trade with the trend because it's much easier. So, if the trend is your friend, what is the first step when it comes to trading the retracement setup? Well, the first step is you need an uptrend or clear bullish momentum. You need to be confident that prices are going higher. I want to be trading in the direction of the trend. If there is a downtrend, I don't want to be going long. If there's a sideways trend, I also most of the time don't want to be going long. I only want to go long when I'm confident what the trend is. So, what is an uptrend? And most of you are already going to know this. It's very simple. And by the way, if you can't tell, I like to keep my trading as simple as possible. That's what makes me a profitable trader. I don't like to use complicated indicators. I don't like to use complex strategies. I trade essentially two to three core strategies. Number one, the retracement setup. Number two, the breakout or the breakdown. And I also like to trade reversals at times. However, I would say 90% of the time I am trading in the direction of the trend through either a retracement aka buying the dip or through a breakout. So, what is an uptrend? An uptrend, it's very simple. higher highs, higher lows. Okay, that's all you need to know. All right, we have higher highs right here, right here, right here, and we have higher lows right here. We know that the overall direction is moving higher. Now, your goal as a trader is to essentially time your entries when this dip happens. This is when you obviously want to be getting into the trend. You don't you don't want to be getting into the trend here. Most people actually FOMO here because they think they're missing out just to see that stock move down, they sell here, it starts to move up again, then they buy either here or here just to see it move down, they sell, and then the cycle repeats. And that's how most retail traders unfortunately trade. They buy the top and then they sell the low of the retracement when it should be the opposite. they should be buying the retracement and then of course selling this point right here. Or maybe you're going uh for a much larger move. Maybe you're swing trading or maybe you're holding your trade intraday when you're day trading for like a few hours and you're aiming for a much bigger gain. You could actually buy down here and then hold through all of these dips in attempt to catch a much bigger move. But you need an uptrend. If you don't have an uptrend, you need clear bullish momentum. And one of the ways um that I like to see clear bullish momentum is through a bullish gap up. So what is a gap? A gap is an overnight change in price. This is when a stock opens the next day at a different price in which it closed the previous day. So let's say Tuesday 400 p.m. Eastern when the market closes, the stock closes at $5. And then the next morning, Wednesday, at 9:30 a.m. Eastern, when the market reopens, that stock opens at $10. That difference in price that occurred overnight is called a gap. And I like to trade the continuation of a bullish gap up. And a bullish gap up gives me bullish momentum. It gives me a bullish bias. So, lots of my retracement setups actually occur on bullish gap ups. And I'm going to show you a bunch of examples of that. But here's an example of a gap up. This was on plug. Oh, no. I'm sorry. This was on open, I believe, just a few weeks ago. And this stock closed right here the previous day. And then the next day it opened 29% higher right here. You could literally see the gap in price. You could see this overnight change in price. And of course, the stock absolutely mooned that day. And there was a beautiful retracement setup on this day, which I'm going to show you a little bit later in this video. But this was a gap up that gave this stock clear bullish momentum. We were gapping above resistance. We were also gapping above two red bars, which trapped all of the sellers who went short here or here or here. So, really amazing gap up. I have other videos that go a lot more in depth when it comes to explaining gaps, but this was a really nice gap up that obviously continued higher. Here's another example. This was on rum just a couple of days ago. I will also show you this example later in the video, but it gapped from here the previous day and it opened right here, which was an around 11% gap up. All right? And this actually also had a retracement setup. I had a buy the dip opportunity on this day, but this gap up gave this stock a bullish bias and my my bias on this day was to go long. So, I was looking for either a breakout or a retracement setup to essentially trade this bias on the intraday time frames. If that still sounds a little confusing, we're going to be looking at a ton of different examples later on in this video. But essentially my point is I need either an established uptrend or I need a bullish bias. I need bullish momentum. And one of the ways I could see you know bullish momentum is through a bullish gap up a bullish overnight change in price to the upside. So when it comes to identifying a high quality dip buying opportunity, we look for specific pullback criteria. And let's go ahead and go over every single one of these pullback criteria. And from there, we're going to go to real charts and apply everything that I have just taught you. Okay? So, I'm going to go through this section a little bit quicker. We're not going to be looking at examples right away. I want to show you all of the material first, and that's when we're going to go and look at examples and apply everything that you've just learned. So, first step, following a rally higher. So, the market ran a marathon up. We want three or more consecutive red bars in a row on the pullback. So, we got one, two, three, four. We want three or more red bars in a row. Now, this is like the ideal scenario. You're not always going to get perfectly three to five consecutive red bars in a row, but this is what you want to look for. You want to see three or more consecutive red bars in a row. Why is that important? It's important to know that because you don't want to see Christmas lights. What are Christmas lights? Red, green red green red green red green, and then you move up. You don't want to see this. And the reason you don't want to see this is because as prices start to move up, if you have green bars within this pullback, well, a lot of those buyers, like think about it. If you bought it right here and then prices continued lower and now you're down on your position and then all of a sudden prices start moving back up, you might feel the need to actually just cut that trade because you felt wrong and you were losing money, right? or if you especially if you bought it up here and then prices continued lower. If prices move back up, well, at that point, you might just cut your losses or you might just say, "Hey, this was a failed trade. I'm going to get out break even and you're going to have almost like layered buyers within this pullback." And you don't want that. You want there to be clear selling, okay? You just want the sellers to be taking profits before the next move up. You don't want selling and then a little bit of buying and then selling and then buying and then selling and then buying. You don't want Christmas lights because these layered buyers could actually put sell pressure on this stock as it's moving up where as it's moving up these buyers sell then these buyers sell and then all of a sudden you have a really choppy kind of next move higher. You don't want that. You want three or more consecutive red bars in a row. You don't want Christmas lights. Criteria number three, you want to look for prices to retrace into the 20 period simple moving average. I like to keep my trading as simple as possible. I don't use complicated indicators. I don't use MACD or Ballinger bands or RSI or VWAP or stochastics or Elliot wave theory or Fibonacci. I don't use any of that. I keep my trading very simple. I only use two simple moving averages and volume. That is it. And the 20 period simple moving average is the ultimate trend following tool in existence. Now pay attention to what I just said. Trend following tool. That is our first step for trading the retracement is we want to have an uptrend. We want to have an established trend higher. And that's exactly why I like to use the 20 MA. Now, what we want to look for is we want the 20 MA to be under price, trending higher. I want you to say that out loud. You're watching this YouTube video. I want you to literally say it with me. Under price, trending higher. Under price, trending higher. Under price, trending higher. We want the 20 MA to be under price, trending higher. And we want to be timing our entries when prices are close to or near the 20 MA. That's what we're looking for. When prices are, let's say, really far from the 20 MA, that means there's extension. Extension is the distance between price and the 20 MA. We don't want to be entering when there's a lot of extension. So you could use the 20 to figure out whether prices have corrected enough, whether prices are extended or you could think of it as overbought. So the closer we are to the 20 MA, the less extended we are, the less overbought we are. And that's why we want to be timing our entries when prices are near the 20 MA. And let me show you an example. It's going to be a lot easier when you actually just visualize this. Take a look at this uptrend. Take a look at every single retracement setup here. This is the 20 MA, the blue line. What is it doing? It's under price, trending higher. It's not flat. When the 20 MA is flat, it's not effective. That suggests that prices are trendless, that their prices are sideways. We wanted to be under price trending higher. And notice every time we got close or we touched the 20 MA, we bounced. And that was honestly a very good dip buying opportunity. Literally every time it hit the 20 MA, every single retracement here here here here here here here, here. You get the idea. Every single retracement got bought. And this is exactly why I like to use the 20 MA in conjunction with everything else that I'm going to teach you in this video. Whenever I teach the 20 MA, people are like, "Oh, well, you're just using an indicator for your entries." No, I use it as a complement. It complements every other part of my analysis. It complements the other criteria. I use it to my advantage. I don't solely rely off of it. Here's another example of a downtrend. We base into the 20 MA, drop, base into the 20 MA right here, drop. Retrace a little bit, we come a little close, drop. Okay, that's why I like to use the 20 MA. Here's another example. And we weren't quite, you know, right at the 20, but we're pretty near the 20. And this was actually on the 15minute time frame. On the five minute time frame on this chart, we were actually right by the 20. But this was an excellent buy the dip opportunity where we moved up, retraced, and that was an excellent buying, you know, buy the dip setup. So, we want the 20 MA to be under price, trending higher, and we want to see prices retrace into the 20 MA or at least come close to the 20 MA. This is a very important requirement. Criteria number four is actually pretty simple. We want to see the stock retrace 40 to 60% of the prior move. We want it to pull back 40 to 60% of the original rally. retracement. If you want to define what a retracement is, it's just the amount that the stock pulls back. So, we want to see this pull back into what I call the golden zone. And that is between 40 to 60% of this rally. Right? So, let's say this was 0% the bottom of the rally. This was the top of the rally that represents 100%. We want it to pull back around 40 to 60% of this rally, which is like this area right here. We don't want it to pull back deeper than 60%. We don't want it in this area right here because a deep pullback suggests weakness. If that stock was really that strong, if that trend was really that established and really that strong to the upside, why would it retrace over 60%. And the same thing applies almost in the opposite way if it's under 40%. So let's say a stock pulls back here right into this area that shows lack of correction. And you know just through my experience when you have a very shallow retracement where it's not into this golden zone where it's like 20% retracement or 30% retracement whenever it attempts to move higher it fails because it just hasn't corrected enough. It hasn't gone through enough of a resting period for prices to continue higher. And similarly, if you see a really deep pullback into this area, well, prices are really weak. And what tends to happen is it starts to move up, you get excited, and then it fails. And that's just through my personal experience. You want to see it into the golden zone, the 40 to 60% um retracement of this prior move. That's really the sweet spot. Criteria number five, before I enter into any single trade in the markets, I need a predetermined entry, predetermined stop-loss, and of course, predetermined target because that's going to add structure to my trading. I hate operating randomly. I want to know where I'm supposed to get in and where I'm supposed to get out if the trade doesn't go in my favor. A lot of traders operate completely randomly and then they expect consistent results. That makes no sense. If you want consistent results, you need consistent input. That means you need a structured approach towards entering and exiting a trade. So the entry and the stop-loss for the retracement setup is actually really simple. So your entry is going to go over the last candlestick of the pullback. I'm going to show you what that looks like in a second. Your stop loss is going to go under the lows of the retracement. So, you find the lowest point of the retracement. Your stop loss is going to go below it. And the target is the previous high. So, where are the last candlesticks of the pullback? Well, right here, these two. So, entry over these two candlesticks, stop-loss below the lows of the retracement, and you're going to be targeting the previous high. That is target number one. Now, that's super simple. And ideally, you want your entry bars, right? Right here. These are our entry bars because we're using these bars to base our entry and stop loss off of. We want the these to be narrow range bars or dogee bars. We want these to be relatively small candlesticks. And the reason we want that is because it's going to give us a far better reward to risk. So, how do you size your position? If you watched my risk management video, you should already know this. Or if if you've watched my free 10 plus hour course, you should know this. The share sizing formula is risk divided by entry minus stop-loss. And then entry and stop loss. They're in parenthesis. So, you calculate this first before you do the division. So, let's say our entry is at $4, stop loss is at 390, and our risk is $100. $100 divided by $4 minus 390. So that's $100 divided by 10. $100 divided by 10 cents is a,000 shares. So that would be our share size for this position. If we get a,000 shares at $4 and it hits our stop loss at 390, we would lose $100. All right. Now, why do we want small candlesticks? Well, let me give you this example. Let's say this is a really large candlestick like that. Let's say these candlesticks are larger and then all of a sudden we have a much bigger stop where instead of our stop being at 390, let's say our stop is at 370 all of a sudden. Then we have to go and actually change the formula around because our entry remains the same, right? But our stop loss is different. So instead of 390, this would be 370. So now our share sizing formula would be $100 divided by 30 because $4 minus 370 that's the distance between our entry and our stop. 30 cents, right? So $100 divided by 30 that means we would only be able to get 333 shares for this position because we have a much bigger stop-loss and therefore we have a much lower RTOR. So we want smaller candlesticks. We want smaller entry bars so we can get a tighter stop. And as a result, we could have a better reward to risk for, you know, our same risk. Keep in mind with having a 30 cent stop now versus a 10 cent stop before, our risk hasn't changed. What's changed is the amount of shares that we can get. so that you know if the trade does hit our stop loss, right, we're only going to lose $100. So, we want smaller entry bars because we have a better RTOR. Criteria number six, we want to look for a retracement into what's called minor support. This is when prior resistance of that uptrend becomes support for the next dip. So for example, let's say we are right here and prices move up. Fantastic. We want to see this next dip basically dip into the prior resistance, right? Like at this point right here, this prior high, it's going to act as resistance. That's why this prior high is target one because that's the next level of resistance. But on this dip, we want to see this prior resistance, this area of resistance become support. And this is a really nice amplifier where if we could have a nice move up and then a dip into what was before resistance, that's exactly what we want to see. This is a really solid area to potentially buy the dip for the next move higher. So, if I draw it out, we have an uptrend, right? We have an uptrend. This is an area of resistance. We want this area of resistance to now become support and it moves up. Same thing here. This area of resistance, okay, right here, now becomes support for the next dip before we move up. And this is a really nice amplifier. And it's really simple. prior resistance, the prior high basically becomes support for this stock within the uptrend. Now, before I show you some real life examples and some recent trades that I have taken where I was trading the retracement setup, I want to emphasize that you don't need every single one of these criteria to hit in order to buy the dip. And that somehow rhymed, but you don't need every single one of these qualities, right? You can pick and choose which qualities you want to put into your trading plan. For example, let's say I'm looking at a retracement setup and it's into the golden zone. Great. It's into a rising 20. Great. It has three or four red bars in a row. Fantastic. It has a nice entry. It has a really good reward to risk, but it's not retracing into minor support. I will still probably take that trade because it hit enough of my criteria. Let's say instead maybe it did retrace into minor support, but it's not quite into the golden zone. Maybe it's like right here, like 65% retracement, but it's into the rising 20. It has a really bullish catalyst. It has three or more red bars in a row. It has a really nice RTOR. I might still take that trade, right? So, you can pick and choose which criteria you want to specifically focus on on your setups because you're not always going to get picture perfect retracement setups. If you do, great. You should just take it, but you're not always going to get picture perfect. So, you can decide which one of these qualities you want to include in your game plan. and you can decide which one of these qualities are like necessities versus maybe some of these are more optional for you. So, right off the bat, I want to show you what a power trend is first and how you can capitalize trading retracements within a power trend. And a power trend is exactly what it sounds like. It's a powerful trend. And most of the time, you're going to see the 20 SMA under prices trending higher. And you will see it kind of trending in a 45° angle. When you see the 20 MA trending in a 45° angle, it suggests that the trend is sustainable. When you see it trending at a little bit, you know, greater than a 45 degree angle, that's when the trend is kind of getting exhausted. And you could see this was on Wayfair just recently over the last few weeks. I mean, look at this beautiful uptrend. Every time it retraced to the 20 period moving average, literally every single time it respected the 20 MA and then started to rally right after that. Even here, we broke below the 20, instantly rejected and continued higher. Even here, almost broke below the 20, instantly rejected and continued higher. Here's another really good example of that going both ways. Here we have a solid power trend to the downside where we dropped retraced to the 20 MA dropped retrace to the 20 MA. And this is also, you know, a retracement setup just to the downside. So everything that I taught you in this video could also be applied if you're going short. You would just apply it the opposite way where the 20 MA is over price trending lower. And all of the same criteria would apply the same exact way. So, retraced to the 20 MA, dropped, retraced to the 20 MA. This time it gapped down all the way to the 200, respected it, right? Retraced back to the 20, dropped, retrace back to the 20, dropped. And then the same thing happened on this uptrend. You could see how well prices are respecting the 20 MA on this power uptrend. And every time we got a retracement to the 20 MA, we ended up rallying. We could even look at the S&P 500, which has basically been on a power uptrend since the tariffs happened in early April. And we've rallied 36% since then. And take a look on this uptrend. Every single dip into this rising 20 MA got bought. We dipped right here, right to the 20, instantly moved up. Dipped into the 20, moved up, dipped into the 20, moved up. Even here we broke below the 20, instantly rejected, continued higher, dipped right into the 20, perfectly respected it. Same thing here, same thing on this tail. Same thing recently here. So, if you're noticing that you're looking at a stock or any type of asset that is power trending and closely following the 20 SMA, you could actually use every dip into the 20 SMA as a buying opportunity, especially if it matches up with the other criteria that I have taught you. Let's look at some individual retracement setups that we can understand and analyze. So, the first one is plug. We already looked at this gap earlier in the video, but this gap from 284 the previous day and it opened around 13% higher at 321 the next day. It was gapping above a red bar and it was also gapping above resistance. So this was a really bullish gap and this gave me a bullish bias for the day on plug. From there we go to the smaller time frame. So, I like to use the 5-minute chart, especially around 30 minutes into the day. And funny enough, I will be honest, I actually got stopped out on plug because I originally tried it as a breakout here. I was super aggressive. It was extended from the 20 MA. So, really aggressive setup and I took a full stop on this. And funny enough, right after that, I called this as a retracement setup. And I had a lot of my students actually take this play and make money. But I ended up passing on it. And then looking back at it, it was just a, you know, beautiful retracement buy the dip opportunity. But I already kind of took a stop on this, so I stopped watching the plug and I started focusing on other stocks. But wow, what a setup here. Really nice pullback. We had three or more red bars in a row. We did have one dogee, but it's never going to be exactly exactly perfect. So, nice pullback into the rising 20 MA. I would call this a 40 to 60% retracement, right? Maybe 60%, 55%, something like that. But we're into that golden zone. Perfect. We had a gap up, so we can't really look at minor support. So, you know, that criteria doesn't really apply. And the entry would go over these candlesticks over 345 stop loss around 335. So it was a 10-centent stop and this ended up moving all the way to 392 which is around a 40 to 50 cent gain. So this was like a four to five bar trade. It would have been and maybe you took profits at target one and then you left a runner and you know maybe you took those profits somewhere up here. a really nice retracement setup. And obviously, I didn't take advantage of this, but I had a ton of students who did. And yeah, this is a really great example of a bullish gap on the daily time frame. And then you trade that bias via a retracement setup on the intraday time frames. Let's look at another example, and this was on Rumble Rum. And this was also just a few days ago. This was just this past Friday. This was the same day that the plug happened. And I know that because I actually called this trade in my group. And this stock gapped from 739 to 823, which was an 11% gap up. So that gave me a bullish bias for the day because we were gapping above this resistance. And the next major resistance was honestly the 200 period simple moving average. So I thought that this stock could actually run up to around $9 for that day. and I go to the 5minute time frame and we'll look at the other time frames in just a second here. But we get a beautiful retracement setup. We got a nice move up. Four red bars in a row. Perfect. We don't see any Christmas lights. We are kind of far away from the 20. But you got to keep in mind because of the big gap up. It's going to take time for the 20 MA to catch up to prices, but it's still rising. It's still under price. And the entry would be over this red bar. stop loss directly below and we would enter this trade basically as this green bar is forming. We don't wait for this green bar to finish forming and then take it. As soon as it hits above this entry above what was it 833, we would get into the trade. So you don't need to wait for this green bar to actually finish forming. And this was kind of a deep retracement. you know, maybe a little bit above 60% but still really nice retracement setup. And of course, TP1 would have been this prior high. And then TP2 would be the next target, which I said was around N bucks, and we hit around 8.95 on that setup. If you look at the 15-minute, it looked really, really solid, too. So, I always like to look for multiple time frame alignment. We got a we had a nice green bar, red bar, and a nice dogee bar. I like dogee bars, right? So, entry above the dogee bar, stop loss directly below. So, you could have taken this retracement setup also off the 15. And by the way, we kind of got one, you know, later in the day, even though I didn't really like this one. It was a really deep pullback. But hey, if you wanted to trade this retracement setup right before the close, you could have entered above this little base, above these candlesticks, stop-loss directly below. Let's look at the RKLB Rocket Lab Corporation. And this was a few months ago, but I remember taking this trade and this was just a fantastic retracement setup. We had a very minor gap up from 2540 to 2665. So we were just clearing above this resistance and that small little gap up actually gave me a bullish bias on the day. We were clearing above this resistance and I thought we had upside to move higher until this prior resistance area. So we go to the fiveinut time frame. All right. And we got a really nice retracement setup here. Green bar. We got one big red bar. Then a small little kind of uh topping tail, narrow range bar, right? So entry above, stop-loss below. And obviously this had really nice follow-through, but I think this was actually way nicer on the two-minut time frame. So I always like to look at multiple time frames, and that gives me a lot better of a perspective on what that stock is actually doing. And as you can see on the two-minute, it was actually much nicer. Nice move up, red bar, bottoming tail, and then we had like two dogee bars in a row. Really nice. So, we didn't see three to five red bars in a row, but it didn't matter because it was still a really nice retracement setup. Entry above, right? Stop loss directly below. And you could have even entered it here. Let's say you missed this setup. It moved up kind of based. You could have put your entry here, stop loss directly below. I would say this would be a little bit tougher because it's right into the prior high. But of course, it didn't matter. It continued up and even here had a nice little retracement setup. Moved up, retraced three red bars, bottoming tail. You could have even even played this. I wouldn't have and I didn't, but you know, in theory, this is also a retracement setup. Entry there, stop loss above, and you would have taken profits at the previous target. Let's look at another one. And this was on APLD just a few months ago as well. terrific trade that I called and actually executed on. And APLD had a nice move up retracement almost had a retracement setup here into the rising 20 uh four red bars in a row and it triggered this retracement setup on a gap. So we gapped up triggered that setup and of course we had really nice follow-through to the upside and I traded it on the day of the gap. So this gap was gapping above those four red bars above resistance. I thought it was really interesting. It gave me a bullish bias on the day. And if we go to the fiveminute time frame, we got, you know, basically a picture perfect, you know, retracement setup. Nice move up. Three red bars in a row. Then we had a bottoming tail, narrow range bar close to the 20 MA. Okay, around a 60% retracement or so, you know, a little bit more than that, but still really nice. And entry would have been over that candlestick. Stop loss directly below. And of course, it hit target one. It actually exceeded target. In fact, we kind of got another retracement here and another retracement setup here that you could have played. So, really nice setups. And even though we didn't hit every single criteria, it's still an effective setup because we combined the daily time frame and looking at the gap and establishing that bullish bias, we knew that there was a bullish direction. There was a bullish catalyst. and we combined that catalyst with a retracement setup on the intraday time frames. Let's look at some retracement setups that actually work the other way that actually worked as shorts. So, this stock gapped from 2022 to 1888 the next day. So, this was like a 6% gap down, but notice how it was gapping below the 200 and below a lot of this resistance. So, really bearish gap down. I had a bearish bias for this stock on that day and we got a picture perfect almost power trend lower. But take a look at this retracement. We move down. We had three green bars in a row. Remember, we want three red bars. If we're looking to go long, if we're looking to go short, we want three green bars in a row. 40 to 60% retracement into the golden zone near the 20 MA. So nice and entry right below these candlesticks, stop loss directly above and then literally every single time it retraced near to the 20 MA, it actually just continued lower. So beautiful picture perfect retracement setup um you know in the opposite direction where we would be going short instead of long. So all the criteria that I just taught you, it would just be the opposite if you're going short. Let's take a look at the FN KO. And I remember this setup very clearly because I couldn't get filled on it. And it was an unbelievable trade, but I couldn't get filled any shares short on my Thinker Swim. I just couldn't get a fill, so I couldn't take advantage of it. But this was gapping from 365 that day to around uh 298 the next day, around 18% gap down. This stock had a nice move down based and it triggered this breakdown via a gap on the daily chart. So I had a bearish bias going into this day. And if we go to the fiveinut time frame, we could see a beautiful just beautiful retracement setup right here. It's a little bit choppy because Trading View doesn't really like represent this data all that well. But we had a nice move down 40 to 60% retracement. Not a perfect retracement, but it was still good enough to take. Um near the 20 MA, right? 20 MA was starting to catch up to price. And basically the entry would have gone under 264 or under 265 stop loss 275 and it was a 10-cent stop and this thing dropped all the way to 232. So unbelievable trade. This was actually scalpable as well. Really nice retracement setup for a short and in fact it worked as a retracement here. It retraced to the 20 MA kind of based dropped retraced to the 20 MA dropped but at this point it formed a higher low. So, you know, this that's obviously a red flag and it obviously start to kind of transition higher after that. But beautiful retracement setup to the downside. Like I said, entry under 265, stop loss [snorts] 275. And if you look at the 15-minute, I mean, look at that. Really nice, nice move lower. Couple of green bars. We had a dogee bar here and beautiful continuation to the downside. Hopefully, you found tremendous value in this video. And I want you to actually test this strategy first in your own trading with either paper trading or really small risk so you could develop a feel for trading the retracement setup and you could practice applying all of the criteria that I've taught you today. All right, before you actually use significant risk, I want you to test it out. I want you to kind of develop your own intuition for this setup and be selective with your trades. Don't just take any retracement. I pass on like over 95% of the dip opportunities I see in the markets because I only like to go for high quality A+ retracements. So, make sure you're paying attention to these criteria and make sure you're practicing this setup before you actually use heavy risk. Let me know in the comments what you think about this strategy and whether you think it's going to be very effective for your trading plan. Make sure you leave a like on this video and make sure you subscribe to the channel for my other education. And lastly, make sure you get started with my free 10 plus hour trading course. Like I said, it is genuinely better than most paid courses on the internet. And you're going to find that out and you're going to learn more about this strategy in my free course as well. So, I will see you on the next video. Thank you so much for watching. What's going on, guys? Hope you're having a great day. We just talked about the buy setup, but now we're going to be talking about the sell setup, which is the exact opposite of the buy setup, except we're going to be shorting instead of going long. So, we're not going to spend as much time on the sell setup as we did on the buy setup since it's exactly the same concept except, you know, obviously it's the opposite. So, let's just get right into it and we'll do a quick little class here. Sell setup. What is it? It's the opposite of a buy setup. We're going to be shorting the retracement rally, right? So, we know how uh if we have an uptrend, if we have a rally, we have a dip. Same thing when we have a downtrend, right? We drop, we also have a little bit of a retracement rally. It's one of the most potent strategies for day swing trading. works in any time frame, stocks, crypto, forex, and it's really important to just develop the skills required to recognize one and recognize um when you have a quality sell setup. So guys, same idea here. We drop, we need to correct in some way after this large drop. Maybe some people need to cover their shorts. Maybe some people are buying it down down here in hopes that it's bottoming. Um but we have a retracement rally, right? And this is where we want to time our sell setup. This is when we want to get in so we enjoy the move lower. And then of course we could cover here um or um you know stick with the play and we see we have that retracement rally and we could we have another sell setup and we short it here and enjoy the move lower. Okay, we must have a downtrend in order to play the sell setup. Just like we need we need an uptrend when we're buying the dip, when we're, you know, doing a buy setup, we need an established downtrend when we are trading the sell setup. Guys, don't overthink this. It's the exact same thing except it's the opposite. Key criteria number one, um, after a huge drop, we need to have three or more consecutive green bars in a row with higher highs and higher lows. Right? This high is higher than this high. This higher is high is higher than this high. And this high is higher than that high. Okay? Three consecutive green bars and ideally consecutive higher highs and consecutive higher lows. Okay? It's the same exact thing. we are basically um analyzing the quality of the retracement. Okay, same thing here guys, the 20-day moving average requirement. Remember, when we're downtrending, when we're shorting, we want the moving average to be trending lower and we want it to be over price. Trending lower and over price. So, we drop from the 20-day moving average and then we retrace right back to it here. Okay, same thing guys. 40 to 60% retracement. Um, if this retrace is too much, then it's, you know, clearly too strong, right? We're trying to short. We're looking for weakness. If it rallies all the way up here, then it's clearly not all that weak because otherwise, if there was really that much selling pressure, the sellers wouldn't allow there to be a retracement to here. Similarly, um, if we only retrace to right here, there's still extension from the 20-day moving average and a full correction hasn't been made. So, we're looking to the 40 to 60% area. In this case, it's around 50%. Okay. So, we have a we drop 40 to 60% retracement. Our entry and stop loss, it's the exact opposite. uh once our entry bar has formed, we put our entry under the entry bar. We put our stop loss over the entry bar since we are shorting. So we would be entering during this red bar when it hits uh the lows of this entry bar. Okay? And our t our target is the previous pivot low. Same exact thing guys, just opposite. Entry bars, as we're aware, it makes it an enhanced setup. Ideally, we have narrow range bars or small topping tails. Right? Before on the buy setup, we wanted bottoming tails because a bottoming tail shows that the buyers have taken control. With a topping tail, it shows us the sellers have taken control, which is what we want when we're shorting. So, we obviously want an entry bar. It improves our reward to risk. Okay. Obviously, here the green bars are becoming smaller. Um the b the buying is weakening compared to this. We we have an entry bar here. We don't have an entry bar there. Okay, same thing. And the exact same idea, guys. With an entry bar, we have a tighter stop-loss. We have a higher reward to risk. This is why we want entry bars. Stop loss is at six bucks. Our entry is at 590. We're shorting it. Remember, here our entry is at 560, stop loss at six bucks, right? Same target, same stop loss, different entries because we don't have an entry bar here. And in this case, we're risking 10 cents to make 40 cents. I'm sorry. We're risking 10 cents to make 50 cents. In this case, we're risking 40 cents to only make 20 cents. Okay. Obviously, the reward to risk is a lot better here because we have that entry bar. We have a tighter stop-loss and our risk-to-reward is a lot better. Okay. Okay, guys. Let's look at some examples. Right, the 20-day moving average is starting to curl over price and is declining now. Right, especially it's curling over and we have a drop. Then we have a base we have a base breakdown here actually. So we have a drop base base breakdown. We break down, right? Then we have that retracement. We have three or more consecutive green bars in a row. We have a topping tail, right? In fact, we have a topping tail and a really nice small entry bar. Um, in this case, guys, I know technically we're supposed to put our stop loss over the entry bars high, but in this case, since the topping tail is higher, we're going to put our stop loss there. Okay, we in general want the stop loss to be over the absolute highs of the sell setup, right? Our entry would be under this bar as this bar is forming. So, as soon as it hits the lows, we enter and the target is a previous low. Beautiful, beautiful sell setup. Um, this is around, I'd say, 60% retracement. So, beautiful sell setup. Perfect um example of this. And notice how the we it's right into the declining 20-day moving average. It literally stops at the moving average. This is why the moving the 20-day moving average is so important. Same thing here, guys. The 20-day moving average is dropping. It's trending lower. We have a huge drop. Three or more consecutive green bars in a row. We have a, you know, kind of larger um a larger entry bar than we want. However, it's still good. We are our stop loss is right here. Entry right here. And we actually surpass our first target. Notice how it went right to the declining 20-day moving average. That's when we had our drop. And we actually did another one here where we rallied it. This is not a perfect sell setup, but still entry bar, entry bar, and we continue lower. Okay, hopefully that makes sense. We also have higher highs on each of these green bars. Just really, really nice setup. Same thing here. This one's a little sloppy. We have a prior support here that becomes a resistance for the sell setup. We drop this one's a bit sloppy entry bar, but nevertheless, it's a sell setup right into the declining 20-day moving average. It kind of went above the 20-day moving average, but that's not a big deal. It's never going to be perfect every time. Okay, really nice sell setup. And notice this is supposed to say sell setup, but not every sell setup is perfect. You have to look at the overall context of what's happening. And remember guys, if you're having uh troubles with this setup, it's exactly like the buy setup. It's just the opposite. You're shorting. You're taking advantage of the and making money off the price moving lower. A key idea here is, guys, remember, use the 20-day moving average to your advantage. And once again, you're you're seeing that we're combining all of these ideas to make a to produce a really potent trading setup that has a high likelihood of success. Okay? By combining different ideas and different elements of what we're learning in this course, we're going to be able to combine everything, right, and find setups that are extremely high quality and have a high likelihood of success and high likelihood of, you know, making money. That's what we're here to do. So, hopefully this makes sense, guys. This is basically like buying the dip except you're shorting the rally, right? So, you guys know all the requirements. And something I want to emphasize just like I did with the just like I did with the uh up with the buy setup class is make sure there's an established downtrend. Okay? Don't trade the sell setup if you have an uptrend. Don't trade the sell setup if the charts are looking bullish. If the charts the charts are showing buying pressure, look at several time frames. Look at the daily, right? Look at the hourly. Look at the weekly. Maybe look at the smaller time frames such as the 15, five, or 1 to 2 minute charts and see what's going on. Are we bearish? Do we have clear selling pressure? Do we have a downtrend? Or do we have conflict on the time frames? Do we have some time frames looking higher? Some time frames looking lower, some time frames maybe sideways. You don't want to trade that. You want to trade the sell setup when there's clear bearishness on multiple time frames and when you have established downtrends on multiple time frames. Okay, that's something that's really really important. And same thing with the base breakout and the the base breakdown as well. I didn't really cover it before, but um you you want to trade the base breakout when you have an established uptrend on several different time frames. When several different time frames are showing that it's bullish, just like you want to trade the base breakdown when several different time frames are showing bearishness, showing that there's selling pressure. If you guys don't get the idea at this point, uh definitely go back and watch my multiple time frame analysis video. You guys get the idea here. You want the multiple, you want multiple time frames to all be in agreeance. And once they are, then you could start finding these setups that we're learning. Okay, awesome guys. We have now learned two different strategies, right? The buy setup and the breakout and the respective sell setup and base breakdown. And boom, now you guys are ready to begin trading them. So maybe try to look for some on your charts. Try to practice. Maybe come to my live streams and ask me questions about whether you found one or not. But perfect. Make sure you guys really understand the requirements that go into the strategy. Anyway guys, we're going to be discussing the one two three pattern next. See you there. What is going on guys? Hope you're having a great day. Today we're going to be talking about another strategy that we're going to add to our trading arsenal. We already talked about the breakout/breakdown and the buy setup and sell setup. But today we're going to be talking about another type of strategy and the best way to sum up this strategy. It's uh a continuation play. Okay, so we already discussed and looked at a diagram showing how price corrections occur and how we take advantage of price corrections through either buying you know after a base or through buying a pullback or you know shorting a base or shorting a retracement. Okay, but let's talk about what happens if let's say you miss the initial breakout or you miss the buy setup. Right? So let's say we have a breakout or let's say we have a rally first and then we get a base we get a consolidation and of course we're looking to play the breakout right and similarly let's say we have a rally and then we get that price correction and we get a pullback okay so what happens if you miss this initial breakout and you miss this initial buy setup right let's say Maybe you weren't at your trading desk. Maybe uh you know, you're coming late to the party and you weren't able to catch the initial breakout. Okay, the initial breakout here or the um the buy setup here, right? What do what do you do? Right? Maybe you know you still want to take advantage of the play and you may ask yourself, okay, I missed the initial entry. Is there any way I could get into this position through a secondary entry? Okay. Right. So, maybe you missed this initial breakout, but you get another opportunity here before it inevitably continues higher. Or maybe you get an opportunity right here to get in before it continues higher. Right? So, the whole point of this setup is to talk about the one 123 pattern. That's what it's called. And it's a continuation play. This setup is basically trying to catch the continuation of the move. It's a secondary entry. Okay, so let's get right into what it looks like. Okay, so the first requirement that you need for the one, two, three pattern is a and a bullish one two three pattern, right? where one where we're actually going to go long is we need a bullish wide range igniting bar first. Right? So remember we talked about what an igniting bar is. Okay? So we need a bullish wide range igniting bar. We don't want to see a large candle up here, right? Or I mean a large wick. We don't want to see a large wick or tail on this bullish igniting bar. And this igniting bar, the reason it's called an igniting bar is that it ignites the move higher, right? This is the first bar that is igniting the next move. Um, so it's going to indicate the direction of the move. In this case, it's higher, right? Shouldn't have a significant topping tail. We talked about that. And the next bar we have here is a resting bar. And this resting bar, it's usually a narrow range bar or sometimes a dogee candle. Okay? And this resting bar has to form and stay in the top 33% of the igniting bar, meaning it has to be ideally in the top third of this candlestick. You're not always going to see that. Sometimes the resting bar is a little larger. It's not a big deal if that's the case, but ideally, you know, if we're just talking about the textbook, the textbook version of this pattern, you want to have a resting bar that's in that's, you know, in the top 33% of this igniting bar. You can see this one is, you know, in the in the top third of this bar. It doesn't matter if it's green or red or if it's if it's a dogey candle. That doesn't matter. And ideally, you want it to form an equal or near equal high with the igniting bar. meaning you want the high of this resting bar to be near the high of this igniting bar. Right? In this case, we're kind of near the high because what it ends up forming is a double top or an area of resistance. Okay? And the reason why we want to have an area of resistance is whenever we get the triggering bar, right? This is the bar that where we would actually enter this pattern, right? We want the trigger to happen when it breaks that resistance, right? And as soon as it breaks that resistance, that' be confirmation that we're going to go higher. And that's when we enter. So you're entering above the highs of the igniting bar and the resting bar. Whichever one is higher, right? So if it's equal highs between these two bars, great. But let's say in this case, um, the igniting bar is a little bit higher than the resting bar, right? You're going to place your entry above the highs of either these two candles. So, whichever one is higher, that's where you're going to be placing your entry. And you're going to be placing your stop loss uh under the low of the resting bar, okay? Or under the low of the triggering bar, whichever one is lower, right? So, let's say that there's a maybe a large tail, maybe there's a tail here in your triggering bar. You're going to be placing it at the lows. So, at the lows of either the resting candle or the lows of the tri uh of the triggering bar. So, this isn't really hard stuff, guys. You have an igniting candle, right? Then you get a resting bar, a narrow range bar, uh or perhaps a dogee candle, and right, so it's a one, two, and then we're on the third bar. That's where we're going to be actually that's a triggering bar. That's where we're actually going to be entering and placing our stop. Okay, so let's look at the opposite, the bearish setup, where we're going to actually be shorting the 123 pattern. We first have the wide range igniting bearish bar. Ignites the move lower. It indicates the direction of the move. We shouldn't have a significant tail here, right? We shouldn't have a significant bottoming tail, right? When it's a bullish wide range bar, you're not going you're not supposed to have large tails, right? So, you you definitely don't want to have a large bottoming tail here. Okay. So, that's the igniting bar. The next we have the resting bar that's forming and staying in the bottom 33% of the igniting bar. So it's has to kind of form and stay in the bottom third of this igniting bar. It's not always going to do that in trading. Nothing is ever really, you know, exactly perfect, but ideally the textbook version, you want to have this uh resting candle be in the bottom 33% of this igniting bar. It doesn't matter if it's green or red. And ideally, you want it to form um near equal or equal lows with the igniting bar, right? You want the low of this bar to be near the equal or or near the low of the igniting candle because that's going to create an area of support. And once that support is broken during the triggering bar, that's where we're placing our entry, right? So the entry is going to be under the igniting bar or under the resting bar. Whichever one is lower. So find the absolute low of the igniting bar, the absolute low of the resting bar. Whichever one happens to be lower, you're going to place your entry under that. Okay? And you're going to short immediately when the bar goes below the no below the lows of the igniting resting bar. We just talked about that entry. We just talked about that. stop loss is going to go over the highs of either the resting bar or the trigger triggering bar, whichever one's higher. Usually, it's going to be over the highs of the resting candle. So, you're going to place your stop loss um over the highs of the resting candle, right? So, you have a one, you have a two, so you have an igniting one, a resting two, and then the third candle is going to be our triggering bar. And the one 123, by the way, whether it's bullish or bearish, uh it could really be played on any time frame. Uh yeah, it it works on any time frame for crypto stocks. So, you shouldn't have a problem, you know, beginning to uh immediately take advantage of using this setup. Uh so, let's talk about what I meant by it's a continuation pattern. Okay, so you guys should immediately recognize what we have here. We have a rally. We have a rising 20-day moving average that is under price. Perfect. We have a rally stemming from the 20, right? It's coming from the 20. Perfect. And we begin to base. We have our shakeout bar. Remember, what does the shakeout bar tell us during a bullish base? It gives us confirmation that the stock or the crypto is indeed higher. Okay, it's an enhancer. We talked about that uh during one of our classes. So we have a bullish base at the highs and of course we have our base breakout. So the initial entry for this trade is for the base breakout. Right? This is our entry point. It's over the highs of the base. That's our entry. That's the first setup for this stock. Right? But let's say you missed it. You weren't able to take advantage of the entry for the base breakout. Maybe, you know, you were you weren't really confident that this stock or crypto was actually bullish and you wanted to wait for the next setup. Maybe that maybe that's what happened or maybe you just missed it. You didn't see it. But the sec the one 123 pattern then gives us uh an option to get into the stock or crypto after the breakout. Right? So where then we have the igniting bar, the breakout happened, right? We broke out and then all of a sudden we get the resting bar. We get the one two three pattern and now you can enter over uh you know the highs of the igniting bar here. Enter over the highs and you put your stop loss under the resting candle and boom now you have a 123 pattern. So this is going to serve as a secondary entry into the stock or crypto in case you missed out the initial breakout. Okay. And in general, guys, the igniting bar, right, we talked about the igniting candle, this usually has to stem from either a base or from a buy setup. Okay, that's why it's igniting a new move, right? This this can't we're actually going to talk about in a second here, but this can't you know you really can't have an igniting candle unless it's coming from a consolidation or a buy setup. You need that, right? And here we have a 123 pattern stemming from a buy setup. Right? So let's say you have the rising 20-day moving average that is under price. You have the rally, you begin to pull back, you have your buy setup where your buy setup entry would be over this candle, right? Stop loss under this candle or under the 20. We have our initial u igniting bar, right? The buy setup worked. It triggered, right? Our entry was right here. It worked. But let's say you missed this entry or maybe you were skeptical that it was really going to work and you decided to pass on this setup. Then it gives you a resting bar, let's say. And now you're going to be able to play it as a one, two, three pattern where your entry is right over these two candlesticks. Stop loss is under this candlestick and that candlestick. Okay? So you could see that the igniting candle, right, it it's always it always has to stem from either a base or a pullback, right? Because the igniting candle ignites a new move higher. And this kind of brings me to this point. Look at this candlestick. Is this considered a one two3 pattern? What we have here, right? We have this green bar and then we have the resting candle, right? And let's say we continue higher. Is this considered a one two3 pattern? And pause your video and really think about it. Okay, so I'll give you guys the opportunity to do that. Okay. And it's not right. The move was already ignited. A one, two, three must have an igniting bar that starts the move. We just talked about it, right? This move has already been ignited. We're already up four green bars in a row before we get this one, two, three. This is not an igniting bar. This is just I mean, this is really just continuing the move higher. But that's not what we want here. We want the first bar to be an igniting candlestick. It has to stem from either a buy setup, you know, meaning has to stem from a pullback or from a base. It ignites. It's really important. You wouldn't believe how many questions I get about this. And they'll give me an example like this and they'll be like, "Is this a one two three?" No, it's not a one two3 because this candle is not igniting a new move higher. Okay, so let's continue. What's the benefits of this trade? Well, number one, it creates a higher reward to risk setup, right? We talked about reward to risk. Um, but you know, it usually gives us a pretty tight stop loss, which is really, really nice. We know that the tighter the stop, the better reward to risk. And like I said, if you miss the breakout or the buy setup, you could use the 123 as a secondary entry. It gives you another opportunity to take advantage of the trade. And it also, you know, it kind of gives you confirmation. The stock has already proved that it's bullish due to the successful breakout and you're just trading the continuation of the move, right? This has already proved that it's bullish, right? We broke out. We have the igniting candle. This the trade is telling you, hey, we're bullish. We're probably going to continue higher here. And then you get the one, two, three, and boom, you can take advantage of the continuation higher. Okay, let's look at some example here. Examples here. We have the 200 day moving average. It's flat and underpriced. Perfect. We actually have a buy setup here, which is it's not a clean buy setup because of the 20-day moving average, right? It's not under price. It's kind of like moving through price, but nevertheless, we have a rally. We have a a retracement. Notice how right here, the 20-day moving average starts to point higher, and boom, we get an igniting bar. We get our resting bar and then we get our triggering bar. And our entry would be over the highs of the igniting bar and the resting bar. So it'd be right here. Our stop loss would go right below the resting bar. And this is a 1, two, three, right? 1 2 3. Perfect. We could see also the resting bar is in the top 33% of this candle. Awesome. Let's look at another play. We have a rising 20-day moving average, right? It's starting to curl higher. We get the wide range bar. We get our resting bar and then we get the triggering bar completing the one, two, three. So you guys could see this is the definition of igniting bar, right? We're kind of sideways here where there's it's trendless, right? We're not really doing anything and we boom ignite right out of that sideways trend and we begin to start a new trend, right? So I guess you can call this a base. It's a really sloppy base. Like I know I said that you t you want to have the igniting bar um stem from a base or a buy setup, but sometimes you're going to have a sideways trend like this where you know price begins to break out of that sideways trend with a large igniting bar. I mean notice the size of this bar. This bar is bigger than any other bar on this chart and that's what makes it such a strong igniting candle. Here we have a resting bar. It's not, you know, perfect. Ideally, this would be smaller, but you know, nothing's ever perfect. Our stop loss would go right here. Our entry is over the highs. And we have the one, we have the two, and we have the triggering bar number three. Perfect. Let's look at another example. This is a really pretty setup. We have our wide range igniting bar. Um, really, really bullish candlestick right here. We have our resting bar and we have our triggering bar. And this was actually in the beginning of the day. Um I I I don't I forget which stock this was, but this ignited this igniting candle um you know ignited the entire move for the entire day. So we could see that off this one two three we continued higher the rest of the day. We have our resting candle, we have our igniting, we have our triggering candle. So let's say you missed the initial breakout down here. You were able to capitalize because it gave you a 123. you were able to put your stop loss under the resting candle and entry over. This is literally I mean this is a perfect perfect one 123 pattern right here. We also have a rising 20-day moving average. We have kind of a flat 200. Not it's kind of trending but not a big deal. All right. So, let's let's take a look here. Okay. And this is a really great example of what what I what I said. Um the one 123 is the best continuation pattern. Right? We have a base right here. we actually break under that base, right? So, we have a base breakdown with this candlestick. But let's say you missed this initial entry short, right? It gave you a 1 2 3 4 actually. So, all a 1 2 3 4 is the exact same thing exact same thing as a 1 2 3 except you're going to have two resting candles. So, we have our igniting candle and then we have two resting candles before we have our triggering candle that triggers under the lows of, you know, basically all of these preceding candles. And boom, you could have taken advantage of this, right? Um, you would have placed your entry right under the lows here. Your stop loss, you can either place it up here or you could place it over this candle. um whichever one kind of fits your risk management. Um I would have probably placed it over this candle just because I like the reward to risk. It makes it a better reward to risk setup. And we actually ended up, you know, having a huge tremendous drop before we formed for a sell setup right here and we had another drop. So there's a lot of patterns in here. We have a base breakdown short. Then we have a 1 2 3 4 which is like I said the same thing as a 1 123. Then we continue lower. We actually have a climactic buy setup reversal play which we haven't talked about that yet but we have that here. Uh and that's where you actually play a reversal. Then we have a sell setup. We have a declining 20-day moving average. We have the sell setup that worked. And wow I mean there's a lot of lot of strategies that's in this screenshot. And you could see that this one, two, three four one two three four four served as a secondary entry just in case you missed this initial breakdown. Okay, hopefully that makes sense. And that's really it, guys. So, the 123 is not a difficult setup, guys. It's just a continuation play. And you could just see from these examples that it's not that hard. Um, they're pretty easy to pinpoint. Remember, we have to have an igniting candle, right? Um we can't have something like like this, right? This is not a 1 123. It needs to ignite a new move higher. That's the whole point. And this works on any time frame. And hopefully you can begin seeing one 123s on your charts and you can begin um applying them, right, and start actually trading them. All right, guys. Perfect. Let me know if you have any questions on that and have a great day, guys. What's going on, guys? Hope you're having a great day. Today, we're going to be talking about another trading strategy and another trading setup that you guys need to add to your arsenal. And this one is going to be focused on picking reversals. It's called the exhaustion and the climactic pattern. And what this strategy is all about is, you know, picking reversals with precision. So far with the base breakout, with the buy setup, with the 123 pattern, we've learned how to play with the trend, right? If we're in a solid uptrend, we've learned how to find setups in that solid uptrend or how to find setups in that downtrend so we could play short. But today, we're going to be talking about how to go against the trend. Okay? And before I hop into the presentation, I want to give you guys a little diagram of exactly what I mean showing you guys this. So, [snorts] let's go to my little drawing area. Okay. Let's say we have a 20-day moving average. That's let's say trending higher just like that. Let's make this moving average this orange. And let's say we have price. Let's make this actually yellow. Let's say we have price, you know, respecting the 20-day moving average and continuing this uptrend. Okay. So, let me just draw this real quick. Very good. So, right now, and we could even make this a little flatter. Maybe make it more like 45 degrees. Perfect. Okay. So, what we have here is a gradual uptrend. we have an uptrend that it's just grinding higher and it's gradually continuing higher. Okay, so this isn't where we're going to find a reversal. Why? Because price is near the 20-day moving average. We talked about [clears throat] in some of the other classes that extension means extension is when we have distance between price and the 20-day moving average. And we're really going to be diving into this idea of extension during this strategy. But let's say all of a sudden we talked about how the slope of the 20-day moving average matters, right? And you know the uh the higher the slope is, the more unsustainable the move is, right? So right here, let's say we have what? Let's just call it a 45 degree angle. And let's say all of a sudden, let's make this same color yellow. the 20-day moving average starts to, you know, uh it becomes basically steeper, right? It starts to kind of curl even higher and and and you know, make it kind of a higher angle. This is 45° maybe at this point. This is more like 60°, right? And we see price start getting really extended from the 20-day moving average to the point where there's even let's say even even higher. Right. Right. And you see that there's a ton of distance between price. Right. Let me make this a different color. Let's do make this like orange. Let's say there's a lot of difference between price up here and the 20-day moving average down here. You can see this is the price that this is the distance that's representing that. So, what do we do up here? Well, we don't want to play long up here, right? Why? Because number one, we're extended from the 20-day moving average. Remember, we talked about we want to take entries that's at or near the, you know, trending 20-day moving average. We're at this point, we're really far from the 20, right? The other thing is we had a huge move higher and we don't want to buy at the highs. So what do we do? This is actually the exact point where we're going to be trying to find a short where we have extension in this sort of acceleration. So now that you guys get the general idea of what I'm talking about and how we're finding this reversal setup, let's actually go into the presentation and talk about details and specific things that we're looking for. So this is called the exhaustion play. You could also call it the climactic pattern. And this is honestly the most potent reversal setup. This is the only way to pick reversals, right? I think this is there's this amazing idea um where traders, they just want to pick the tops. They want to pick the bottoms in stocks, right? There's just this like idea behind it where it's just like, oh, you're buying it at the absolute bottom or you're shorting it at the absolute top. And that ideal idea is so appealing. So if you're one of those traders who is really trying to find reversals and that's just what you're inclined to do, that's just like what makes sense to you, then this strategy is going to really help you with that and help you take, you know, your trading to, you know, your trading to the next level, especially with the strategy. So something to understand, guys, I think truthfully this is the most difficult trading pattern. If you're a beginner, I would say stay away from this pattern until you're a little bit more experienced. And the reason it's the most difficult is because your odds of success is always greatly increased when you play with the trend. You usually want to be going with the trend, right? If the charts are saying bullish, if there's an uptrend on several time frames, right? and everything is screaming bullish, well, you should play long, right? You should go ahead and look for buying opportunities because everything is telling you that there's a lot of buying pressure. So, going short in an environment where there's a lot of buying pressure, that's difficult. And a lot of times, you're going to, you know, you're going to take some trades with the with the exhaustion or climactic pattern, and it's not always going to work out. They have a lower likelihood of success, right? especially when you don't know the specific details that you need for the setup. So, it's it's difficult. Just stay away from it as a beginner and start doing it when you're a little bit more experienced, I would say. But it's up to you, obviously. So, like I said, you don't want to you typically don't want to play against the overall trend. However, you should still be equipped with the knowledge of how to do it correctly. And the thing is, guys, since we're trying to catch tops and bottoms, this setup might take more than one try, right? Like if you're finding one of these setups, you might have to enter it more than once because you have a high likelihood of getting stopped out if it continues like in that direction. You know what I mean? And and that'll make sense in a little bit here. So let's talk about the setup. So first requirement is we have you know in this case this is a climactic buy setup, right? Or exhaustion buy setup um because we're going to be buying in this situation. So, number one, you need a declining 20-day moving average, right? And ideally, it's we talked about slope. Ideally, you know, the the slope is very steep with the 20-day moving average. So, declining, it's overpric. Perfect. Acceleration. So, let's talk about acceleration. We kind of mentioned acceleration and I kind of showed that idea. Where did it go? Did my I guess my drawings got deleted. No problem. Um, so in terms of acceleration, notice here that these red bars are becoming increasingly larger. And for the climactic pattern, for this pattern, you need to have at least five or more red bars in a row. Actually, let's start over here before we go on to an acceleration. Um, so yeah, you need ideally five or more red bars in a row and you need five consecutive lower highs right? So 1 2 3 4 five. That's five red bars in a row. Even six actually. And you could see we're making lower highs on each red bar. Those are requirements. And we're going to be looking for clear extension and acceleration. And the whole idea of the setup is we're trying to buy the stock or crypto when supply is about to run out. Like there's a lot of selling at this point right here. we could be confident that supply is starting to run out and that's when we're going for the long and that's when we're trying to buy it because like there doesn't need to be a lot of demand to bring this stock or crypto up from here because if there's zero supply if there's zero people selling it down here because they already sold then any amount of buying pressure will bring this back up. So we talked about acceleration. Notice how these red bars are becoming increasingly larger and larger. Notice that the distance between price and the 20-day moving average is becoming increasingly larger. Right? Like here there's [snorts] not that much different uh distance. Here there's more distance. Here there's even more distance. And all the way down here there's a lot of distance. That's what I mean by acceleration. The candlesticks are becoming increasingly larger. So, we need to see this acceleration. It cannot just be a steady and gradual decrease. Okay, this is a really a [clears throat] lot of people get this wrong where they'll see a very steady and gradual downtrend and they'll try to find a reversal. No, you need to have this acceleration. Um, we also talked about, you know, extension from the 20. These are kind of connected. the acceleration, the extension as is it as it's accelerating, it's going to become more and more extended. And the larger the distance between price and the 20-day moving average, the more oversold the stock or crypto is. So, if there's a lot of distance between price and the 20-day moving average, like in this scenario, you could think of it as this is oversold and there's probably going to be a correction higher. We also talked about volume already. Um, or if we haven't talked about volume yet, it's going to be in the next class. And you could think, we also need a large volume spike here. And the volume spike. Um, we talked about amateur and professional volume or igniting volume. So, we want to see a ton of amateur volume down here. Okay. And so, hopefully those are the three requirements there. We have acceleration that causes, right? the acceleration, increasingly larger red bars that causes the extension from price and the 20-day moving average. We have a huge volume spike indicating a reversal. And once we have one of these entry bars that we talked about, we talked about that with the buy setup. Um, once you get one of these entry bars, you place your entry over the entry bar and your stop loss under the lows of the move. So, that's what's key. It has to be under the lows of the move. So, let's talk about the importance of entry [clears throat] bars. We already talked about this with the buy setup. You guys should already know this. We're looking for narrow range bars or we're looking for dogee bars or for bottoming tails. Cuz remember, if we get a bottoming tail right here, it suggests that what that the buyers have started taking control. So, an entry bar, it provides us a clear entry and a clear stop-loss, right? Entries above the entry bar, stop loss below it. and increases our reward to risk. And uh we're always going to put our stop loss under the very lows of the drop. So whichever wherever the lows is of the drop, that's where we're putting our stop loss. So if it continues lower, it'll hit our stop-loss and we'll exit immediately. Let's look at the opposite. This is a climactic sell setup or an exhaustion sell setup. Um you could see here we have a rising 20-day moving average. You could see price. Well, number one, we need um ideally five or more green bars in a row and [snorts] five consecutive higher highs. You can see we have higher highs. Okay, five green bars in a row. We're looking for acceleration. Notice how the green bars are becoming increasingly larger and larger, causing extension from the 20-day moving average. You can see the distance here. Okay. Obviously, the larger the distance between price and the 20-day moving average, the more overbought it is. So, if you see a lot of distance between or you see a lot of extension between price and the 20, you could assume that it's a little bit overbought and a correction might take place. And of course, we have a volume spike at the highs indicating a reversal here. Okay, it's the same exact thing except obviously the opposite. Our entry in this case would be shorting shorting under the entry bar stop losses over the absolute highs of the move. Okay. So you know whenever you have a huge rally like this nar and you get narrow range bars or topping tails or even bottoming tails dogey bars small bars like this those are entry bars. They enhance the shorting opportunity. It gives you a clear entry and stop-loss obviously better reward to risk. and we're always going to put the uh the stop loss over the highs of the of the rally. Okay, hopefully this makes sense for you guys. Now, let's look at some examples and let's let's kind of check off everything we need to know here. So, number one, number one, uh do we have a rising 20-day moving average? Yes. Is the 20-day moving average is the slope increasing? Well, you can see it's curling. It's curling. You could see this the slope is slowly increasing to the point where here you could see that you know this is much greater than 45°. This move is probably you know based off this moving average the move is probably not sustainable right now looking do we have well acceleration. Okay. Well, first we move up, then we kind of base. Then we start to grind higher, grind higher until eventually we start to see some clear acceleration, right? The bars are becoming bigger and bigger and bigger. We kind of had two little breaks with these bars, but right after that we get one huge bar, another huge bar. And with this topping tail, this was being bought before. The highs was up here, right? So, you could see clear acceleration. The bars are becoming increasingly larger. There's clear acceleration, right? We also have extension. I mean, look at this point, we're kind of close to the 20. We're close to the 20. We're close to the 20 until boom, huge rally. At some point, we were all the way up here. Look at the distance between price and the 20-day moving average. Clear extension. And we also at the top right here, right? Huge spike in amateur uh buying volume up here. Huge spike in volume suggesting a reversal. Where would our entry be in this case? Under this candlestick that would be entry and then stop loss up here. Okay, we also get a topping tail by the way which shows that the sellers have taken control. Let's look at another example. Here we have we started from the 20. Huge rally higher, right? Um, this might have even gotten halted because we have a gap here. Um, oh yeah, by the way, guys, for this setup, the target is always the 20-day moving average. So, this would be the that this is target because the the bars are becoming increasingly larger. This is not a perfect setup, but I I kind of want to show you guys, you know, not the best setup just to show you guys that, you know, you don't need a perfect setup like this to play this pattern. Entry [clears throat] is right here. Stop losses over the highs. Um, we have the extension as well. So, nice. Uh, this is a really, really beautiful setup here. So, let's take a look at it. You could see move starts from the declining 20-day moving average. You can see the 20-day moving average is curling, starting to curl lower and lower and lower and lower, right? And we drop, we kind of base here, we drop again, little retracement, we start to drop, base, and all of a sudden, you could see the acceleration right here, really starting where we really accelerated, right? You could see the bars are becoming larger and larger. We don't get the volume spike. So, in this case, we didn't get the volume spike. That doesn't mean that this is not a good pattern just because we don't get the volume spike. Everything else, the acceleration, the extension from the 20-day moving average, it was telling us that it was climactic and it was exhausted. And the reason it's called exhausted, right? The reason I say exhausted is because in this case, the sellers have been exhausted. In this case, the buyers have been exhausted up here. There's no more demand up here causing it the sellers to bring it down. here. There's no more supply causing the buyers to bring it all the way back up to the 20-day moving average is target. Entry is over the highs. Stop loss under the lows. Let's look at another [clears throat] example. We have a So guys, what if you guys are looking at this, you should immediately be able to identify the the setup that this is stemming from. This is a breakout, right? We have a rising 20-day moving average that's curling under price. We base into the moving average. We start to break out. We start to get the acceleration, right? Huge volume spike up here showing amateur buy volume and then professional igniting volume, right? Because we that that's when we started to move lower. We have distance between price or price and the 20-day moving average, right? Uh there's clear acceleration. really nice shorting opportunity. These are uh incorrect. This should say stop-loss. This should say entry. Okay. And that's our target. Same thing here, guys. Clear. We have a base breakdown. Curling 20-day moving average pointing lower. Really nice breakdown here. Huge drop, right? We see clear acceleration. There's clear extension from the 20 in price. We get a bottoming tail suggesting the buyers have taken control. The 20-day moving average is our first target. Huge volume spikes up here showing a reversal. This is a really really nice setup here and we play it long entry here, stop-loss here. Uh let's look at I think you guys have seen this before in our other classes. Several setups here. We have a uh breakdown right under this base breakdown with a 1 2 3 4 pattern. 1 2 3 4 setup. We drop clear acceleration, clear extension, huge volume spike indicating a reversal. First target is a 20-day moving average. And this actually formed a sell setup. Okay, this formed a sell setup and then we ended up going lower. Okay, same thing here. Um, what happened here [clears throat] is um, we have a rising 20-day moving average. We kind of the acceleration wasn't very clear, but it is sort of climactic because the 20-day moving average started, you know, the slope was pretty huge. Rallied. We got a double top making a higher low right here. And boom, nice setup here as well. Same thing here. We dropped into the 200 day moving average in this case on large volume. Okay, reversal setup. Boom. So guys, let's talk about multiple time frames for the setup. Using multiple time frames is key. And why is it key? Well, if you don't have a clear entry on the time frame you're looking at, you should shift to a lower time frame. And e you can even go down to the one or two minute charts for a potential entry. Okay, so let's kind of talk about this. Let's and let's let's go to a an example. Uh let's look at uh let's look at this example. You might be saying to yourself, hey, you know, I understand this setup, but one thing I don't understand is we talked about entry bars, right? how we want entry bars. But on a lot of these setups, like for example, this is not a great entry bar. This is a huge topping tail, right? If our entry is over here and our stop loss is over all the way up here, that's a huge stop size. And you might be thinking, there's no entry bar here. Like there's a topping tail, but this is not a small bar like this. So in those scenarios, let's say we're looking at the 15-minute chart here, right? This is the 15-inute chart. If you see something like this on the 15-minute chart and you're [clears throat] saying to yourself, I I I want to play this, but I need a better entry bar, what you would do is you would drop to the five minute time frame or the one minute time frame or the twominut time frame and see if you can spot a potential entry bar and then, you know, play the setup off the lower time frames wherever you could find an entry bar. However, always place your stop loss over the absolute highs or uh absolute lows of the move. Hopefully that makes sense though, right? So, let's take a look at this example. You could see we don't have an entry bar, right? Our entries here, stop losses here, but in this case, go to a smaller time frame and see if you could spot an entry bar off the lower time frame. Okay? And if you can't, then you're just gonna and you really still like the setup despite it having not having an entry bar, then you're going to have to just have a larger stop-loss than you want to. Um, you could even just sometimes when they move really fast and I can't find an entry bar, I'll I'll just short it right here, right? And I'll just place my stop loss above the highs, right? Like you could even do that. And it's technically not a textbook, but let's say it's over you're over here. You could just and you think it's this is the reversal is coming. Just buy it. Calculate your risk. Make sure you're not risking too much. Buy it wherever and just place your stop loss underneath the lows. And if it hits the lows, it continues lower. Well, you're going to be already out of the position. Okay? So, you could do that as well. Same thing here. We have a large large entry bar. go to the smaller time frames and try to find a better entry bar, a better uh you know entry [snorts] into the trade. Okay, so hopefully that makes sense. And looking at the climactic and exhaust exhaustion pattern, um something to note here, if the daily chart and the intraday charts are both climactic, meaning let's say on the daily chart, you also see that there's clear extension, there's clear acceleration, right? And on the on the uh lower time frames, right? Like for example, on the 15-minute chart or on the hourly chart, you're also seeing that it's uh that there was acceleration, we [snorts] have extension, right? And if both the daily and the intraday time frames are both exhausted and climactic, that makes a much more potent setup, right? Because all of the time frames are climactic. all of them are exhausted and that setup has a much higher likelihood of working out. Okay, hopefully that makes sense. Hopefully you guys understand what what I mean about the multiple time frames. Um I'm trying to think if there's anything else I want to mention with this setup. So yeah, guys, this is a difficult setup, but it's really not that hard if you think about it. There's not that many, you know, requirements we need. We need acceleration. That's pretty easy. Extension, pretty easy as well. Just distance. Um and yeah, and just make sure you're following all of these qualities. Make sure you're looking at several time frames. Um don't make the mistake of just finding um a gradual uptrend and just shorting that. That's not correct. You need that extension. You need that acceleration. You need, you know, hope ideally you also need the volume spike as well. This could work on the smaller time frames for scalps as well for one or two minute time frames if you're scalping or five minute. So this works for scalping, swing trading, whatever it doesn't matter. I will say one thing guys um before I forget and there was this example. Um so I see this mistake a lot. Let's say you have a climactic move that we have that acceleration, we have that extension, right? Usually the first sell setups after that move, right, we drop. Remember a sell setup is when we retrace back to the 20-day moving average, right? And then we short it again. Usually, whenever you have a sell setup after a huge drop like this, they usually never work. Okay. So, let me kind of paint that out on on here real quick. Let's say we have a huge drop, climactic drop, and then we retrace this shorting this position right here, right? Doesn't work. Don't do this. It works right here, but this is an anomaly. It usually never works. Okay? So if we have that climactic drop, right, we have that acceleration, that extension, the volume spike that we talked about, it's a clear climactic pattern, and you buy it, let's say down here, right? Right. Remember, our first target is the 20-day moving average. So, let's change this color. Let's make this white. Let's say, you know, it got to the 20-day moving average. Uh, I know it's kind of sloppy, but that's the 20, right? and you you took profits off this long. You bought it here and you took profits there, don't short it, right? Because this rarely ends up continuing lower. It this usually fails. And let me show you what what that looks like going long. Let's say you have a climactic long, right? Where huge increase some, you know, we have literally picture this. Picture this, right? We have that here okay? And you decide to short it up here, right? You you're shorting it up here and it drops in your favor, right? And remember the target is what? The 20-day the target is the 20-day moving average. So, let's say that's white. And you go and you you know, remember that that's where our target is too, the 20-day moving average. You took profits right there. This is technically a buy setup, right? Because we're retracing to the rising 20-day moving average. This doesn't work. This buy setup after a climactic move does not work. Right? You could see it here. We had a climactic move higher. We dropped. We retraced right technically to the 20-day moving average. The first buy setup after a climactic rally usually doesn't work. You can see tried to move up and it failed. Okay. Um let's see if we could find another. So this is an anomaly it working here. Let me see if I could find another example like here, right? We have a this is technically a sell setup, right? We buy it down here, right? Climactic retrace to the 20-day moving average. This is a sell setup. You could see the sell setup did not work. We ended up continuing higher. Same thing right here. A lot of people are going to go ahead and buy this and be like, "Okay, we have a rally. We have a pullback into the rising 20. This is a buy setup." But remember, buy setups after climactic moves like this where we have that extension, they never work. And this never and this ended up failing. Okay. Same thing here. Technically over right here is a buy setup. These don't work. Don't. So in summary, after a [snorts] climactic rally where after, you know, exhaustion or climactic rally or a climactic or exhausted drop and we get that retracement to the 20-day moving average here or the 20-day moving average here, this sell setup doesn't work and this buy setup never works. So never take buy or sell setups after exhausted uh or climactic patterns. Okay, that's basically the last point I wanted to make. Now, you guys should be able to also play reversal patterns and understand what to look for specifically. Remember, multiple time frames is key. And that's basically all I wanted to talk about, guys. So, thanks. See you in the next class. This next chapter is all about risk management. And risk management is by far the most important skill set that you can have as a trader. So, make sure you're paying attention because it doesn't matter how much money you make. If you don't learn how to protect your capital and how to limit your losses, you'll never become a profitable trader. So, in this chapter, I'm going to teach you how to adopt a riskmanager mindset. So, let's hop right into it. What is going on, guys? Hope you're having a great day. Today we are going to start with the riskmanagement section of the course and this is going to be a very exciting lesson and let's just hop right into it. Okay, so risk management. This is truly a key to your trading success. There isn't a single successful trader out there that doesn't know how to manage their his his or her risk. Okay, I don't care if you're able to find the best trading setups, you're able to find the best breakouts, the best buy setups, right? You're able to read charts perfectly. The fact is, if you can't manage your risk, you're [snorts] never going to succeed. Okay? So, make sure you really pay attention to this. So, why does it matter? Like I just mentioned, it doesn't matter even how much money you make, right? It doesn't matter how many winning trades you have. If you can't manage your risk and limit your losses, you're never going to succeed. Okay? And let me kind of give you guys a story of uh my personal trading journey. I [snorts] remember when I first started trading, um my father, of course, he's a professional trader, so he was the one that was mentoring me in the beginning. And he told me, "Your first goal in trading shouldn't be to make money, right?" And that sounds kind of crazy, like we're we're, you know, that's why we're doing this. We're here to make money. But he said, "No, your first goal should be to break even consistently." Because by breaking even consistently, what does that mean? That means you're not losing money consistently, right? And once you're able to limit your losses and be able to not lose money every single day, you're already 80% there to actually making money. Okay, so the goal here, your your first priority as a trader is how can I manage my risk? How can I limit my losses? The wins and the profits will come, but make sure at first you you you know really take care of your risk. That's what you want to focus on. The last thing that you want to do as a beginner trader is start trading in the markets and because of your inability to [snorts] manage your risk, you end up blowing up your entire account before you're, you know, before you even gain any sort of experience, right? [snorts] So, your win rate does not have to be very high to make money. A lot of people talk about, "Oh, I have such a high win rate. Oh, you know, I win 80% of my trades." That's great. You could have a high win rate and lose money, believe it or not. And you really don't need a high win rate to make money, okay? And we're going to talk about that later. Your first thought when you enter a trade, and this is what your thought process has to be. Your first thought should not be how much money can I make off this trade? How much can I profit? How lucrative can this be? No, that's not the mindset that you want to have. The mindset you want to have is how much can I lose if this trade does not work out, right? if this trade hits my stop-loss, how much am I going to lose? Right? And if you enter every trade with that mindset with how much am I actually going to lose if it doesn't work out, you're going to immediately start limiting your losses. And a lot of risk management, it's not really something you can physically do. It's not about physically finding setups or looking at the quality of certain trading setups. No, it's literally it's more about discipline. It's more it's more about the mindset that you have. And you're going to notice that the road to profit profitability, right? You don't need to make more money to become more profitable. That's one way to become more profitable is to make more money. But you can also be more profitable by limiting your losses. So just like you should be focusing on you know making money on your trades, you should devote equal um you know mind space towards you know figuring out how do I limit my losses on all these trades. Okay. So number one the first step that you have to do first step is determine your risk. sit down on your bed or wherever you want and think about what is the maximum amount of money I am willing to lose per trade. Okay? And what I mean by maximum amount of money you're willing to lose per trade specifically how much money can you lose without being psychologically or emotionally affected. Right? Like for example, for me, I usually risk anywhere between $100 and $300 per trade, maybe a little more sometimes, right? If I lose $100, I'm not worrying about the next trade, right? That doesn't hurt me psychologically. I accepted that I'm okay with losing $100. And when, let's say, that loss occurs when I do lose the hundred, it doesn't affect me, right? It doesn't affect my psychology or my disposition. it doesn't make me uh make emotional decisions. But let's say for example, if I lost $1,000, well, that's going to make me feel uncomfortable, right? That's going to make me feel a little emotional because I'm not really prepared emotionally and psychologically to lose that much money, right? And that sort of loss is going to affect my trading. It's going to affect my psychology. And maybe, you know, you guys have taken a few trades. And if you've noticed after some of your losses, you begin to, you know, think, you know, you're not thinking rationally anymore. Now you're starting to think emotionally. You're starting to think, oh, I have to make back that money that I lost. I can't believe I lost that much. Oh, and you start, you know, making bad decisions. That's not what you want to do. You want to risk the exact amount that you're comfortable with risking where if you lose that amount, it's no big deal, right? If you lo like for me, if I lose 100 bucks, it's fine. I'm not worried about it. Big deal. It's okay. But if you're a beginner, right, and you know, you don't know what risk you should go with, start with 10 or $20. I don't even care if you have thousands of dollars to trade with. You might have a $25,000 account and I'll still recommend you to start with $10 to $20 risk or maybe even less. Start with $5, right? Because in the beginning, right, your goal isn't to make money. It's to develop consistency and perfect your trading plan. And the money will come afterwards. Okay? So, stop worrying about the money. I can tell you right now, if you're just starting to trade and you're taking this seriously, if your goal is to make money right away on the first couple trading days, it's not going to happen. Focus on the consistency and perfecting your plan, right? and practice. Don't worry about the money. And in general, if you're a beginner, you guys should be paper trading anyway. But this class is more about, you know, once you're done paper trading and you're going into trading real money, okay? Because with real money comes real emotions comes real psych real, you know, human psychology, right? And your risk should be the absolute highest amount you're willing to lose per trade. If your risk is $100 per trade, the maximum amount you could lose is $100. Okay? So, let's say you've determined your risk. Let's say for for our sake, it's $20. Okay? That's that's our risk. Actually, no, let's not do $20. Let's do $100. Our risk is $100 because that's what we're using in this example. Your strategy should be this on every single trade that you take, right? If you're risking $100, you have to make sure or you have to pick trades that give you the opportunity to make at least $200 or more, right? So, if our risk unit, our our R is $100, your return to risk has to be two to one. Two Rs to one R, right? Two Rs is is $200. one R is $100. Right? So, number one, step one, figure out your entry price. Right? Whether it's a base breakout, a buy setup, a breakdown, um a climactic pattern or exhaustion play, or a sell setup, or a one, two, three. You guys should know how to find your entries for each one of those setups by now. Find your entry price. Number two, find your stop-loss price, right? You guys should be able to uh be able to know how to do that as well by now. And step three, figure out your target price. And uh we're going to have classes in the course talking about figuring out your target price. And it's usually comes down to checking your next resistance or support levels. Okay. And step four, ask yourself based on my entry and and the size of my stop-loss and the next target, right? Your your target price, is there 2 to one return on risk? Right? Do I have the potential to make at least twice the amount that I am risking? Okay. And if yes, then go ahead and take the trade. And if it's a no, then pass on the trade. Right? If this only h if you're if you find a trade and you're seeing that it only really has the potential to make you $100, well, why would you risk $100 to make $100? That doesn't make sense. We want to risk $100 to make $200 or $300 or $400. And over time, if you keep taking setups that give you at least 2 to one risk-to-reward, you're going to notice that you don't need a high win rate to make money. So, let's say we take 10 trades and only four of these trades are winning trades, right? If you're following this risk management strategy where you're making at least 2 to one return on risk, right? If you're winning, if your winning trades make 2x what you're risking, you're going to make money. Okay? So, we have our first six trades. Let's say all they're all losing trades, right? And we know that our risk is $100. So, we lose the maximum amount that we can per trade, which is $100. So we lose 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 right we're down 600 but then we have four winning trades that make us at least 2:1 return on risk so we make 200 on four what's our profit well it's going to be 800 minus 600 we have a profit of $200 right so even with a 40% win rate as long as you're following this strategy you're going to make money okay And imagine some of these winners, right? Like we talked about 2:1 uh return on risk. What if some of your some of your winners are actually, you know, huge winners, right? Let's say you you make 3 to one. Let's say this is a $300 trade. This is a $300 trade, right? Then that's when you see your profits go up, up, and up. But the point here, guys, is as long as you're making 2x on your winning trades and you then on your losing trades, right? then you're going to make money even if you don't have a high win rate even if you're not winning 60% of your trades. Okay, hopefully that makes sense. So keys to understanding risk management, it's important to understand how to share size. Your share size depends on the size of your stop-loss. You guys should already have some um experience, you know, looking at and understanding share size through our through our strategy videos, right? But to remind you guys, share size equals your risk, right? Your dollar amount risk divided by the size of your stops loss. Okay, so let's give an example. Let's say your risk is $100. Your entry price is $6. Your stop loss price is at $590. Let's say this is a breakout, right? It's a 10-centent stop. Your stop size equals 6 minus 590. That means the size of your stop is 10 cents. Let's say your target price is $640, right? How many shares should you buy to ensure you don't lose more than $100. How many shares should you buy? Well, if you're risking 10 cents, right? You don't want to lose more than 100. Well, that's 100 divided by 10 cents. You're going to be buying a,000 shares. That's how many share shares you can buy. At the end of the day, if you oversize your position and you buy or you short more shares than you want to, if that position becomes a loser, you're going to end up losing way more than you want to. That's why share sizing is so so important to risk manage management. So, make sure before every trade you take, calculate the the the correct amount of shares. Okay? Make sure you calculate the correct amount of shares so you don't end up losing more than you want to. one simple mistake and you know and you know you buying more shares more shares than you wanting to you're going to end up losing way more money than you want to and then that's going to affect your trading psychology. We also have the percentage approach where let's say you have a $1,000 portfolio and you decide to risk 5% of your account per trade, right? So 5% of your account per trade. That's just an example. Usually, maybe it should even be 2 to 3%. But let's say you decide to risk 5% just to make it easier for us. How many shares should you get per position? Well, $1,000 portfolio, you're risking 5% of it. Let's find the dollar amount. $1,000* 5%. 05 equals $50. So $50 is the amount that you're willing to risk, right? That's 5% of $1,000, right? Then your share sizing is going to be your risk $50 divided by the size of our stop. Let's say for this example, the size of our stop is five cents. $50 divided by five cents, you're gonna end up getting a thousand shares. And if you're uh curious where, oh, well, how do we know the size of our stop? Well, you know, that's why, you know, when you're picking your uh trading setups, whether it's a buy setup or or a sell setup or a breakout, you're going to know the exact entry, the exact stop-loss. And then, you know, stop size equals entry uh price minus stop-loss price. Okay? Golden rule. Here's a golden rule. When you are in doubt, lower your risk. If you're in doubt, lower your risk. If you're not feeling comfortable, lower your risk. Okay? It, you know, it never hurts to lower your risk. If something is going on, if you're not feeling yourself, if you're kind of com, you know, compromised psychologically, just lower your risk. Okay? That's a golden rule, okay? If things aren't going well, lower your risk. You guys get the idea. Whenever there's anything that's going bad in trading, the last thing you want to do is, you know, have a huge loss. So, lower your risk. That's what I personally do. Sometimes when I have a few losing trades in a row, what do I do? I lower my I lower my risk. Uh keys to sus to success here. You, as you guys know, the tighter the stop-loss, the better reward to risk. So that's why you want to find trades that have tight patterns, that have tight stop- losses. At the end of the day, guys, risk management is all about discipline. Everything that I taught you today, this is not this isn't anything that difficult. It's nothing that you have to, you know, aside from maybe that formula. Um, but none of this stuff is difficult. This is all just discipline. making sure that you're disciplined with your stops, you're disciplined with your risk, and just keep, you know, just always keep in mind that, you know, you don't want to take on bad losers, okay? So, be disciplined when it comes to your risk. Make sure you're never oversizing your positions. And by limiting your losses through risk management, you will become more profitable. We talked about that. And guys, just understand now that you guys are traders, you're also risk managers. you are managing the risk of your personal account. Okay? And we talked about the psychological aspect of it, but if you're not comfortable with losing x amount per trade, what's the golden rule? Lower your risk. If you're feeling sad or uncomfortable after taking a trade, golden rule, lower your risk. Losses can um emotionally and psychologically affect you. Don't let your need to make money affect the amount you risk. I understand you want to you want to make money. We all want to make money. We all want to profit. But don't let that need to win and that need to be profitable end up being your downfall cuz that might happen. Okay? And you're going to become profitable and more you're going to make more and more money over time. Okay? Understand this might take time. Okay? But that shouldn't discourage you. Anything in life that's, you know, makes money or that's worth anything, you know, it usually takes time for to acquire those skills or to acquire that accomplishment. So, understand that this is all going to take time. It's not a problem. You will become profitable over time as long as you manage your risk and you don't blow your account on some stupid trade because you completely oversized your position. Okay? and understand that your as a trader, you know, as a trader, your psychology and your confidence is everything. Taking bad losses for no reasons will affect you. I can tell you that personally. It will affect your confidence. And without your confidence, without without that psychological comp uh composure, you're not going to be able to take advantage of really good trades. Okay? So please guys, manage your risk. Be disciplined with it. Don't, you know, try to go for huge winners. Always think about how much money can I lose if if this doesn't work out. Okay? And that's really it for risk management. I might include another little motivational risk management clip, but that should make sense, guys. Let me know if you have any questions. Thanks a lot. Hey guys, how's it going? Thanks for tuning into this video. The whole topic of this video is going to be share sizing. How many shares should you be purchasing per trade? And before I go into it, this concept is very important. It is a critical part of managing your risk. If you guys end up buying too many shares on a trade, you're going to end up losing, you know, way more money than you intended to if the trade goes south. Of course, on the flip side, you're probably going to make way more than you intended to if the trade, you know, ends up working out. However, share sizing, it's it's important because you need to minimize your risk and you need to buy or short the amount of shares that you're comfortable with because trading is not really about how much money can you make. Of course, you know, we're all in the game to make money, but a critical question really is how much money are you willing to lose? Okay, managing your risk is probably one of the most, if not the most important, you know, uh, elements of trading. Okay, and share sizing is a, you know, huge factor in that. So, let's get right into it. Step one, and before I actually go into the steps, it's extremely simple. This is something if you guys know basic math, which all of you do, this is extremely simple. All right, step one, you're going to want to ask yourself, what is the maximum amount, you know, dollar amount I am willing to lose on this trade? So, um, if you're comfortable with losing $100 per trade, then that's your answer. It's whatever you're comfortable with. Personally, I do anywhere from 100 to 300. Uh, you know, sometimes I risk a little bit more depending on how I'm feeling or depending where my confidence is at, but that is what I'm comfortable with. that is known as your risk for the trade. Okay? So ask yourself, what am I comfortable with losing? And figure that number out. And the whole idea behind this is that if you lose more than you're comfortable with losing, then that's going to affect you psychologically. It's going to, you know, hurt your psyche in a way. You know, it's going to make you feel uncomfortable. It's going to be like, "Wow, I lost way more than I wanted to." It's going to hurt your confidence. You don't want that to happen. When you have a losing trade, it shouldn't affect you, you know, and the key to that is you have to make sure you're losing the amount that you're willing to lose or that you can with lose that you're comfortable with losing. Step two, calculate the size of your stop-loss for the trade. Some examples is a 10-cent stop or a dollar stop, etc. And in order to correctly identify the stop-loss for the trade, you have to make sure you know exactly what strategy you're playing. Different strategies call for different stop-losses or different stop-loss placement, I should say. So, I would uh definitely look into the buy setup, which is a video that that's posted in the server. The breakout, another video posted in the server. And the one 123 pattern, I don't think I posted that yet. However, um I'm going to do a class on that shortly. Okay? And make sure you know what strategy you're playing because if you know what strategy you're playing, you know exactly where to put your stop-loss. So, that won't be an issue. And step three, you're going to apply the formula. What is the formula I'm talking about? It's really simple. It's share size equals your risk divided by your stop-loss. Okay? So, whenever you are going into a trade, I don't care if it's equities or crypto or forex, and you're buying shares or you're buying cryptos, you're you have to ask yourself, what's my share size going to be? Okay? And it's really simple. Let's say your risk is $200. That's the most you're willing to lose on this trade. And your stop loss happens to be, you calculate it, it's 10. Then you do $200 divided by 10 cents equals 2,000 shares. So there you go. You know exactly how many shares to buy. And if you buy, let's say, those 2,000 shares and the stock does hit your stop-loss, meaning you know it doesn't work and the trade doesn't work in your favor and it drops by 10, the most you're going to lose is $200, which is the number you agreed, you can kind you kind of made an agreement with yourself that that's the most you're willing to lose. Okay, you lost it, but at least you're comfortable with losing that amount. Same thing here. Your risk is $100. Your stop loss is $1. Risk divided by stop-loss $100 divided by $1 is 100 shares. So if you buy it, right, 100 shares, if it drops $1, you're going to lose $100. Or yeah, if you and it drops $1, you're going to lose $100. Okay, it's super simple, guys. Again, share size equals risk divided by stop-loss. And I'm to the point, you know, where this is kind of automatic in my head. If I'm this is I'm automatically doing the math every time I'm looking or uh you know considering a trade. I am just immediately uh doing this calculation in my head to really figure out what my stop loss or [snorts] not what my stop loss what my uh what my share sizing is going to be because again I I personally don't want to lose more money than I'm willing to on that trade. That's why share sizing is extremely important. It's a critical part of risk management. And guys, never buy or short more shares than you than you're comfortable with doing because trust me, if it doesn't work out and the trade goes south, it will psychologically affect you, okay? Well, not only that, it might just drain your account. You might lose way more than you intended to. But anyway, guys, let me know if you have any questions about this concept. It's super simple, but and the formula is super simple, but it's extremely extremely important. Please direct message me in manual trades or type in the premium chat tagging my name if you have any questions regarding share sizing. Thanks guys and have a good day videos. So, when my father began mentoring me 5 years ago on how to trade, this was quite literally the first thing that he taught me. He told me that this should be the backbone behind my trading. And that's exactly what it is today. And this is the reason I'm a successful trader today. And this is more than just a rule. This is a mindset. And a lot of you guys watching this video may listen to this video and kind of blow past it. Kind of, oh, whatever. Yeah, I know that. But you need to take this to heart. You need to instill this way of thinking into your trading and into your analysis. And I guarantee you, it's going to end up making you more money. And this rule is incredibly simple. When in doubt, lower your risk. Right? It's not sexy. It's not this crazy new indicator. But whenever you are feeling uncertainty, stress, high emotions, lack of confidence, whenever you're feeling anything that is negative in your trading, you need to lower your risk. When in doubt, just lower your risk. Because 80% of your trading success isn't going to come from price action or knowing the right indicators or knowing how to read patterns. It's going to come from your ability to handle your emotions, handle your psychology, and of course, manage your risk. And your emotions and your psychology are very directly correlated with your risk. So, if you are feeling emotional, if you're feeling anything that is remotely negative and you're starting to feel doubt, you need to lower your risk. And this has saved me so much money in my career. Having this riskmanagement type of mindset where I go into trading, I go into every setup that I take. In my mind, I'm not thinking, oh, how much am I going to make off this setup? Oh, I might make 1 to 2,000 and perfect. That's going to put me up 10K in the week. Amazing. No. When I go into a setup, I'm thinking, what is my downside here? Like, if this thing goes against me and hits my stop, how much am I going to lose? How volatile is this stock? Is there a high probability this stock is going to actually blow past my stop and I'm going to lose more money? I always think of the downside first. I always try to protect my capital. And that's what you need to understand as a trader. Your priority isn't to make money as a trader. Your first priority is to preserve the capital in your account. Capital preservation. Your second priority is to make money on that capital to make money on the, you know, capital you have in your account. That's your second priority. First is capital preservation. And most traders, unfortunately, don't have this mindset. Most traders don't really care about their bottom line or their downside. They just care about making money. They just care about quitting their job, living this life of freedom. And yeah, those are some of the best perks when it comes to trading. But you'll never realize them unless you adopt this riskmanagement mindset. And there's a very common cycle that most traders go through here. And I kind of drew up a little rough representation here, but a lot of times a trader will make a mistake. Maybe it's an honest mistake. Maybe you underrisisked on a trade or you overrisisked on a trade or you messed up your management or you took the wrong trade. Maybe you fomoed in whatever you make a mistake. What does that lead to? A lot of the times an emotional crash out, right? And guys, we are not robots, right? Like I hate this advice that you constantly hear on the internet that's like, "Oh, if you're a trader, you have to trade like a robot. You have to trade like an algorithm." Bro, we are human beings. We feel emotions. Unless you're like a psychopath, you feel emotions. And especially in trading, those emotions are strong. They're almost violent. Where a lot of the times we sometimes feel like completely different people when we trade. Like we go into the trading day feeling composed, feeling good, you know, ready to follow our plan. And then and then as soon as the market opens and you begin trading, right, things happen, prices move, you lose money, you make money, and that changes your psychology, changes your emotions, and next thing you know, right, if you make a bad mistake or two, you're having a full-on crash out, you're getting emotional, you're starting to sweat, you have that psychological pressure, right? And this happens to a lot of traders. Maybe it doesn't happen to you every day, but maybe let's say once or twice a month, you have this sort of emotional crash out. Now, my biggest suggestion, honestly, is to just step away from your desk. But that's hard for a lot of people, right? Let's be real. It's going to be difficult for a lot of you guys to step away from your desk, but the least you can do is decrease your risk. But unfortunately, what most people end up doing is they have this crash out, right? and they're like, "Oh my god, I have to make back the money that I just lost. Oh, I was up a thousand. Now I'm only up 200. I have to make that back." Right? What do they do? They increase their risk. And as soon as they increase their risk, they have this mindset of, "I need to make money." Right? It's ultimately greed. That's what's causing this. You're increasing your risk because of greed. And greed is what's stopping you from making money in the first place. Isn't that ironic? Greed is our desire to make money. Your desire to make money is what's stopping you from making money. So you increase your risk and what happens? You take another trade and you end up losing money, right? Because you overrisisked or maybe from there you took a lowquality C++ setup, maybe a D setup and you end up losing more money because you increased your risk and that usually leads to another emotional crash out or you making even more mistakes. And this is how the cycle begins. And the thing is, [snorts] you only have to go through one of these cycles to ruin months of progress. You could be perfectly trading according to your plan for two months, managing your emotions, and you have one day where this happens where you have this crash out. You know, everything's going wrong, and all of a sudden, you increase your risk. Now, you lose, you're losing money, and you're giving back months of profits, months of progress. And some traders even just blow their entire account. And this is just the unfortunate reality of most traders. This is what happens. And you need to avoid this at all costs. And ideally, you just decrease your risk when this happens. Right? So the real cycle should actually be you make a mistake, you have that emotional crash out. That's fine. Sometimes I get frustrated too. It's a part of trading. From there, you lower your risk or you just step away in the first place. Let's say you don't step away. Lower your risk. And from there, you can rebuild your confidence, right? You take trades with smaller risk, right? Then let's say those end up being winners. Yeah, it's still on small risk, but you're rebuilding your confidence. And once you're back to like, okay, I'm feeling myself. I'm feeling good, right? I'm not emotionally unstable anymore. or I'm norm, you know, I'm feeling great. Maybe one to two days later after you've rebuilt the confidence, you're able to re-raise your risk to where it was originally. And from there, even even if a mistake happens, right? Maybe even if you get emotional, you have like a protocol ready where you're ensuring that you're not going to lose a lot of money in your account, you're protecting yourself, right? you have a protection protocol where you decrease your risk when you find yourself um feeling doubt or uncertainty or stress, high emotions or lack of confidence, any one of those things. So, before I go over some key situations that I guarantee you have faced as a trader and show you how to actually apply this rule in practice in the moment, I want to talk about the riskmanagement formula. And it blows my mind that people don't know how to calculate this. They don't know how to size their positions. And I'm going to show you by how much you should decrease your risk by if you are feeling doubt or uncertainty. So right off the bat before we enter any single trade, our risk is predetermined. We don't go into a trade not knowing how much we're going to lose if the trade hits our stop- loss. We go into the trade knowing that if it hits our stop at this specific price, I'm losing X amount. That risk is predetermined. As a result, you need to size your positions correctly. So, if the trade does hit your stop, you're only losing your predetermined risk. And your sizing is like your share size or your lot size, right? And the formula for this is really, really simple. It's risk, your dollar risk divided by entry price minus stop-loss price, right? So, let's say you on average risk $500 per trade. And let's say the entry price for that trade is $3, right? Let's say you take like a breakout opportunity. Entry is at $3. Stop loss is below the base is at 290. Great. So, if it hits your entry at three bucks, you get into the trade. And if the trade goes back down and hits your stop loss at 290, you exit and you get stopped out. Now, you need to buy an appropriate amount of shares to make sure that if it does hit your stop, you're only losing $500. And this is the reason why we use this formula. So, you take the uh entry price, you put it here. Stop loss price, you put it in here. And then, you know, $500, which is your risk, is divided by that. So $3 minus 290 is 10. 500 divided by 10 cents is 5,000 shares. So if you get 5k shares at three bucks and then it stops you out at 290, you're going to lose $500. It's very important that you do this calculation before any trade that you take. I have to include it in this video because it's crucial. It's you have to do it. It's not optional, right? And let's say you're starting to feel uncertainty. What you can do is you lower this risk amount from let's say from 500 and let's actually type it. Let's say from 500 you're feeling uncertain. You're not feeling good about your trading. You're like, you know what? I want to decrease my risk. I'm going to decrease it by half. So now it's $250. Great. These numbers don't change, but your risk changes. And as a result, your share size changes as well. So now you're getting less size for your positions, right? your share size is decreased because your risk has decreased. And I recommend doing it maybe by half or by 60%. It depends honestly how you're feeling. This is more discretionary. It's up to you how much you want to decrease your risk by. Uh but I recommend half. If you're if you're feeling really really down on yourself and you're just not trading the way that you know how to trade and you're just feeling off, lower your risk by half. Okay. Now, let's talk about some key situations that where this could be truly truly applied. So, let's kind of go over it here. So, there's a bunch of situations. Uh we'll start off going through kind of uh the first one here. So, let's say you're up $1,000 on the day. You're feeling good. You see another quality setup. You want to make another 500 to a,000 on the day, right? So, let's say it's lunchtime. You're up a,000 bucks, feeling great. You traded well. you see another really nice setup and you're like, "Hey, I think I can make 1,500 to 2,000 bucks today. I'm feeling good. Let's make some money." Right? You're feeling pumped up. Then all of a sudden, you completely mess up that setup and instead you end up losing $200 and now you're at $800 for the day, right? Let's say $200 is your predetermined risk. So you lost your predetermined risk, everything's fine, but now you're like, "Ah, I was up a,000. Now I'm up or yeah, now I'm up only 800." You know, maybe that $1,000 is like a psychological level that you want to see your profits above a,000. You're like, "No, I need to get back up above a th00and." And what you do is you raise your risk, you end up overtrading, and then you finish the day in the negative. So, what went from a nice solid $1,000 day, you take a trade, you lose your risk, you're only up 800 now, and you're like, "No, I need to be up more than a thousand." you overtrade, you lose your confidence, you increase your risk, and as a result, you give back everything. I guarantee this has happened to you and you need to avoid this, right? And general rule of thumb is uh always protect 70 to 80% of your profits in a trade, right? So, if you're up a thousand, you need to at least finish the day up 7 to 800. Okay? General rule of thumb, this is a great situation. So, maybe when you're up a thousand and you're like, "Okay, I'm good here. I'm feeling good. I want to make sure I finish above a th00and, lower your risk for the rest of the day. If you're feeling like you're you're good, you're good with your profits right now. If you do see a really high quality trade that's like A+, sure, use your regular risk. I'm not saying don't do that, but I'm saying lowering your risk could be a good solution for you uh to make sure you're not giving back too much. Next, let's say you take three really nice, highquality setups and lose. You take three good setups that fit your plan, but they they lose you money. Now you're starting to feel emotional and frustrated. You increase your risk and next thing you know you're down five, six, seven Rs, right? You don't want to do that, right? You don't want to do that. If you take three high quality trades in a row, you know, you're following your plan, you're taking the right setups and they lose, that's fine. That's going to happen sometimes. The worst thing you could do from here is raise your risk to try to make back what you lost, right? If you are feeling a little bit uncertain and frustrated after three losses, lower your risk, rebuild confidence, and then raise your risk back up. Or if you have a three-day losing streak, you're down three days in a row. Maybe it's your fault, maybe it isn't. Maybe it's a tough environment. Maybe there's other external factors in your life that's stopping you from trading to the best of your ability. It could be for any reason. If you have a three-day losing streak, I don't care what the reason is. Lower your risk. Hands down. lower your risk by 50 to 70%. Or it's a heavy news day and there's, you know, crazy things going on in the market. Markets are really volatile, volatile. The market might be changing, right? The environment might be changing. This happens a lot to a lot of new traders where they make a bit of money three, four, five months and then the market kind of switches and they fail to adapt, right? like or maybe goes from a bullish market to a bearish market or a bearish market to a sideways market. And traders fail to adapt and the same strategies that they were making on money on before, they're not making money on those strategies anymore. And next thing you know, they're they're feeling frustrated. They're feel like nothing is working. They increase their risk. They try to make their money back and they blow their entire account. Right? If you're noticing that's a weird day in the market, heavy news day, the market is adapting, decrease your risk. find comfort in that market. Start to develop confidence in that market. And once you're feeling good, increase your risk back to the normal amount. Or guys, honestly, maybe you're trading in a new location. Like I was traveling in Europe this past month. It was a, you know, I was in the hotel rooms with a different monitor than I'm used to. Uh the Wi-Fi was a little bit weird. Uh different location, different setting. I'm trading now in the afternoons versus the morning. That kind of affects you as a trader. I'm a I'm a creature of habit. I like consistency. I like having a structured day. And when I was trading a little bit in Europe, I traded a couple days per week, honestly, just for my students. Um, it was weird. So, what did I do? I decreased my risk until I felt comfortable enough to increase it back to the normal amount considering my environment changed. Okay, hopefully this makes sense, guys. And the reason this is so important guys genuinely most people think that you need new strategies, you need a new methodology, you need new indicators, you need much higher reward to risk to make more money. That couldn't be farther from the truth. The easiest way easy obvious nothing is easy in trading. I'm saying the simplest way to make more money is to simply limit the amount that you lose. And the and the way that I came up with this number right here, 378,000, is this right? I have there's 252 trading days per year I believe some somewhere around there. I've been trading for five years. Call it give or take 1,200 trading days. It's a nice round number. If I'm able to have this mindset of and this rule of lowering my risk when I'm in doubt or just having that riskmanagement mindset like just living my life being fiscally conservative and being conservative with my trading just having this overall mindset of worrying about my downside over my upside. If that can save me an extra $300 per day, I'm going to make an extra $378,000 over five years. That's an extra 75K a year, guys, by doing nothing by but adopting this mindset. That's the only thing I changed risk management mindset and having this rule. If this rule saves me $2 to $300 per day for the rest of my career, which I risk around 500 bucks to trade around there between three to 700, I have more of like a range. Um, if this is able to save me two to three hundred bucks a day, and that might be even conservative, right? It might even save me way more money. I'm I'm I'm making an extra 75K per year just because of that. Not by learning new strategies or trying out different things, new indicators. No, just by having this mindset, I'm making more money, right? By the end of the week and the month, if if you're just able to limit your losses on your losing trades, you're going to make more money, right? And no one talks about this. Everyone talks about exciting new stuff in your trading, new whatever strategies and indicators like I mentioned, but no one talks about this. And this is how I've saved so much money in my career by just applying this rule and not getting so emotional and not increasing my risk and then losing all my money. Right? When in doubt, lower your risk. I don't care, you know, if you're not feeling good, frustrated, stressed, whatever. It could be because of reasons outside of your trading. Maybe you're you got into a fight with your spouse or maybe um someone upset you in your personal life. You're going into trading not feeling the best. Lower your risk, okay? Just trust me. Just do it and rebuild that confidence and then re-ra your risk. Okay? And yeah, make sure this is not your cycle. Okay? So, this is a nice little summary. Yeah, hopefully you understood the share sizing formula and and yeah, guys, use these situations. Okay? When in doubt, lower your risk. Have that risk ma management mindset. This is what's made me a profitable trader. I I haven't had a losing month in over five years. And that sounds crazy, but I've I'm happy to post my statements. I've done it many, many times on my channel and on my TikTok. Happy to be as transparent as possible. The reason I'm so consistent is because I have this mindset. All right, guys. That's it for the video. I hope you enjoyed. And if you need to help build uh your trading foundation, you need more help with risk management or your strategies or the way that I trade, I have a free 10 plus hour course that is genuinely better than most paid courses on the internet. Seriously, any course you've ever taken, my free course will trump it. It It's just significantly better. I know it is. So, uh make sure you start watching it. It's in the description of this video and it'll help build the foundation for your trading and it'll teach you a lot more stuff. um it'll expand about everything that I talked about today. So, start the free course. Um let me know what you think of it. Watch my other YouTube videos in conjunction with that education and yeah, leave a comment, leave a like, subscribe to the channel if you found this valuable. I will see you guys in the next video. Thank you so much for watching and hopefully you'll take this to heart and hopefully within weeks you can actually apply this and as a result make more money. I'll see you guys in the next video. Thank you. In this next chapter, I'm going to teach you how to combine everything you've learned in this free course so far with scanning and with trading gaps. And it's going to sound a little bit confusing in the beginning. Maybe you don't know what a gap is. However, you're about to learn it. This chapter is especially powerful because we're finally getting into the more practical side of how I scan and how I find highquality setups. So, make sure you're paying attention and let's hop right into this chapter. Change of scenery here. The hotel kicked me off the terrace because they knew about the value I was about to drop. But in this video, I'm going to explain what the gap trading model is, how it works, why it works, how to apply it within your own trading starting tomorrow. How to scan for these massive moves that I'm about to show you, and how to take advantage and trade those moves using predefined simple setups that even a beginner could take advantage of. And if you haven't realized it yet, I like to keep my trading as simple as possible. And this model is incredibly simple. It's not complicated. It's not complex. It's very easy to understand as you're about to witness. But the real sauce is applying it correctly. There are details. There are nuances that are important to understand to find high probability trades on high momentum stocks. Right? I as a trader pass on like 98% of the opportunities in the markets. I only focus on high probability, high quality. And you have to differentiate yourself from all the other traders who take lowquality setups. There's a lot of traders who trade gaps who are kind of familiar with this model, but not a lot of them succeed because they focus on lowquality gaps in lowquality setups. But that kind of begs the question, what is a gap in the first place? So, if you search up on Google, what is a gap in trading, you're going to get this definition. So, feel free to pause the video and actually read this definition, but I'm going to simplify it even further. A gap is an overnight change in price. The stock market closes at 400 p.m. Eastern on weekdays and it opens the next morning at 9:30 a.m. Eastern. So all of the price activity that happens overnight, whether it's buying or selling, that price activity is reflected the next morning as a gap. So let's say a stock closes at $5 at 400 p.m. Eastern on Tuesday. And then the next day on Wednesday, when the market opens at 9:30 a.m. Eastern, the stock opens at $8. That $3 difference in price is called a gap. So, it's just an overnight change in price because there's trading activity that occurs either in the post market or the pre-market. And these gaps occur because of news, because of earnings within the company, like positive earnings or negative earnings or events in the company, or maybe there was a new law that was passed where that affects the company. And as a result, investors either panic or they get really excited during the after hours trading and that causes the stock to gap and change in price overnight. However, it's very important to understand that we don't care about the news. I'm not sitting there every morning and reading earnings reports or reading the news about why that stock gapped or why, you know, the investors panicked. I don't care about any of that. All I care about is the price action. What effect does that gap have on the charts? So, let's go ahead and look at some examples. So, you could literally visualize what a gap is and you could literally see the gap in price on the chart. It's not really important where the price was for this example or what day this was. I'm just trying to prove a point here where we closed right here on the previous day and then the next morning we opened up here and you could literally see the gap in price on the chart. And that's exactly what a gap is. It's an overnight change in price. This was on J&J just a couple of weeks ago where we closed right here and then the next morning we gapped down and we opened right here. Right? You could literally see the gap in the chart. So, we have gap ups and we also have gap downs. And these were pretty significant gaps. But take a look at this one. This one was actually a pretty small overnight change in price. And always remember, the amount that it gaps isn't really relevant. What we care about is where it's gapping to on the charts. And we're about to talk about that in just a second. But right here, we closed at this price the previous day. And then the next morning, we gapped up right here. And like I said, you could literally see the gap on the charts. And you know, it's really simple. A gap is just an overnight change in price. So before I teach you how to identify highquality gaps and how to trade them step by step, it's very important that I debunk a very common misconception and myth that I always see that all gaps fill. And this is complete nonsense. A lot of traders will tell you this, but it is not true. And what a gap fill is essentially when the price of the stock returns to the price it was the previous day. So let's say a stock on Tuesday closes at $5 at 400 p.m. Eastern and then the next morning on Wednesday it opens at $8. A gap fill would be where the stock opens on Wednesday at $8 and then drops back to $5 and just goes back to the original price it was the previous day. So for example like on J&J we closed right here and then the next morning we open here. This is the gap. A gap fill would be where when it opens on this day it just goes back to the original price. Right? Or for example right let's take it on CHEG right here. We closed here and then we opened here the next day and instead of moving up, a gap fill would suggest that it would drop back down to this original price essentially where it was the previous day. And that's what a lot of traders will tell you. They'll tell you that all gaps fill and you shouldn't really focus on gaps because they all fill. But that is nonsense. And the reason I know that is because I trade gaps for a living. I do this every single day. I've done it every day for the last five years and 90% of the time I am looking to trade in the direction of the gap. I trade the continuation of the gap. So if it gaps up, I'm looking to go long. If it gaps down, I'm looking to go short. Now, there are exceptions to this where I'll go for the reversal where if it gaps up, I'll be looking for a short or if it gaps down, I'm looking for a long. But those are pretty rare and yeah, it's like 5 to 10% of the time. 90% of the time, the majority, I am trading in the direction of the gap. And you might be wondering, why do I trade gaps in the first place? And it's very simple. Gapping stocks move way more than non-geapping stocks. And they just have way more momentum. And as a day trader, I want to trade stocks that have a high probability of moving 10, 20, 30, 40% in a single day. And the gap is like a catalyst for that stock. I like to trade stocks that have a catalyst because the catalyst causes it to just move way more than non-Gapping stocks or stocks that don't have a catalyst. Right? So, it's very simple. Gapping stocks just have a higher probability of moving and having momentum in one direction and they also provide me a clear bias and direction in which I should trade in. Right? Where if it gaps up, I'm looking to go long. If it gaps down, I'm looking to go short. It gives me what the trend is. it gives me that bias in which I should be trading in. So, let's get into how to trade gaps for a living step by step. And step number one is finding gaps in the pre-market. So, every single morning at 8:30 a.m. Eastern around 1 hour before the stock market opens, I begin my morning preparation where I go to my trading office and I begin scanning for gaps. And what you're essentially scanning for is percent change or percent difference between yesterday's closing price and today's opening price. And there are a bunch of different tools, scanners, websites that could actually help you accomplish this. And they're 100% free. And I'm also going to show you the specific site that I use every single day to scan for gaps. Now, the first website that you could use is finiz.com. And this is actually a really popular site for traders and investors. And I have used it in the past to scan for specific stocks. Now, I don't use Finn Viz for my current scanning right now. I just want to give you different options and different tools that you could play around with to see what you personally prefer. But don't worry, I'm going to show you exactly how I do my pre-market scanning to find gaps every single day in just a second. But once you're on finnvvis.com, and by the way, this is also a free site. So I want to show you free websites that you could use. So you don't have to pay for anything or you don't need to sign up for a specific brokerage that may or may not be available in your area. So once you're on fidden.com, just click on screener right here and it's going to bring you to this page. From there, navigate to technical. And if you click on right here, gap, if you kind of hover over it, it'll tell you the difference between yesterday's closing price and today's opening price. Now, it might not show today because it's Saturday. However, if you click on that, you could scan for all gap ups or you could scan for all gap downs. Now, they also give you functionality of like specific percentages, but I don't see how that would be useful. I would just scan for all gap ups and all gap downs. The next site that is super useful is market chameleon.com. And once you are on the site, you just hover over to stocks. And then you go to features pre-market trading. Just click on that. And this website actually gives you a big list of overnight gap ups or overnight gap downs where it gives you this list of gainers, percentage change, and it'll list them in descending order uh based on the biggest gap ups all the way to the smallest gap ups. And then for the decliners, same exact thing. It gives you the biggest gap downs all the way to the smallest gap down. So you can literally just copy and paste these tickers onto your watch list every single morning. And there's other really cool functionality with this site. It'll give you the most active tickers traded that day. And sometimes I do kind of scroll through Market Chameleon during the intraday. For example, if I want to see like the top gainers on high volume and I'll just kind of see what stocks are popping off that day. You could also use tradingview.com where you head over to products, you go to screeners, and then you go to stocks. Now, I haven't actually used trading view, so you guys could experiment and let me know if it works or not. But if you go to extended hours, it'll actually tell you pre-market change percentage or pre-market gap percentage. And then you're able to sort by ascending order or sort by descending order. and it'll give you a bunch of stocks that have overnight changes in price, whether it's a gap up or a gap down. Now, in terms of what I personally do every single day, I do most of my scanning on my actual Think or Swim platform, just because it makes it easier for me. So, whenever you're on your watch list on Think or Swim, if you rightclick this thing right here, go to customize, you could actually look for percent change or percent change since or percent in the money or this wouldn't make sense, but percent change. I like to use mark percent change. I found that to be super useful, but you can kind of experiment. Uh, sometimes I use other ones, but this is what I would do. You can kind of go to this column and type in percent change and it'll give you a bunch of different options. And this is exactly how I scan for gaps every single morning. It's usually a combination between think or swim and using percent change or mark percent change. And then I also use market chameleon in case I like missed out on some gaps or maybe my scanner on Think or Swim didn't include some. That's exactly what I do. Step number two. Now that you have your gap list, you have that list of stocks that are either gapping up or gapping down. Now it's time to assess the quality of every single gap and pick the specific stocks that you want to focus on for the stock market open and throughout the trading day because you may have 20, 30, 40 stocks on your gap list. Sometimes less, sometimes more. It really depends on the time of year. For example, during earning season when companies are reporting quarterly earnings, they usually report either in the pre-market or in the postmarket. So, we have tons of gaps during earnings season. And that's why earning season tends to be a really busy time of year. And you don't want to overwhelm yourself looking at like 20 different gaps. You want to pick, you know, the specific gaps that you want to focus on for the market open. And there are specific criteria and qualities that separate highquality gaps from lowquality gaps. And I'm about to teach you how to do that. But first, you need to check the price in which the stock is gapping to. So for this, you know, depending on what brokerage you use or what scanner you use or what platform you use, it's going to tell you where it's gapping to, like what's the pre-market price of that stock, and that's what you're going to look at. And from there you're going to go to the daily time frame on whatever platform you are using and you're going to look on the charts where is the stock gapping to. So for example on Apple we closed on Friday at like 200 bucks. If Apple opens at 190 versus let's say 173 that is a massive difference and that could have massive implications on the quality of the gap. So, it's important to identify the location in which the stock is gapping to because it could have a dramatic impact on the quality of the gap. So, it's very important that in the pre-market, you're looking at the daily chart, you're looking at the pre-market price, and you're checking where the stock is gapping to. Now, it's time to learn about how to assess the quality of every single gap that you look at so you could pick which stocks you want to focus on for when the stock market opens and throughout the trading day. And this is by far the most important component of your gap scan and your pre-market analysis. You need to identify the highquality gaps versus the lowquality gaps. And this is really what's going to differentiate you from all of the other gap traders out there. This skill set is beyond important when it comes to pre-market scanning and then even intraday scanning as well. So let's keep it simple, right? So, even if you're a beginner trader, you're going to be able to understand everything that I'm about to talk about. We are looking for gaps that number one are clearing directly above a resistance area if it is a gap up. Remember, I like to trade 90% of the time in the direction of the gap. So, if it's gapping up, my bias is to go long during the intraday time frames. In for that case, we want it to be gapping above a resistance area. We don't want it to be gapping into resistance. We want it to be clearing and gapping above that resistance. And I'm going to break down exactly what that means in just a second. I just want to kind of go over all of the points real quick and then we're going to go into the specifics. And the opposite applies if it's a short. If it's gapping down, my bias is to go short. I want it to be gapping below support. All right? I want it to be clearing a key support area. So, that's the first thing we're looking for. Number two, we look for gaps that are either ending a long-term or short-term trend or that are surprising buyers or sellers or shocking buyers or sellers or even trapping buyers or sellers. And this is so powerful. I'm going to show you how this works. These are the most powerful gaps that you could possibly find. Gaps that end trends and that shock buyers or sellers. We also like gaps that trigger high time frame setups off the daily time frame or off the weekly time frame. And we also like gaps that have room to move. So let's say we're clearing a major resistance area. We want to make sure the stock has room to actually move up before it hits the next resistance area. So these are all the points we're going to look for. And now let's get into the details. So off the bat, let's start off with support and resistance requirements. So let's break this down. We have a very established downtrend and then we begin consolidating at the lows and we close right here the previous day. The next morning we gap down and notice how we are gapping down beneath this consolidation. We're gapping beneath this area of support and that's exactly what you're looking for. You don't want it to gap into the consolidation. You want it to gap underneath support, underneath the consolidation. So, it's actually clearing every single low, right? You want it to be opening below every single low right here. And that would effectively mean it's gapping below support. Same thing applies if it's above resistance, established uptrend, and then we begin to consolidate at the highs. We close here the previous day and the next morning we gap up. Notice how we're not gapping into the highs. We're gapping over the highs. We are clearing these highs, right? So, we're gapping above that resistance area. And that's exactly what you want to look for. Now, another really key point is that notice how I said directly above resistance. I didn't say a massive amount above resistance. I said directly above. Right? So, we don't want massive massive gaps above resistance or below support. A lot of people think that the bigger the gap, the better the gap, and that's not necessarily true, right? So, let's say instead of us opening here, we opened all the way down here, way below support. We don't want that, right? We want it to be gapping directly below support, not like crazy far away from support. Does that make sense? Next, instead of it opening directly above resistance like it is here, imagine it opened all the way up here, which you know is has a massive distance between yesterday's closing price. It's way above this resistance area. We don't want that. We oftent times actually call these mega gaps when the gap is so big that it almost loses its power. It loses its effect because it's just completely gapping off of the charts. And a lot of the investors, right, like imagine you were in it short right here and all of a sudden it gaps all the way up here, right? You might like panic sell, but you might also just be like, "Okay, well, I'm just going to wait until it comes in. I'm already down so much money. I'm just going to wait until it comes back down." So, we want it to be directly above resistance. directly below support, not like a massive amount away from support or resistance, right? And that's really demonstrated here as well, right? So, we don't want it to be gapping into support. We want it under support. So, this is an example of it uh gapping into support or gapping into resistance. We don't want it to be opening into the previous low or into the previous high. We want it to be clearing the previous low or clearing the previous high. Does that make sense? All right. Now, let's go ahead and move on. We also look for gaps that end trends because they could be unbelievably powerful because they ultimately trap and shock the buyers or sellers. So, here's a really good example of that where you have a really established downtrend, right? You close right here the previous day and then all of a sudden the next morning you open right here, right? Like think about how shocking that could be. Let's say you're in it short either from here or from here or from here. You know, you're you're going to sleep at night feeling good. Your position is up. It's looking lower. Everything's great, making money, and all of a sudden the next morning it gaps all the way up to basically right here where it essentially just ends the downtrend. Like, think about how you might feel waking up to your position now down hundreds and hundreds of dollars or thousands of dollars or hundreds of thousands of dollars. Think about if you're an institution who went short right here, for example, and all of a sudden the stock is opening up here, right? That's going to put pressure on you and everyone who went short to ultimately cover their position. And when they cover their position, they're buying their shares back. That's what gives prices the momentum to move higher, right? Or a gap that ends an uptrend, right? Let's say you went long right here and the price closed here the previous day. You're feeling good. You're making money and all of a sudden it opens down here. Next morning prices are down here. Aren't you going to panic? You're going to be like, "Oh my god, I'm down. I'm losing a lot of money." uh you know, and let's say it begins to drop. Let's say it starts to drop a little bit and then you're like, "Oh my god, it opened. My position is more and more in the red. I'm losing more and more money, right? That's going to put more and more pressure on you to just cut your losses and sell." And that's what gives prices the momentum to continue lower. And this is why gaps that end trends or that shock buyers or sellers are powerful because it puts those buyers and sellers in a position that they don't want to be in. it puts them in a position where they have to cut their losses or otherwise they're going to lose way more money already. And we also like to look for gaps that are uh below green bars if we're going short, right? Or above red bars if we're going long. So if it's opening below a green bar, it is trapping all of the buyers from the previous day. And if it's opening above a red bar, it's trapping all of the uh sellers from the previous day, right? So, a gap below a green bar is powerful. A gap above a red bar is powerful. And I know we kind of just went over theory, but let's look at some reall life examples here. So, let's take the PLC. This is a gap from a couple of weeks ago where on the previous day we closed right here, and then the next morning we opened right here. So, let's see if it fits the criteria, right? We want a gap that opens below support. This is a support area. This is a support area. Yep. We're opening below this support area. We're also essentially ending this uptrend, right? We have this kind of mini little trend here. We're ending that trend and we're also gapping below all of these green bars. Like think about it. Everyone who bought it this day or this day or this day, they're waking up to now price is moving against them. That's going to put pressure on them to cut their losses and sell. And that's exactly what happened. And we saw really nice follow-through on this day. And we actually, you know, dropped right into this prior support area. So this support area was kind of like target, right? We gapped right here. Next support area, we looked to the left. Next support area was was target. And that's exactly where it dropped to. Really beautiful gap. And in fact, it continued lower. And this is the daily chart. So it continued lower the rest of the week. So you could see how powerful this could be even for like swing trading, right? Where you could find really powerful daily gaps that are ending trends that are clearing support that have room to fall. And you can even look for ways to swing trade it. Take a look at this gap right here. So, we have this kind of like multi-week consolidation. We have a very clear support area right here. We gap directly below it. We gap directly below a green bar. And we also kind of have a setup on the chart. We're kind of consolidating here, consolidating. So, we have a setup on the higher time frames. We have a breakdown. And we trigger that breakdown through a gap down. We open here, which like I said, below support. And if you look to the left here, we do have kind of a bunch of resistance. We have this resistance area right here. And we also have this pivot right here. But this stock just didn't care. It had so much momentum to the downside. I don't know what the news was, but it had so much momentum. This was such a massive catalyst for the stock that it just ripped through all of that support. And it was just a picture perfect gap. And I remember um watch I remember kind of writing this stock off in the pre-market because I didn't think it was liquid enough to trade. And then funny enough, it was and it just produced such a massive move. All right, now let's look at the NASDAQ. Let's look at the Q's real quick. And there was just an unbelievably powerful gap on it right when the tariffs really came out where we topped here, we moved down, then we kind of bounced around and I think a lot of people were saying that we bottomed on the NASDAQ right here. This is the QQQ. This is the tracking ETF for the NASDAQ. A lot of people were telling me um I was reading on Twitter, a lot of people thought that we bottomed and a lot of people were going aggressive with longs thinking that the market bottomed. We had three green bars in a row and I think we ended up gapping down the next day from here to right here. And look at the effect that this had on the chart. And by the way, we're gapping below three green bars. And notice how it's a downtrend. Or we have a high, we have a low, we have a lower high, then we have a lower low and a lower high. And then we gap down right here. And it just shocked all of the buyers who bought it the previous day. And you could see that I mean, look at the move that it triggered here. And we literally just basically capitulated right after that. Unbelievably powerful gap, right? It trapped all of the buyers who bought it the last 3 days on this gap and then it just completely tanked. Beautiful. And you could even say that this was kind of a higher time frame setup that this was like a sell setup. This was a retracement into the declining 20 MA on the daily time frame. going over what those setups are and how to apply them with this GAP strategy. However, I highly recommend watching my free 10 plus hour trading course. It is genuinely better than most paid courses on the internet and you can combine everything that you learn in my free course with a lot of my YouTube videos to really build the foundation for your trading. So, I highly recommend going to my free course and learning about the sell setup that I just talked about or the buy setup that I am about to talk about. And of course, the breakout, the breakdown, the one, two, three, and all of the other setups that I trade. So, let's take a look at this APLD. We bottomed here. We went on a nice little uptrend. We have a rising 20 period moving average below price. We have a high here and then we begin to pull back and we have three red bars in a row. And then the next day, I believe we open somewhere right here. So, we opened above those red bars. We have an established uptrend. We also opened above this resistance area. And I saw this in the morning. And this is actually a setup that I called in my mentorship community as well. And you could just see the move that it produced. I mean, take a look at this. Look at this move. And this was that day, but you could see even the next few days. I mean, this thing just mooned like crazy. But look at this gap, right? This gap right here. And that gap was the catalyst for this massive move to the upside. We cleared over this resistance area. We gapped above three red bars and we also triggered a higher time frame setup. We had a very clear buy setup on the daily time frame. We have established uptrend rising 20 MA pullback into the rising 20 MA. We have an entry bar and we trigger that buy setup through this gap right where we gap up. We trigger the buy setup and boom, we just go off on a rocket ship. And there was even a daily one, two, three here as well where we had an igniting bar, we had a resting bar, entry over that resting bar, stop-loss below, and it continued higher. So, like I said, watch the free course because like the 1, two, three, the buy setup. It's important to know that for this video. All right, but I am going to go over briefly what that is in a second. And I am also going to show you how to trade these gaps on the intraday time frames. Uh, let's look at Coinbase. This is another just beautiful, beautiful gap. Very similar to the APLD. We bottomed here. We moved up. 20 MA is now under price. Prices are respecting it. And we kind of had a little bit of a breakout here. And we triggered that breakout by gapping right here. We're gapping above this resistance. We're gapping above this resistance. We're gapping above the 200 period moving average. We're opening right here. You look to the left. We have plenty of room to the next resistance area, which is really like right here. So, we have plenty of room to move higher. And let's take a look at the move that it produced. And Coinbase was just brilliant that day. I mean, such a nice gap right above the 200, above all this resistance. Beautiful setup on the charts, right? We have kind of a move up basically a breakout. We have a breakout right here. And that breakout was triggered by this daily gap. All right, let's move on. Let's look at the UNH. Um, and this was the company that there was a lot of news on it. A lot of people were talking about it um on Twitter and a lot of people were discussing how United Health, you know, this was like I think it was like $600 and you'll see where it ended up gapping to, but I think we opened right here somewhere around there, right? So, this thing very solid uptrend. This thing looked like it was going to make new all-time highs and all of a sudden it ends this uptrend completely. I mean, this is a extremely established trend to the upside. It looks higher. If anyone any professional or retail trader looks at this chart, they're like, "Yep, that looks higher. This is an established trend." And we open right here below this pivot, right? We are kind of into an a little bit of an area of support, but it just didn't matter at all because you could see what happened directly after on that day. We just had such nice follow-through to the downside. And this is what happened afterwards, right? So, this was that day and you could see where the stock ended up falling to. This gap essentially ignited a brand new trend because it shocked all of the buyers who were in it long basically this entire trend higher, right? It shocked everyone. It trapped all of these buyers, all of the long-term investors, all of the traders. And you have to understand when you have a really powerful gap like this that ends a trend or gaps below a lot of green bars, it's almost like a snowball effect of selling because think about it, right? It opens here, it starts to drop. Maybe there are some traders or investors that are like, "Hey, you know, this is a good company. I'm just going to wait until this moves back up, right?" So, it drops, then it drops again, then it continues to drop, and all of a sudden, their position is becoming more and more red, and it becomes a snowball effect of selling. And that's why these gaps are just have such a strong catalyst, and that's why they move with so much momentum. And we as professionals could take advantage of that snowball effect. we could take advantage knowing that those investors and traders are trapped and they're likely probably going to sell. So, this is a really good example of a gap that's ending a trend. Let's look at CHAG. This was oh my god, picture perfect. So, we have a really established downtrend. I mean, look at the 20 MA. Look at how well prices are respecting the 20 MA. I actually have a video on my YouTube channel that teaches how to use the 20 period moving average. I also teach it in my free course. But so we move down and we have basically you know a little base breakdown. We have a little bit of a uh consolidation here at the lows and it maybe there were some investors that thought that hey this thing double bottomed I'm going to start buying here and it started to move up. People thought that hey maybe check bottom maybe check is about to move higher. They started to go long and all of a sudden we opened like right here directly below this support. We trapped the buyers who bought it the last 3 days and were continuing also the longterm trend and it was just beautiful. And I remember trading in this day. I mean it made me a bag. I don't remember this was weeks ago. I don't remember exactly how much it made but it was such a nice trade. And look at this. I mean picture perfect. It it closed at the lows. It closed literally at the lows of the day because it was such a powerful gap. It was continuing this long-term trend to the downside. It shocked the buyers who bought it the last 3 days. And also it triggered basically a sell setup break uh daily time frame. We have a sell setup consolidation at the lows. We triggered that setup by a gap down. Beautiful. And notice how we didn't gap down here and dropped. We gapped directly below support. Beautiful. Trapping all the buyers. Just picture perfect, honestly. All right, let's continue onward. We have the yex. So this was essentially just a base breakout on the daily time frame. I think we opened right here or so. So, we were clearing essentially this entire area of resistance and the next resistance was basically all the way up here, right? And it didn't really shock any buyers or sellers, right? Cuz you look at the previous day, it was actually coming off a green bar. So, it was already getting bought. It just essentially continued that momentum the next day. And let's look at what the gap ended up doing. And boom. I mean, insane green bar. Notice this is literally the biggest green bar on the chart. Look at all of the candlesticks. The biggest green bar was ignited from a gap where it essentially triggered a base breakout above resistance and it actually cleared the previous resistance as well. It literally cleared it. It was such a powerful gap. Beautiful. Beautiful. All right. And by the way, all of these charts, this is not me cherrypicking. I do this pre-market scan every single day. Not only for myself, but for every single one of my mentorship students that trade live with me every single day. We do this analysis every morning at 9:00 a.m. All right. So all of these stocks are stocks that were just on my personal scanner that we either traded that day and made money off of or it was like on our radar and maybe maybe we didn't catch that specific trade but it was on our watch list. Let's look at the CHAG. Another great example here right here we have a red bar. We closed right here. Then we opened right here. Now this wasn't that great of a gap and I'll tell you why. We do have an established uptrend, right? Respecting the 20 MA. Respecting the 20 MA. This was a really nice buy setup by the way. Moved up, retraced. Really nice buy setup. We had a nice red bar the previous day. So, it started to get sold. I'm assuming the people who bought it started to take profits and then all of a sudden it was gapping from here to right here. But it was gapping right into this area of resistance and it was also gapping into the 200 period moving average. Now, it didn't care. It still went higher. But the point that I'm trying to make is not every gap is going to be a picture perfect gap. They're not always going to be perfect, right? like A+ A+. I don't want to say they're rare, but you're not going to get them every single day. You're not going to get five a day. Sometimes you could still make money off of like B gaps or even C++ gaps, right? And we do that. All right, but generally speaking, you do want to trade the highest quality of gaps. Okay, so I just gave you a ton of different information to understand for how to assess the quality of a gap and what we specifically look for, but you probably are a little bit still confused on how to actually trade these gaps. Like where do we enter? What do we actually do when we see a high quality gap on the daily time frame? And you need to understand that the gap sets the bias. And from there, once we know what the bias is, once we know what specific stocks we want to focus on, the ones that have the highest quality gap, once we know the direction, right, we go to the intraday time frames to trade that bias. We don't just buy a gap up, right? Let's say you have a really interesting gap up. It's clearing over resistance. It's trapping sellers. It's ending a downtrend. It's looking really good on the daily time frame. We don't just buy it. No, you need an intraday setup. So, the gap sets the bias. It sets the direction in which we want to trade in. And from there, we combine that with the intraday predefined simple setup. And we're about to talk about that. But I know people are going to ask me about time frames. So, in the pre-market, I'm scanning for gaps. I'm picking which stocks I want to focus on for the market open. And then when the market does open, as I'm looking at the daily chart and where the stock is opening, I'm looking at the one and the two-minute charts from like 9:30 to 10:00 a.m. And I'm also looking at the 5m minute as well, closer to 10:00 a.m. Then from 10:00 a.m. to 12:00 p.m. And this is Eastern time, by the way. I'm looking at like the two-minute chart and the five-minute charts. And I'm also looking at starting to look at at the 15-minute chart as well. And then from 12 to the end of the day, I'm primarily looking at the five and the 15minute time frames. Now, even when I'm scanning for new stocks to trade that day, I'm always looking at the daily chart first. I'm always assessing what is the gap or is there a gap in the first place? And a lot of times, if there's no gap, I don't even look at the intraday time frames. If the daily chart isn't interesting, there's no quality gap, there's no momentum, the daily doesn't really have anything to be interested in. I don't even go to the lower time frames. I look at the daily chart. I assess, is there a gap? Yes. Great. Is there a high quality gap? Yes. Great. That's when I go to the intraday time frames to look for a setup. Now, what setups do we trade? And it's really simple, guys. Like I said, just watch the free course. It'll teach you all this. But we look for either a retracement setup or a consolidation. So, this is essentially a buy setup or a breakout. That is exactly what I trade. All right? We keep it really, really simple. Right? I don't like to over complicate my strategies. is I don't like to use crazy indicators. I keep my trading as simple as possible. I think the simplest things in life are oftent times the most brilliant. I keep it simple. So once I have the bias to trade that bias, I either trade a retracement pattern which is a buy setup or I trade a breakout which essentially is like a consolidation pattern. Now, I also want to show you a strategy that you can implement literally in the first few minutes of the day. Because there are times where I will hop into a trade that has a really high quality gap right off the open, like the first 5 minutes of the day, because sometimes these gaps, let's say you have a really nice gap down, it won't set up. It'll just go. And sometimes you kind of have to just jump into it to uh capitalize on the trade. However, we don't want to just randomly jump in. We still want structure for our trades even if they're right at the open. But, you know, at the open there hasn't been enough time to pass, right? If we're 2 minutes into the day, there's only two one minute candlesticks. You can't really read a setup from that. You can't read a breakdown or a or a sell setup or anything. So, what you can do is use the high low pattern. And I think a lot of people call this the orb strategy, like the opening range breakout. Listen, I really don't care what you call it. I don't study the orb. Like I saw that on Tik Tok and it was kind of similar to what I know as the high low strategy, but doesn't matter. This is the strat. So what you're going to do is you wait for either the first one minute, 2 minute, 5 minute or 15 minute candle to form. So the first one forms either 1 minute into the day, 2 minutes into the day, 5 minutes into the day, or 15 minutes into the day depending on the time frame you're looking at. Now if you're going long, right? Let's say it's a bullish gap up and you want to go long. What you can do is you place your entry above the first candlestick, stop loss below. So you can put your entry above the first candlestick right here. Okay? And you put your stop-loss below that first candlestick. And this provides structure. So you have a really nice gap up. You're noticing that it looks like it's about to pop. it looks like it wants to really get going and move to the upside right off the bat in the morning instead of just hopping in randomly with no risk management, no stop-loss, no predefined entry, you now have structure for the trade. You put your entry below the highs of the first candlestick. You put your stop loss below the lows of the first candlestick. Now, the same thing applies when going short. It's just the opposite. You would place your entry below the lows. You place your stop loss below the highs. And right off the bat, I already know what you're thinking. You're like, "Okay, this is easy. Just wait for the first candlestick to form. And then if you're long, entry above, stop loss below. Going short, entry below, stop loss above. Makes sense. But which time frame do we use? Which time frame do we look at? Do we look at the 1 minute or the 2 minute or the 5 minute or the 15-minut? And ultimately that is up to you. It really depends, right? So my suggestion is if you do it off the 1 minute or the 2minut, especially right off the market open, that stock could be so volatile that it's going to quickly stop you out. My recommendation is to wait for either the five or the 15 to form. You know, maybe if you want to be super aggressive, you could do it off the two-minute where the first two minutes pass by, you have a two-minute bar and that's what you do the high low strategy off of. My recommendation, I think a really good sweet spot is using doing it off the fiveminut. And the issue with doing it off the 15, right, is you might end up having a massive 15-minute candlestick, right? And then all of a sudden you put your entry above, stop-loss below. You have a really big stop. So now you have limited reward to risk. And then the upside of doing it off the one minute time frame is you might have a super small bar, right? So you have really, you know, entry here, stop loss here. You have a really small bar. You have really, you have a really tight stop. You have a high reward to risk. But this thing might end up triggering right and then immediately stopping out and then you end up losing a full R one or two minutes into the day because the stock is so volatile because it's right at the open. Does that make sense? So you need to find a sweet spot. Uh my recommendation is just to do it off the five minute personally. But if you see a 2minut high low where the first two-minute bar is formed, it looks good, the stock is readable, it's not too volatile, it's an amazing gap, you feel like it's about to move, you can do it off the two-minut and use the high low strategy off the two entry above, stop loss below if you're going long or entry below, stop loss above if you're going short. So now we understand that the gap sets the bias. It gives us the direction in which we want to trade in when the market opens. But we don't just randomly buy or randomly short on a gap up or on a gap down. No, we need a predefined intraday setup. And that's exactly why we go to the smaller time frames to find that setup. Whether that is a retracement or a buy setup or a consolidation or breakout or whether that's a high low strategy if it's in the first few minutes of the day. We never enter randomly. We need to have structure in our trading. That's why we trade predefined simple setups that are not complicated. They're easy to understand and they're easy to know where our entry is and where our stop loss is, which allows us to easily manage our risk. Now, let's go back to the previous setups and gaps that we were looking at. And let's look at the intraday setups on those. So, we have the APLD, right? So, this stock gapped up above three red bars over resistance. We already went through it and let's look at the intraday setup that occurred on this day. And I actually distinctly remember this day because we traded this intraday setup. I called this in my mentorship group and we traded and uh capitalized on it. Now let's take a look at it. So we have a very [snorts] very clean 5minute buy setup, right? So what is a buy setup? That is a retracement pattern where we have a move up three red bars in a row. Great. Now we have a bottoming tail entry bar. Perfect. entry would go above that bar. Stop loss below. Target is the previous high and we actually surpassed that previous high. And if you look even later into the day, we kind of had another little buy setup right here, right? Where we moved up, retraced, moved higher. This one wasn't as high quality, but I I definitely like this one where we kind of moved higher, three red bars in a row, entry above, stop loss below, and we made a new high. But the best one was really this one. It was just such a clean buy setup. And you might be thinking, hold up, for a buy setup, especially if you've gone through my free course, you're definitely thinking if it's a buy setup, then it needs to be close to or near the 20 period moving average, uh, which is this line right here. I understand that there is some distance between price and the 20 MA. However, you need to understand that on a big gap, on a sharp gap up, it's going to take time for the 20 period moving average to catch up to price, right? Because it randomly just popped, right, overnight. And you could see why, you know, the 20 MA is really has such a sharp slope because it's trying to catch up to prices. So in the first like 30 minutes of the day, even first like hour to hour and a half of the day, you could use the 9 MA in conjunction or the 10 MA in conjunction with the 20 MA, right? Like these can serve as your 20 MA in the first hour of the day, especially if it's a big gap either up to the upside or to the downside. But you could see we had a beautiful gap down or gap up that was bullish triggering a buy setup on the daily here above three red bars above resistance and we traded that bias through a fiveminute buy setup. Now let's look at the Coinbase. We already went over this gap above resistance above the 200 above a couple of red bars triggering a breakout has plenty of room until the next resistance area. Lovely. Now let's look at the intraday time frame and we see that what do we see? I want you guys to kind of answer that. I want you to pause the video and really think about it, but I'll tell you the answer. We just have an amazing uptrend where prices just are respecting the 20 MA and right off the bat, we have a nice breakout right here over the highs, stop loss under the lows that kind of chopped around for a while until the 20 MA caught up and then as soon as the 20 MA caught up right here, that's when it decided to really run. So, you could have even even traded it as a breakout here uh with your entry above the base stop loss below this tail. You could even put your stop loss below this base if you wanted a uh tighter stop. And in theory, if you want to be super aggressive, we have somewhat of a fivem minute 123 here where we had a igniting bar, dogee bar. You could have even put your entry above that dogee bar, stop loss below if you really wanted a tight stop. But that's super super aggressive. And then even here, we got a buy setup and buy setup again. And you can see how well it's respecting the 20 MA. It's beautiful, beautiful gap and beautiful uptrend on the intraday time frame where you could have traded either a breakout here and then you saw it chop around for a bit or you can even enter the breakout here or you could have traded as a buy setup here. Just a bunch of different setups that you could have traded on this stock, right? But that's the idea. Gap, then you go to the intraday time frames and you find a setup. Let's look at this same exact thing on the UNH. And this is actually a great example. We already talked about the UNH. This is a great example of a high low where you could have, right? you have this first five-minute candle that formed. You could have put your entry below that uh first five-minute candle stop loss above the first five-minute candle and you would have capitalized on this move lower. Now, it would have been a really big stop. That's the only issue. So, what I would have personally done is I would have traded this as a 5m minute 123 igniting red bar to the downside. We have a resting dogee bar entry below that 123 stop loss above. And like I said, watch the free course. I keep saying it, but all these setups, it's important to understand it. I teach the one, two, three in that free education, so watch it. But this could be a nice one, two, three, and it continued lower. Just amazing trade, honestly. So, you could have done it as a high low or as a 5minute one, 123. All right. So, bearish gap down and we traded that bias through those setups that I just mentioned. Let's move on. Che. Let's look at the CHAG. We already talked about it. Beautiful gap down below these three green bars, continuing this long-term trend below support. And let's look at the intraday setup. And we have just a really clean breakdown. We move lower, we consolidated. Check this out. You know what this is right here? This is what's called a shakeout bar. This is called a breakout failure where notice what happened. We dropped, we began to consolidate from there. We attempted to move higher and failed and then we got the move lower. Just beautiful, right? You could see that topping tail. The buyer stepped in, tried to bring prices higher, and then the sellers were like, "Nope, this is bearish. There's a bearish gap. you're not bringing it higher and they brought prices right back down. So, it was like a failed breakout. Either put your entry here, stop loss above, right? So, entry below the base, stop loss above. Or you could have even, if you want to be aggressive, like I remember trading this, I entered below this dogee, stop loss above, which obviously isn't textbook, right? For a breakdown, we want it to trigger underneath the base. As soon as I saw a breakout failure on a really bearish gap with a really bearish base breakdown on the 15-minute time frame, I was just like, "Yep, I'm I'm hopping in." And I probably I think I went to the either the 5minut chart or the two-minute chart for a much tighter stop and a much tighter uh entry. Let's move on to the yex. We already talked about the gap above resistance triggering this base breakout and let's look at the intraday setup. And we have just such a clean, this is the fiveminut time frame. Such a clean high low. Entry above, stop-loss below. And look at that move. Wow. Just insane. And then it consolidated. Literally, it consolidated for a while right here. And you could have traded this as a breakout. Entry above the base, stop loss below, and capitalized off this move, right? And then this would have been the target, which basically that's where it got to. All right. Uh, do we have any more? Yes, we do. Let's look at the CHAG. This is actually a pretty recent trade. This is the one that I said it wasn't that good because it was into resistance. But let's look at the intraday setup here. And we kind of have like a one, two, three slash breakout. So I remember I called this over this candle stop-loss below and we caught this move. But then there was also a really nice 5minute buy setup. So a lot of my students and I, we caught this move off this breakout, but then you could have even traded this three bar pullback, nice entry bar as a fivem minute buy setup really close to the 20 period moving average. entry above, stop loss below, and you would have literally just caught [snorts] number one this move that pulled back. One more buy setup and then funny enough, it had a base breakout. So, uh, entry above, stop loss below. So, you're seeing this like on literally just a chag on this uptrend. How many opportunities did you have to enter it? You had this initial opportunity number one, fivem minute buy setup, number two, another five-minute buy setup, number three, and a fiveminute breakout. Four potential setups. You can even say five. You could say this was a buy setup as well. That's six, right? And by the way, this was like a low quality gap. This was like maybe a B minus C plus gap. But even on a B minus C plus gap, you see so many potentially, you know, interesting opportunities on the intraday to trade that bias. Before I do a summary of the entire video, this chart essentially explains why we focus on gaps. I want you to identify the two biggest candles on this chart. literally pause the video and find the two biggest candles. And if you did that, you would see that it's this one and this one. And both of those candles were ignited by a gap where we have a really nice uptrend right here respecting the 20 MA. We move up. We consolidate into the rising 20 period moving average. We have a really nice daily breakout. That breakout was triggered by a gap and boom, it just mooned from there, right? And we did have resistance to the left. It didn't care. It just went ripped right through it. Looking at this one, another really nice established uptrend. Higher highs, higher lows. We moved up, had a nice buy setup into the rising 20 period moving average. We triggered that buy setup through a gap up and boom. And by the way, we had resistance as well to the left here. Did not care and it just ripped right through that resistance. Right. And by the way, I always like to look to the left to find the next resistance area. So in this case the first resistance was right here which it cleared that and the second resistance was which was right here which it literally just it cleared that as well. Uh but usually I like to use resistance areas and support areas as my target for uh trading gaps and trading the intraday setup on the gap. Now quick little summary guys. We learned exactly why we trade gaps. They have way more momentum. They have a catalyst behind its movement and they just move way more than non-gapping stocks. 90% of the time I am trading in the direction of the gap. Right? There are exceptions to this. There there are times where I'm going against the gap, but I'm not going to talk about it in this video. We already talked about a ton of different stuff. One more thing I should note is that if you have a gap up, right, we are looking to go long. But let's say we have a gap up and it starts to sell off and it starts to drop. I just don't focus on it anymore. I don't trade it short. I just don't focus on it. So, I don't like to trade the gap fill. I trade in the direction of the gap. And if it starts to fill the gap, I just ignore it. Same thing if it's a gap down, I'm looking to go short. That's my bias. But if it starts to move up, most of the time I just I don't focus on it anymore. Right? We learned about how to find gaps in the pre-market, all the different websites. I like to use Think or Swim and I do use Market Chameleon at times. We check the price and from there we check. Is it clearing above resistance or is it clearing below support? Is it shocking any buyers or sellers? Is it triggering a breakout or a buy setup on the daily time frame? Does it have room to the next resistance area? Right? We talked about what we look for when it comes to support and resistance requirements. And then from there, we talked about just a bunch of gaps and what we specifically look for in gaps. And remember, we want gaps that are powerful that are shocking buyers or sellers that are making buyers and sellers uncomfortable to be in the positions that they're in. And that's where the biggest opportunities lie. Very, very important. And the final note I would say is that always remember we don't trade the gap. We need a setup. Right? We can't just enter randomly into a nice gap up. We need an intraday setup. Whether that's a retracement or a consolidation or a high low strategy. The next chapter covers a very important concept in trading. And it's called trade management. And I'm going to teach you exactly how to manage your positions when you're actually in the trade. I'm going to teach you when to trail your position. I'm going to teach you how to extract as much profit as possible from a winning trade and how to limit your losses on your losing trades. The first step when you're looking at a potential setup is to find your entry point. However, the second step is to manage the position to the best of your ability so you can make as much profit as possible while protecting your downside. And that's exactly what this chapter covers. So, I'm going to be giving you a ton of different trade management strategies. So, let's hop right into this chapter. What is going on, guys? Hope you're having a great day. Today, we're going to be talking about managing your position, right? Trading management. And I got a cup of coffee with me and we're going to be learning some amazing stuff. So, let me get a quick sip before we actually begin. Okay. So, I know a lot of people struggle with this topic where they enter into a trade and let's say they begin making money, right? They're in they're profiting and they don't know exactly what to do, right? They don't know whether to to just take profits or, you know, they don't know how to exactly manage that position. And you have to you guys have to understand that managing your position is an art. It's not a science. Okay? There isn't one way to do it. In fact, every trader is going to have sort of a different trading management system, right? Something that suits, you know, himself. And you kind of find that out over time through experience. Through experience, you're going to learn what suits your personality and what sort of trading management works for your type of positions. But let's just get right into the presentation here. Okay, we got how to manage your trades. Let's go. So let us consider two different possibilities here. We have outcome number one. So let's assume you just opened a new position. You have already identified your entry, your stop-loss and targets for the position, right? So if it's a buy setup, if it's a breakout, if it's a breakdown, maybe it's a one two three, whatever it is, you should already know exactly what your entry price is. stop-loss price and what your target price is or approximate target price. Now, let's say the trade doesn't work out in your favor and the trade actually hits your stop-loss. You're going to exit the uh exit the position and take the loss. There's really no confusion here. If it hits your stop-loss, you exit the position. Okay? There's there's only really one outcome. If the trade doesn't work in your favor and it hits your stop-loss, there's really no management necessary. You've already identified your stop-loss prior to you even taking the trade. So, if it hits your stop-loss, you're out of the position. No questions asked, no confusion. Okay. Now, let us consider another outcome. Let's say the trade that you took is a winner, right? You get into the trade and it starts going in your favor and it's a winner. your the trade, you know, which it doesn't matter what security it is, whether it's a stocks, crypto, forex, whatever. Let's say it's approach approaching target, right? And this is assuming you chose a target prior to the trade. There's going to be certain situations where, you know, before you enter a trade, you're not going to be able to identify a target, right? And we're not I don't really want to get into that too heavy. We're going to be talking uh about that during the you know picking targets class. But let's say you know you the security is approaching target or it's approaching the point where you want to start taking profits. What do you do? Are you just going to exit the position once it hits target completely? What if the position continues more in your favor and you actually miss out on some profits? Right? Like let's say it hits your target, you completely exit the position, but then the stock or crypto and your trade it continues going in your favor and then you end up missing out on all those additional profits. You really don't want that to happen to you. You don't want to miss out on more potential profits by exiting the trade too early. Okay? And that's where trading management comes in. That's when you know your distinct management system will come into play and you'll know exactly what to do um once your position actually hits target. All right. So before we go into it, I just want to clarify a specific topic because I use this phrase a lot and I think you guys should know what it means. So I usually call it just getting shaken out of of a position. So if I ever say getting shaken out of a position, this is what it means. So let's say you enter a position and you set your stop-loss. Before the stock or crypto in your trade goes in your favor and it eventually hits target, let's say it hits your stop-loss force uh first, forcing you out of the position and therefore missing the move, right? So let's say you get into a trade, right? the trade hits your stop-loss and right after it hits your stop- loss, it immediately starts going in your favor and it, you know, and you would have, you know, you would have made money on the trade for the fact if it didn't hit your stop loss, right? So, that's what's that's what's um getting shaken out. That's that's what that means, okay? Where it hits your stop loss and then it ends up continuing in your favor anyway. So, how do you eliminate getting shaken out of a position? Well, number one, it's don't set too tight a stop losses. And I know that's kind of contradictory, right? We talked about in the risk management videos that you want to look for tight stop- losses, right? And now all of a sudden, I'm saying, "Oh, you can't have too tight of stop losses cuz you might get shaken out of the position, right?" And it's kind of like a conflict. You you kind of have to pick the perfect stop-loss, right? And my recommendation is just pick pick the correct stop-loss for that setup. Right? If it's a base breakout, we know that we always place the stop-loss under the base, right? If it's a buy setup, you know, we always place the stop-loss under our entry bar, right? So, I would say just stick to the basics. Like stick to um stick stick to what I've taught you guys. But this is kind of an issue. It's kind of uh they're kind of like butting heads where you know you don't want to get shaken out of the position but you also don't want to have too large of a stop loss because then you're not going to really have all that much reward to risk. Okay, hopefully that makes sense. And so how to eliminate it? Yeah, don't set too tight of stop losses. Give the stock or crypto some room to fluctuate. Okay, worst case, if you'll set a larger stop-loss, it may mean less reward to risk, but at least you're not going to get stopped out and be forced to enter again or miss the opportunity altogether, right? So, you might have to set a little bit larger of a stop-loss, therefore making your stop larger, right? Therefore, uh you know, you're going to have uh a worse reward to risk because you're not going to be able to buy or short as many shares, right? But, you know, that sucks or whatever, but at least you're not going to get shaken out and see that trade end up going in your favor anyway. So, keep this concept in mind that you never want to get shaken out of a trade. You never want it to hit your stop loss and then have it go in your favor anyway. So, let's take a look at this example here. It kind of looks a little confusing, but let's walk I'm going to walk you guys through it. We have a rally and we start to get a base, right? And we know what setup this is. This is a base breakout, right? And let's say your entry is right here, right? It's your entry is over the base, right? So, you're going to get triggered into the position right here with this green bar. So, it hits your entry and now you're in the position, right? And let's say for this position, you end up placing your stop loss right here, right under these candlesticks. And remember, according to, you know, the textbook theoretical version that I taught you guys, you should always be placing your stop loss under the lows of the base, right? So, the correct way to place your stop loss would be under the lows of the base, which is this bar. So, this right here is the correct stop-loss. But let's say you wanted to have a higher reward to risk. So, you ended up putting your stop loss up here instead of here, right? So, you place your stop loss here instead of under the absolute lows of the base because you wanted to improve your reward reward to risk. Now, let's say you get triggered into the position and all of a sudden the next bar is a red bar and we get a drop and it actually hits your stop loss that you placed here, right? It hits your stop loss here. It liquidates you out of the position before you know on the next bar, the next bar completely explodes and it goes right back up and makes new highs, right? But unfortunately, you're you're not in this play anymore because it hit your stop loss here, right? How to avoid this? Well, you know, you should have placed your stop loss correctly in the beginning and put it underneath the absolute lows of the base. So, as a result of you having your stop loss here, you got shaken out of the position before the trade actually went into your favor and would have produced very nice profits. So, what's the conclusion here? Because you decided to use a tighter stop-loss, right? use this stop loss instead of this one. Uh uh you got liquidated and you missed this move higher. Okay, so the theme here guys is place correct stop losses. Don't try to place too tight a stop losses. Otherwise, you'll get you'll have the risk of uh getting shaken out of the position before it ends up continuing in your favor. Anyway, hopefully this makes sense, guys. I know I kind of repeated myself a bunch of times, but it's important that you guys understand this and hopefully this all makes sense. If it doesn't, either, you know, go ahead and ask me in the server or just re-watch this video. Okay, so how do you manage positions that reach target? Right, so let's say your trade has reached your target price, right? you were in it from down here and all of a sudden it hit your target price. What do you do from here? Well, you really have two options. Option number one, you take profits. You just exit the position as it hits target and you take your profits and it's a winning trade. Perfect. Or number two, you trail your position and you raise your stop. Okay? And we're going to talk about this in a second, but this for number the the second option, that's where the trading management comes in. So, let's talk about option number one. Let's talk about the take-profit option first. So take profit. You can either number one exit your entire position, right? Where you just liquidate your entire position. You're completely out of the trade. Or number two, you take some profit here and you leave the rest of the position open in case it continues higher in your favor. Right? So by doing option number two here, you're securing profit. Right? At that point, it's a it's 100% a profitable trade. You're securing profits and then you're allowing um you know that other half of your position or the other um you know whatever whatever however much you left in the position you let that run and hopefully make you more profits. So that ends up and and by the way you might be thinking okay but you know how much of the of the position should I take right like if you want to take some profit how much profit should I take um my recommendation is take at least 50% of your profits if you made $200 take secure at least 100 or even do you know 75% where you secure um let's say like $150 right out of 200 and you let the other $50 kind of run. In worst case, if you lose that $50, well, you you secured 150 already, it's for sure a winning trade. But when we, you know, when we're talking about leaving the rest of the position open, right? We take some profits and we leave the rest of the position open. Well, that begs the question, how do we manage the rest of the shares that you left? You know, how do you manage those shares that you left in the position? What do you do with them? When do you take profits for them for those shares? Where do you place your stop loss for those shares? Okay, so let's get into it. I'm going to take a sip of my coffee real quick. So, one second. Okay perfect. So, your first option um in trailing your position, right? So, the stock reached target. However, you still think this this can continue higher, right? So, let's say it hits your target. Let's say this is a buy setup, right? This is a it pulled back. This is a buy setup and the buy setup hits your target, right? But you think this still has potential to move higher. What do you do? So, what you could do is wait for the pullback to complete, right? I'm talking about this pullback and raise your stop to the new pivot low. And this doesn't only apply to a pullback. Let's say it ends up basing as well. You could also raise your stop loss to the um to right under the lows of the base. So like I said, you wait for the pullback to complete and you raise your stop to the new pivot low. So this is your original stop loss, right? We have a buy setup here and your stop loss is under this entry bar. What you could do as soon as it hits target, let's say it pulls back or it bases, you raise your stop loss to that new pivot or the new lows of the base. Okay? So, by raising your stop loss, what you've done here is you have 100% secured profits because remember your entry is right here, right? Your entry is right here. By raising your stop, you have secured profits, right? Because let's say you raise your stop here and it let's say it attempts to go higher, but then it fails and then it hits your new stop. Well, if it hits your new stop, you know, at the end of the day, you're still making money because you know this stop is over your entry. So, what are the pros of this? Well, number one, you give yourself the ability to aim for a larger target while securing profits with this new stop-loss. What are the cons? Well, the cons is the pullback can continue and you can give back your profits. And it's talking about this pullback, right? Where let's say you hit target right here and you think this can continue higher and you're waiting for this pullback or you're waiting for that base so you could raise your stop loss. but instead this pullback just continues dropping and dropping and dropping and it ends up hi hitting your original stop. That might happen and then you end up having a a winning trade go negative and hit your original stop-loss. You definitely don't really want that to happen either. So, at the end of the day, guys, it's kind of up to you. You know what I mean? I'm kind of giving you guys the different uh strategies that exist, but it's up to you for, you know, what you actually want to do. But in general guys, you always want to raise your stop loss. It's a very good way of securing profits while allowing the position to continue higher. So this is one way of doing it where you're raising it to the new pivot low or you're raising it to the new um to the new uh low of the base. Now let's talk about another way you can trail your position. So let's say the stock, right? This is a buy setup, right? We get a pullback. You have a buy setup. You enter here. Your stop loss is right here. Let's say the stock or crypto has reached your initial, excuse me, it's reached your initial target, right? However, you still think this can continue higher. What do you do? What you can do is trail the position bar by bar. Okay, what does that mean? So, as soon as the target is reached, you trail the position to the prior bars low. Right? So, let's say you have, you know, th this is the bar that hits target, right? This is the bar that hits target. What you can do is raise your original stop to this bar's low. Okay? You raise your original stop to this bar's low. So, in that case, if it goes against you, well, it's going to hit your stop loss and you've secured profits right? And once you know, let's say this bar has finished forming, then you're going to raise this stop to this stop to under this bar lows. And then as soon as this bar finishes forming, you raise it to that bar's lows. So, as you can see, as each bar is moving higher and higher and higher, you're continuously raising your stop your stop loss to each bar's low. And by doing that, you're giving the trade, you're giving the stock or crypto room to fluctuate, right? It like let's say that you raise your stop loss here and this bar is already forming. It gives this bar the opportunity to go up and down and up and down a little bit before it continues higher. Like, you know, like remember stocks in crypto, they don't just go infinitely up. Sometimes they go up, sometimes they go down. By continuously raising your stop, you're giving that stock or crypto room to fluctuate while also, you know, having a tight enough stop-loss where you're able to secure profits. Okay. So, what's the pros here? Well, you give the trade some room to continue higher while you're maximizing profits. However, a con of this is if you're thinking to yourself, okay, cool. I I get the theory of this, right? I get the idea. when it when it hits target, you're raising your stop loss to the to uh you know the bars low. But which time frames am I going to use? Which candlesticks am I going to use? That's where the difficulty comes in. It's kind of difficult to decide which time frame you're going to use. But guys, by, you know, either trailing your position this way or by trailing this your position this way, what you're doing is you're allowing the trade to continue um earning you more and more money even though it already hit your target. Right? So th by doing this you're giving yourself the opportunity to still have stop losses securing profit but also giving the stock or crypto the opportunity to you know make really big gains right to make to it gives you the opportunity to have huge winners right because you're constantly raising your stop loss as the stock or crypto continues higher okay hopefully that makes sense so trailing barby bar time frames let's talk about the different time frames you could use. Right? So, if you're swing trading, right? Remember swing trading, that's, you know, you're looking at the uh daily chart and the weekly charts and then you're using the hourly charts for entries. Um, if you're swing trading, you can trail your position bar by bar on either the hourly or daily time frame. Okay? Hourly or daily time frame. So, uh, I I can actually go ahead and show you guys, uh, an example of that. Let's see. I don't have my charts up, actually, my Trading View charts up at the moment, but I can show you guys an example in a different class. Um, showing you guys how to apply this. But, um, right. So, you're going to trail it bar by bar on the hourly or daily time frame if you're swinging trading. If you're day trading, it becomes a lot trickier because you can either tr choose to trail it on either the one minute or the two-minut chart or can you could also use the 515 or hourly time frame. You have a lot of options when it comes to trailing it on uh trailing it if you're day trading, right? If you're looking for a tighter trail, right? And what that means is you're looking for, you know, tight stop losses. You're, you know, it's more likely to secure profits as soon as possible without giving the trade as much room to operate by using, you know, lower time frames, right? Because on lower time frames, the uh the candlesticks are a lot smaller. There are a lot more of them, right? it's a lot more likely that you're going that's going to hit your new stop-loss if you're trailing it on the one or two minute time frames. Okay? But if you want to secure profits as soon as possible without giving your the trade right room to fluctuate, um then use lower time frames. However, if you do want to like let's say you found a stock or crypto and you're extremely confident that it will continue higher, but you also don't want to get shaken out easily. Um, if you're really really confident that it's going to that it's going to continue higher, then use larger time frames to trail where you could even use the hourly or perhaps the 15minut time frame, okay, if you're day trading. Okay, also let's talk about this um this concept here. the speed that it hits target matters, right? Like let's say you have a base breakout. You have a base and you're playing a base breakout. If this immediately pops into your target, right? As opposed to, you know, putting in a gradual move to your target, you're going to want to take at least 50% of the profits that you made in that trade. Right? If this immediately pops really fast to your target, you you either want to take at least 50% of your profits or honestly, you might want to just take all your profits and don't even trail the position. Just take all of your profits, right? Because quick, large, and sudden moves um higher could also lead to quick and sudden moves lower. Okay? And the last thing you want to do is have the position immediately reach target, right? Really fast. And then you're like, "Oh, but you know, maybe I want to go for a higher target or whatever. You want to keep this trade because you think it's going to go higher." The last thing you want to do is get out or I'm sorry, the last thing you want to do is stay in and have this stock completely fail and go right back down. Okay? So, if it's a really fast acceleration into your target, take profits, right? at least 50% of your profits. Okay? And understand that context matters. And this doesn't only apply to trailing. This also applies to setting stop- losses uh from the beginning of your trade. When determining how to manage your positions, make sure you look at how the overall stock or crypto is moving, right? If it's whippy or if it's sloppy or if there's a lot of tails, right? whether it's bottoming tails or topping tails, make sure you give that trade more room to fluctuate. In other words, set a little bit larger of a stop-loss. Okay? And yeah, you might minimize your reward to risk, but at least you won't get shaken out. The last thing you want to do is get shaken out of a position that makes a huge move in your favor. And understand, guys, like I mentioned earlier, trading management is um is difficult. It's an art, not a science. Once the trade is working in your favor and it it's uh you know hit your target or you're making good money on it and you want to start managing that position and you know making sure you maximize your profits while securing some profits in case the trade, you know, ends up failing after all. Then, you know, you got to really kind of try to master what works for you, what what trades uh trade management style works for you. Okay. Um, and over time of developing experience, like I say, you're going to find different trading management strategies that work best for you. Every trader is different and unique. Okay, guys. So, hopefully this makes sense. All right. Uh, I'm going to have one last sip of my coffee. So, cheers to you guys. Okay, so if you're kind of confused on this, understand that it's normal. Okay, this is kind of a difficult concept. So, make sure you come to my live streams, make sure you ask me questions on how you can master this. But the general idea here, just to give you guys an overall summary of what's going on, if a winning trade, right, hits your target, you could either take all the profits, right, and just take the position, liquidate the position, take your profits, or you could trail the position, right? And by trailing, you're going to be raising your stop loss to either uh a new pivot low or maybe the under the lows of the new base that was forming. Um or perhaps you're going to trail it bar by bar where as soon as it hits target, you place your stop-loss under uh the most recent candlestick. Okay? So, whichever way you do it, make sure uh make sure that you're kind of experimenting with it because you kind of like I said, you have to find something that works for you. And last thing I want to emphasize here, you know, last thing I definitely want to really I want you guys to really get this. If you enter a position and it fails and it goes against you and it hits your stop-loss, exit every time. Always respect your stop loss. And if you're share sizing correctly, right, by calculating, right, risk dollar amount divided by the size of your stop, right, that G that will give you your share size. If you're share sizing correctly and you're respecting your stop losses, you're never going to lose more money than you intend on losing. Right? If you if you're the maximum amount you could lose is $100, then through share sizing, through risk management and through following and being disciplined with your stop losses, you're never going to lose more money than you intend on losing. So just this should be a rule. This should be like a golden rule. If it hits your stop-loss, exit the position. Don't let it go more and more against you. And to do that, honestly, my recommendation is as soon as you place a trade. Don't do mental stops. Just put a hard physical stop into your broker into your exchange. Just place the order where you know if you buy, if you once you're in the position, place your sell stop-loss order at whatever the price it is. And if it hits your stop loss, the system, you know, your broker, your exchange will immediately take you out of the trade. In that case, you're not going to lose more money than you intend on losing, therefore limiting your losses. I know this was a lot of information. I know I'm talking a lot, guys, but I really I understand this stuff is difficult. That's why I'm really trying to um, you know, give you guys enough context and really explain everything very thoroughly. Okay? Hope this makes sense. See you guys in the next class. In this chapter, we're going to combine everything that you've learned in this free course so far. And I'm going to help you build a trading plan. And building a plan as a trader is vital because as traders, we hate randomness. We don't like taking random trades with random risk, with random management. Everything we do needs to be structured and predetermined. And the only way to do that is to have a predetermined trading plan. So, let's not waste any time and let's help you build that plan. >> What's going on, guys? Hope you're having a great day. We are approaching the end of the course and now our goal is to create a trading plan. Okay, every trader needs a plan. And this doesn't really only apply to trading. If you want to be successful in anything, you need to approach it in a systematic way, you can't have random decision- making. You have to have a plan and you have to execute that plan. After you execute that plan, you have to review it and refine the plan and continue forward. Okay? Everyone's trading plan is, you know, everyone's trading plan evolves over time. All right? So today I'm going to be helping you create your own trading plan. And I'm going to be talking about how I created my trading plan back when I started trading. And even though I have three years of experience now, I make money basically every single day. I still don't deviate from my plan and I still refine my plan over time even though I'm already profitable and I'm already, you know, experienced. So this isn't just for beginners. Even if you're, you know, a profitable trader already, you could still find value in this class. So, let's go ahead and begin. So, building a trading plan. Why do you need a trading plan? So, like I said, guys, to succeed in any endeavor, especially trading, you need to have a plan. You need to have, you know, a list of actions that you have to take and a, you know, a list of rules that govern your behavior. And with a plan, you're going to be trading in a consistent and systematic way with no random decisions. As traders, we want consistent profits. We're not going to be able to make consistent profits unless we're operating in a consistent way, right? If we're consistently doing the same things, then we're going to have some sort of repetitiveness in our trading. And especially if we're doing the right things consistently, we're often times going to make money consistently. Okay? But how can you expect to develop or or develop as a consistent trader, consistently profitable trader, that is, if you're doing random things every day? You have to remove the randomness from your trading. And as soon as you remove that randomness and you're trading in a defined a predefined way, you're going to notice your consistency and your results start to improve almost immediately. So over time, you're going to be adjusting your plan based on what's working and you're going to eliminate from your plan what's not working. Okay? So in the beginning I would really suggest is start with conservative smaller goals and create strict rules. Create strict but easy to follow rules I should say. Right? And with a plan guys you're going to be accountable for your actions. And there's going to be times in your trading career where you go against your plan. It's happened to me. It's happened to every trader where you have developed the plan but then you go against it and you lose money or perhaps you know you don't do the right thing and that's going to be an ego hit. You're going to say to yourself, "Wow, why did I lose this money? It completely went against my plan. It completely went against what I planned for yet I still did it and I lost money because of it." And you know it's going to feel bad. You're going to have an ego hit, but that's a part of the journey. You're inevitably going to, you know, kind of go away from your plan and take stupid trades and make stupid decisions, but that's a part of the growth process. But with the plan now, you're going to be accountable. You're going to have some sense of responsibility where you don't want to disappoint yourself and take trades that go against your plan and go against your predefined reasoning. Okay? [clears throat] So what we have to understand now is every trader [clears throat] is different. Every trader must trade to his or her own personality. So what that means is you could take 10 successful traders, put them in a room, 10 random s really successful traders, and if you look at each of their strategies, right, and how they make money, you're going to notice that they all make money in completely different ways, right? and they trade based on what works for his or her own personality. Everyone is going to have a different style. What I like to trade, excuse me, [clears throat] you're probably, you know, you're probably not going to have an affinity for that sort of trading, just like what makes sense to you, what trading setups work for you and how you like to trade. That's not going to work for me. So your goal through this entire learning process is to slowly figure out what works for you. What style do you want to adopt? It's totally okay in the beginning to kind of copy someone else's style as you're learning, but you're going to quickly notice that you if you don't resonate with someone's style, right? It just it's the trades are not going to make sense to you. And you have to find maybe one of our analysts, find um what analyst style works for you, what resonates with you, what makes sense for you, and start taking his trades. And then over time, you're going to be taking your own trades that work for you. So, play [clears throat] on to your individual strengths. So, let me give you an example. Uh and I'll give you my own example. When I started trading, I was going through the process of figuring out what works for me, what I like to trade, what's my own style. And knowing my personality, I'm a very uh high energy. I'm very I don't want to say I'm impatient, but I'm high energy. I don't like to lose money, right? Like I know losing money affects my psychology. Sitting and seeing myself losing money affects my psychology. Um, I know that, for example, like I said, I'm high energy. I like to I'm kind of like a twitchy guy. I'm always moving, right? And I've developed a trading style that kind of fits my own personality where, excuse me, [clears throat] I'm less of a patient trader and I'm more of a scalper. I'm more I more, you know, kind of get in and out of positions. I go for quicker profits than most, but I do that a lot of times, right? And you might be thinking and hearing uh you know myself talking about it and you're like oh I'm actually a patient person. I would never want to just take profits right away. Well there you go. Now you know what style you know you have to adopt. But for me that's what works for me and I've been able to I I was able to figure out that very early in my trading and then play on to my strength, right? develop that strength of mind because I'm really good in high pressure quick situations where other people are better in, you know, very low pressure, uh, you know, letting the trade play out over time, giving it the room to play out. For me, I like to do high share size in high pressure environments with where where it's really quick in-n-out scalps, right? quick in and out, getting in the trades, you know, getting in, entering really fast, exiting really fast. That's just what I prefer. It's what fits me and I play to that strength. So, building a trading plan, the first thing you want to do, guys, we've talked about this before, is uh figure out your risk. Determine your risk. Figure out what risk you're comfortable with losing. If you're a beginner, even if you're like an intermediate trader, re my recommendation is risk low amounts. Focus on consistency. Okay? And I can't emphasize this enough, but if even if you're paper trading, use the same risk and try to make it as realistic as possible. I paper traded for four to five months before I started trading with real money. But I didn't play a I didn't play around with paper trading, right? Like I didn't just treat it like a video game. I really tried to, you know, go into it and paper trade as if it was real money. And because of that, you know, and when I lost paper trading money, I felt bad about it. Like, you know, like I I kind of had the same reaction um as if I lost real money, right? And I had to force myself to really make like I want to think about it like it's real money because that will actually prepare me for when I'm actually trading real money later down the road. So, even if you're risking $10 to $20, right? Like if you're if you're just beginning, risk $5 a trade, $10 a trade, and that risk, that's the maximum amount you could lose on that trade. Risk a low amount. $5, $10, even a dollar. Who cares, right? Just get just [snorts] start developing the right habits with low amounts of money. And my recommendation is paper trade. Okay? Paper trade. And when you're paper trading, they're going to give you like in your account since it's fake money, they'll probably give you like a million dollars to paper trade, right? Don't use that. Like don't like make it realistic. Think about how much you're actually going to be trading with when you're trading with real money and then paper trade to that account size, right? Like if you know you're only going to have a $1,000 account size when you're paper trading, assume you only have $1,000 to paper trade and practice realistically uh risking realistic amounts of money. Like if you're make if you risk $200,000 and you make a $100,000 on paper trading, you're like, "Oh, wow. I made $100,000." Like imagine if it was real money. You would have never done that if it was real money because with real money it comes risk, right? And that's going to affect you. You're not going to be risking $200,000 in a random trade, right? So, take it seriously. Rule, never deviate from your risk. Never deviate from your risk. Never um increase your risk randomly. Never just if you're if you set $10 as your risk, don't randomly increase it to $20 or to $30. Okay. So, let's talk about strategy requirements. You should only be trading when you when you see a distinct strategy that we learn here. Don't trade random setups. Don't make random decisions. For each strategy, what you want to do is create a little template of requirements of what the stock or crypto must have. So, here's just an example. You want to have the pattern. I chose the buy setup. You want to have a mustave and a cannot have. And this is just an example. Okay? So, must have it's if it's a buy setup, established uptrend, okay, rising 20-day moving average, multiple time frame alignment, 40 to 60% retracement. Your musthaves might be different than mine. Maybe you're a lot more of a strict trader and you want to include all the other conditions we talked about for the buy setup, right? If you don't remember, go back to the buy setup class. Um, but this is just an example. So, this is what you want to have. Must haves, right? And then cannot have where if it's let's say there's no market alignment, don't trade it. If it's a deep or shallow pullback on the buy setup, don't trade it. If there's large amounts of resistance above the buy setup, meaning there's limited targets, don't trade it. Right? So, this is a little template you want to have for every setup for the All right, guys. Sorry, the stream actually cut off. So, we're going to continue on here. So, the whole point of what we're doing here is we're we're creating a template where we have must haves and cannot haves. So what you do is once you have your template created you can go back to my classes to figure out the exact requirements. What you do is you know you write this either on your computer or on a notebook and whenever you're you know finding a trade let's see let's say you're on your charts and you see a buy setup right you see a buy setup or a potential buy setup and you go to your charts and you say okay does this have an established uptrend on multiple time frames. Okay it does. Check mark. Does this have a rising 20-day moving average that's trending under price? Okay, it does. Check mark. Does this have multiple time frame alignment? Do we have confirmation on the other time frames that everything looks bullish? Okay, we do. Check mark. How's the retracement looking? Okay, check mark. Very good. How's the pullback looking? Do we have an entry bar? Check mark. Okay, great. Do Do we have a tight stop-loss with good reward to risk? We do check mark. Okay. Does it have now let's see what it cannot have. Does it have a deep pullback? No. Do we have good targets or do we have bad targets? No. We have pretty good targets. Right? And you're going to go down the list like that. And if if the buy setup matches all of your requirements or most of them at least, right? Like it kind of depends on you how picky you want to be, then you take the trade. And if it's a let's say a breakout, you do the same thing. You look at your template, right? And if you're wondering what should I have in my must haves, what should I have in my cannot haves? Well, you're you have to look at the class, look at my classes and create a plan and just look at the requirements and make a template like that. Okay, so that's that's kind of the work that you guys have to do. Let's talk about entry requirements. Um, only enter a trade that has a distinct entry point based off what strategy you're trading, right? If it's a buy setup, you know where the entry is. It's above the entry bar. If it's a breakout, it's above the highs of the base. If it's a climactic move, then you know it it's above or below the entry bar, right? So, make sure you have a distinct entry and maybe put that in your trading plan. I I have to have a distinct distinct entry. I'm not entering randomly. I have a distinct entry. Place a stop loss exactly where you should for the strategy you're playing, right? You know where to set your stop losses for each strategy. Make sure you have an exact price that you're setting it. It's not random, okay? It's distinct. You know what price you you put it into the system, right? You're setting your stop losses in the system. If it hits that stop loss, you're you're out of the trade. No questions ask asked, right? And you can make that a rule where if it hits your stop loss, you're out of the position, right? You're not going to allow it to go against you more than where you placed your stop loss. Right? If it approaches target, you look to take profits or you trail the position. Right? So, building a trading plan. Let's talk about protecting profits. So, this is a really important idea. And this, you know, I've seen successful traders completely lose their confidence and lose their mojo just because they failed to do this. Let me let me give you an example, right? Let's say I make I made $1,000 on the day or you let's say you made $1,000, right? So you're up $1,000. You have to ask yourself, how much am I willing to risk now? Right? Like if you you're already $1,000 in the profit, are you willing to lose all of that $1,000 where you're going to end up finishing with zero? Like you want to protect some of the money you made on the day, right? So let's say you have $1,000 and you say to yourself, "Okay, I want to protect at least 800. I can't lose I can't, you know, lose more than $200 on this trade. I ha I have to protect 800." Right? If you're at a,000, I have to protect $800. I'm not willing to lose um more than $200. Okay? Because 1,000 minus 200 is 800. Okay? So, in that case, that'll be your that you put that in your plan, right? You're not you have to protect 80% of the profits you made on the day once you hit a certain target or something. So, if you risk $50 per trade, $50 is one risk unit or one R. So, one risk unit is whatever your maximum risk is. That's one R. In this case, it's $50. Remember, we talked about that we always want to have 2:1 reward to risk. In other words, two two Rs to one R or a $100 profit at least for $50 risk. So, per here's one strategy you could do. If you're up five Rs in the day, you have to protect at least four Rs. In other words, if you're up $250 in the day, right? Because five * R, one R is $50. That's $250. You must protect four Rs, which is 4 * 50 is 200. So, you have to protect $200. If you made 250, this is one strategy. And let's say you're in an open position. You're in an open trade and you are up two Rs. you have to either trail to break even or trail to secure some profit with the management strategies we've already discussed. So the whole point of this is let's say you know it hits your target you're up already two Rs on the position which is you know that's what we want. We want at least two to one reward to risk. You can't lose money on that trade. either trail it to break even or trail it in a way where you could secure 100% some profits, right, with the management strategies that we've discussed or just take profits completely, right? It depends on you. So, let's talk about some rules that you have in your trading plan. At the end of the day, guys, it's all about the rules. It's all about the discipline, right? It's all about following these rules, staying disciplined, okay? That's that's you know and each rule everyone's uh list of rules is going to be different based on your own psychological flaws. You have to figure out what is standing in the way of your trading from really taking the next step. What psychological flaw specifically and then create rules addressing that flaw. So I kind of listed a whole list of examples. So, if you lose X number of consecutive trades, you step away or lower your risk. If you lose five trades in a row, lower your risk from $50 to $25 until you gain your confidence back or just step away from trading completely for the day. If you lose four Rs after being up five hours, stop trading for the day. So, let's go back to this example. Let's say you're [clears throat] up 250. If all of a sudden you lose four hours, so you lose $200 and now you're only up $50 on the day, you lost four hours, step away. Okay? You don't want to snowball the losing. I think a lot of traders um actually I'm going to make this point after we get through all the rules real quick because it's kind of an important one. But so predefine your risk and reward for each trade. Before you enter each trade, make sure you know what your risk is, where the stop loss is, where the entry is, what your target, what target you're looking for, and make sure it's predefined. You know the exact price is of your target, your entry, and your stop loss. Another [clears throat] rule, and this is more of like a guideline, you you're trading to acquire skill, not to make money. Okay? Don't worry about the money. Worry about you acquiring the skill. If you focus on acquiring the skill, the money will come. I promise you. I can guarantee you. If you're focusing on the skills and learning how to become the best trader you can, the money will come. I guarantee you. And it will come in spades. Okay? You will make a ton of money. The fact is trading is not a linear process. Success is often not a linear process. Right? You're usually kind of I can't really draw it but you know usually your success is kind of flat flat flat until it goes exponential. Okay? So just focus on developing consistency. Focus on becoming a better trader. I promise you the money will come and a lot of it will come as well. If you feel emotionally compromised, step away and lower your risk. If you're trading and you're and you start to feel that you're trading off emotion, step away. Okay, that's that's a big rule for mine for me. Don't make random decisions. Every decision should happen for a reason that you can justify. Okay? Don't have any outside beliefs. You only listen what the charts are telling you. That's a big point. I'm probably going to make a separate class on that. Uh just to listen what the charts are telling you. Understand, like I said, you guys are going to have different rules based on your psychological flaws. Every trader is going to have different rules. You have to figure out what set of rules fits you. Okay? So, that's really key. Okay? And guys, you have to understand that in the beginning, don't be focusing on creating a perfect trading plan. There's no such thing. Your plan is inevitably going to evolve over time. So, what your goal is is create a plan, right? First, uh determine your risk. Then make a little template like this for every trading strategy you're looking to play. Then create some management rules, right? When are you going to take profits, right? How much profits are you willing to get to to uh sacrifice if you're trade, right? Uh how are you going to protect your profits, right? All this stuff. Create a plan in the beginning. Make it simple, right? Just make a beginner's plan. Then execute. Go in for two to three days or 4 days, maybe a week. Execute that plan. Record every single trade you take. And at the end of the week, you're going to go back and review every single trade that you took. Or maybe you could do this on a daily basis as well. review every single trade that you take and see what's what's where are my mistakes, right? Where do I need to improve? What am I really actually doing wrong? Right? And if it's a question on, okay, I'm taking bad setups, then review and be like, okay, what makes this a bad setup? What would a manual say? Right? And if you're confused, that's what the live streams are for. Come to my live streams and ask me questions, right? And you're I'm sure you could probably I could help you a lot with evol helping you evolve your trading plan, right? And after you refi after you review, right? You're seeing what you're doing wrong, you refine. You fix up your plan. You change your plan. You make some adjustments. And then what do you do? The next week or the next day, you execute again. Then you review. Then you refine. Then you execute again. You review. You refine. And this is a process that will take time. And you're going to notice all of your negative habits from your trading are slowly going to go away. And guys, in trading, it's really about it. It's not about what you are doing in trading. A lot of the times it's about what you're not doing in trading, what you don't do in trading, right? Like if you minimize all of your stupid mistakes, all of your psychological flaws that are leading to unnecessary unnecessary losses, if you eliminate all the garbage that you do in your trading, right, you're going to become more profitable. Like for me guys, personally, when I was first starting out, my number one goal wasn't to make money. It was just to figure out what I shouldn't be doing. What should I not? what should I stay away from in trading? And once you understand what you should stay away from in trading and what setups to stay away from, what charts to stay away from, right? What maybe psychological mindsets you should stay away from, right? Once you know what not to do, it's really easy to flourish and what you know you're supposed to do, if that makes sense. Just focus on what not to do. eliminate all the stupid garbage from your trading and you're going to see your trading go to the next level. Okay, that's really it for the presentation, guys. Just understand that this is an evolving plan. And I think we talked about I mean guys, just go step by step here. Follow everything. Um I really want to emphasize that at the end of the day, everyone's different, okay? Everyone is completely different. Your [snorts] your your plan is going to be different from someone else's plan. But always create a plan. Do not procrastinate. Put it pen to paper. Write it down and think it through. Stop trading randomly. Make this plan and execute off your plan. Okay? Don't procrastinate. Write it. If after this class, take out a a piece of pens, a piece of a notebook, get a pencil or pen, write down your plan. Okay? And once you do that, you're ahead of the 95% of traders, the 95% of all the amateurs who don't know what they're doing. You're going to be ahead of them because none of those guys have a plan. They're trading randomly. They are effectively gambling like at the casino. Why? Cuz they're not doing anything consistently. They don't have a plan of execution. They just do randomness. And I can guarantee you if you're just going to be a random individual, a random trader, you're not going to ever consistently make money, which is the goal. All right, guys. Hope this makes sense. Please come to my streams if you have any questions. See you later, guys. I'm going to teach you how to build a trading plan so strong that you have no choice but to become profitable. And I guarantee that 90% of the people that are watching this video right now, and yes, that includes you, are approaching the markets randomly. Random setups, random strategies, random management, random execution. And the funny thing about that is you have random input, but you're expecting consistent results. It makes absolutely no sense. And by the end of this video, I'm going to teach you how to build a trading plan specifically tailored to you so you could 2x, 3x, even 5x your trading profits. And it doesn't matter if you're trading on a small account or a large account or what market you trade in. It doesn't matter if you trade stocks, options, futures, crypto, forex. This video is going to save you hundreds of hours. And if you actually apply what I'm teaching you, it could dramatically increase the amount of money that you're making in your trading. And before we get into the video, I want to go ahead and introduce myself to anyone who is new to me or new to the channel. My name is Emanuel Malurovich and 5 years ago my father taught me how to trade. He was my mentor and without him I would not be where I am today. And in fact, this picture was literally day one of him teaching me how to trade. My mom took this. This is where it all started. And if you want more information about our journey um obviously from my perspective from but also from my dad's persuh perspective and if you want to know my dad's journey as well I created a YouTube interview video with my dad where he details everything you know what he had to go through to become profitable and of course how he taught me. So after you're watching this video I would highly recommend watching this one. It's on the same channel so definitely check that out. And here are my last five months of trading statements. And the reason I'm showing you this is to be as transparent and as real as possible. I use Charles Schwab. That's my brokerage account. And I use Think or Swim platform. I want to show you that I actually make money doing this. That everything I'm going to be teaching you today, I actually implement within my own trading to make money. This is what I do full-time. This is my career. This is how I make a living. And I trade live every single day. So, in this statement, you'll see my deposits. I didn't make any deposits. You'll be able to see my withdrawals, my beginning balance, ending balance, cash activity, all that good stuff. In November, I made $77,571. December, I made a little bit over 53K. January, I made 73K uh and then $656. February, I made a little bit under $69,000. And in March, I made a little bit under 44,000. And it is currently April 27th. I'm going to have my April statement uh ready for next video next month once that statement is prepared. But I think I'm up a little bit over $57,000 for the month of April. Hopefully a little bit more. There's still a couple more trading days. And by the way, I post my profits every single day on my Instagram, M Trades, and I give you kind of like a sneak peek of my life as a trader. And I try to be really transparent. So definitely follow up on my Instagram if you want to know kind of day-to-day what I'm doing as a trader and how much I am making. But let's go ahead and jump right into the video. I want to keep this video around 20 minutes long or so. So I have a shot clock, 20 minutes on the clock. Let's get this going. Build a trading plan so strong it's impossible to lose. And when I say it's impossible to lose, I'm not talking about that you're not going to have any losing trades. Losing is inevitable in trading. It's a part of the profession. You're going to have losing trades. All of the best traders have losing trades. But I'm talking about impossible to lose longterm. To build a plan, to build a system that can make you money in one year, in 5 years, in 10 years, and you need a plan in order to do this. And it blows my mind how many beginner traders don't put any attention to building a profitable plan. every serious profession where money and risk are involved, a plan is required, a pretty intricate plan, right? Why would trading be any different? I mean, think about it. If you're an entrepreneur, if you're a, you know, business owner, you create a business plan, right? You have a marketing plan, marketing budget, you know exactly how much you're going to be playing uh paying your employees. You have a strategy for how you're going to scale your business, right? You can't, you know, start a business and expect to make money without a plan. Trading without a plan is like starting a business with no idea how you'll make any money. It doesn't make any sense. If you're starting a business, you need a plan. If you're going to be a trader, you need a plan. Um, pilots have a flight plan, right? When you go on a plane, you're not hoping, oh, I hope my pilot just flies in hopes that he lands, you know, at the right spot. No, they have a clear flight plan on how they're going to fly, what altitude, whether there's going to be crazy weather conditions, you know what I mean? If there's going to be a storm. And trading without a plan is like literally flying without a blindfold. It sounds ridiculous, right? But trading without a plan is also ridiculous. Next, engineers and architects create blueprints, right? Before they even start constructing the building, they have every single detail completely planned, right? Because without that, well, the building would inevitably collapse or it wouldn't be properly built. A lack of a trading plan in that sense could lead to an emotional collapse. Just like not having a plan if you're constructing a building could lead to the building collapsing, right? Does that make sense? We need a plan. This is something that you need to be focusing on right now. It's extremely important because your job isn't to trade. Your job is to follow your trading system. And your trading system is built through time and experience. And I'm going to show you how to build one literally today. So let's go ahead and literally create a trading plan together. So what goes into creating a trading plan? What's the first step? So number one, strategy requirements. What is your edge? What strategies or setups are you trading? What is your methodology? And I'm going to be going over a strategy today, but I highly recommend watching my free 10 plus hour course. If you don't have any strategies or you don't have a methodology or you don't have a foundation behind your trading, my free course, it's in the description of this video. It's genuinely better than most paid courses on the internet. So, you could use the free course uh in conjunction with this video. But what should your strategy actually have? Right? So number one, you cannot trade random setups, right? That's not what we do as traders. Nothing in our trading should be random because guess what? Random actions lead to random results. And we don't want random results. We want to be consistently making money with trading. You're only as profitable as you are consistent. So in order to get consistent results, you need to have consistent actions, consistent input. And in order to have consistent input, you need a plan, right? So what is your edge? You have to think about that. Like what's your methodology? Why are your strategies going to work over the long run? They need to be defined. They need they need to be repeatable. They need to be identifiable. So when you look at a chart, you know what you're seeing. And the same setups will make you money over the long run. And you need to have a template of the requirements that you that you need, the criteria that you need to see for a trade. Right? There are lowquality setups and there are highquality setups. There are specific criteria that make a setup highquality and then there are also or I should say a lack of criteria that make a lowquality setup lowquality. You need to you need to know all this criteria. You need to know what specifically goes into a highquality setup. And we're going to do that right now. Right? We're going to do a little bit of a sample little plan. All right. So, what we're going to be talking about is a buy, setup, and retracement. That's the strategy, right? So, in your plan, you have the strategy listed. And then you want to have a template of the criteria that you need to see in that setup, the criteria that you would like to see in that setup, and specific cannot haves, which will literally um restrict you from doing the trade in the first place. So, what is a buy setup? That's like a retracement pattern, right? A buy setup is it's kind of like buying the dip, right? It moves up and it retraces. It's one of the most simple strategies out there and it's actually one of my primary strategies. I keep my trading extremely simple. I don't have fancy strategies. I don't have fancy, oh well, you know, the liquidity divergence on the 15 ICT time frame creates uh an RSI uh Ballinger band speculation. Like I I keep I keep it simple. I use like two moving averages and that's it. All right. So, buy setup, retracement, buy the dip type of setup. That's what we're talking about. So, mustave. What do I need to have in my buy setup? And by the way, as we're constructing this plan here, you don't need to have everything that I have, right? This is just an example. You can move bits and pieces around based on your own psychology, based on your own preferences, based on your style. This is just a framework on how to create your plan, right? So, you don't need to copy me. You can take what I'm doing and apply it in your own way to your own system. So, for me, in order to trade a buy setup or a retracement, I need to have a rising 20 MA and I need to have an entry bar. Now, I have here kind of a diagram of a really almost picture perfect buy setup or retracement pattern. By the way, I teach all of this in my free course. So this if this is confusing I would watch the free course. This is going to teach you all these criteria that I'm about to talk about. So rising 20 MA requirement. I have the rising 20 period moving average under price trending higher. Check entry bar. For my entry bars I either want a dogey bar or a narrow range bar. Those are kind of like my requirements for the setup. I must have these two in order for me to take the trade. I need three or more consecutive red bars in a row on the retracement. So, red bar, red bar, red bar, red bar, or red bar, red bar, red bar, green bar, three in a row, or four in a row. What I don't want to see is red bar, green bar, red bar, green bar, red bar, green bar. I don't want to see Christmas lights. I want to see consecutive red bars in a row. I need to see that. That's a part of my mustave. 40 to 60% retracement. So, prices moved up and then we got a 40 to 60% retracement, which is like between probably here and here. So, did we retrace into this 40 to 60% area? I call this the golden zone, the golden retracement zone, right? 40 to 60% retracement is great because um if it's over 60% of a retracement, well, it's a little bit too weak. Why would we retrace over 60% if this was actually bullish and if this was a legitimate uptrend? And if it's below 40%, let's say it only retraces like 10 or 20%, well, it hasn't corrected enough. We need to see more of a dip before I'm going to be interested in playing the uptrend or playing the buy setup. Right? So, there's like a golden zone 40 to 60%. I need to see that. I don't want to see deep retracements. I don't want to see shallow retracements. So, these are my must haves. Next, uh I want to see an interesting overnight gap, right? I trade gapping stocks. I trade stocks that had overnight changes in price. I have another video that's explaining that. So, I would watch my morning routine video and I would watch the uh my boring strategy that makes me 50k a month video. Those will kind of go into in overnight gaps and how they work. I also want to see two to one reward to risk. I need to have two to one reward uh R to R. If I risk $100 on the trade, I need to be at least making $200, right? So, what are these must haves? These are criteria that I need to have for me to trade this setup. If I don't have these musthaves, I don't trade the setup. That's, you know, what's great about having a plan because I know what I'm looking for. Like, it's obviously it's in my mind, but I can even write it down. I know exactly what I'm looking for. So, when I see a setup, I can look, hey, does this fit my must haves? And if it does, great. If it doesn't, then I can't take the trade. Now, I also have would like to have retracement into minor support. This is like when you have an uptrend and the previous high um becomes support for the next pullback. Right? So, I'm going to see if I can kind of draw this here. Uh pen. All right. The pen is kind of So, right. So, it's kind of thin, but let's say you have an uptrend like this. You get a pullback. Do you get another move higher? And then you get a pullback where this pullback essentially pulls back into this previous high. So all of a sudden this prior resistance becomes what's called minor support for the stock. And this is where we would want to go long, right? So I'm not going to go too deep into that, but that is um minor that's a retracement into minor support. I would like to have 3:1 reward to risk. I would honestly like to have four, five reward to risk, but my musthaves says I need at least 2:1, but I'd like to have 3:1 or 4:1 or 5:1. Right? Volume requirement. we tend to want to see a volume spike on the actual uh trigger of the buy setup. So when when this candlestick finishes or when this candle takes out the entry, right, which is over the highs of this entry bar, I want to see a volume spike. They're showing that the buyers are stepping up to the plate and uh buying this stock. All right. Um I also want to see market alignment, relative strength to the market. I love to see when the market is dropping, I love to see stocks that are basing at the highs or or are within an uptrend because then it's showing relative strength to what the market is doing, right? The market's pulling back, but this stock is holding strong within its uptrend and it looks, you know, it's showing relative strength, right? There's something unique about that stock that's causing it to not drop with the market. I'd love to see that. or market alignment where let's say the market is pulling back uh getting ready for a buy setup retracement pattern. Maybe the market is at this point right here before it continues higher. I can time my entry into the stock that I want to trade with the market triggering higher with the market triggering on the buy setup. Right? I also ideally want to see a readable level two which is orderflow. Not going to go too deep into that but ideally I want to see a really good um level two. All right. cannot have I can't have conflict within the time frames, right? I can't have the five minute chart look in a downtrend, 15-minute in an uptrend, hourly is sideways, daily is bearish, right? There's no um alignment among time frames. If there's conflict between time frames, I don't take the trade literally ever. All right? So, very very important. Next, I don't want it to be sloppy and I don't want it to have high spread, right? No. So, I no high spread, no sloppiness. And if it's under 2 to1 reward to risk, I do not take the trade. So, this is a really good framework of what I look for in a buy setup. And here are some really good examples of buy setups. Right? We moved up 40 to 60% retracement, a bunch of entry bars, 2 to1 reward to risk, entry above the highs here, stop loss here. Right? What other criteria does this match? Um the overnight gap, there wasn't interesting overnight gap. Uh we [snorts] got three consecutive red bars in a We did have one green bar, but that's not too big of a deal. And of course, we have the rising 20 period moving average requirement. Perfect. Next, right here, we moved up. We kind of retraced into the rising 20 period moving average. Beautiful uh uh follow through pullback 40 to 60% retracement. Entry bars right into the rising 20 MA entry over these entry bars. Stop loss blow. Maybe this didn't have quite 2:1, but you guys get the idea. These are really good setups based off the criteria that I like to see for a retracement pattern. This is just a sample of what you can do. Next, the next criteria within a trading plan is determine your risk. What is your risk? That is the maximum amount that you could lose on a trade. That is your risk. You don't lose more than your predetermined risk. And that's the important word here or two words predetermined. You're you don't like guess what your risk is going to be when you enter a trade. You know the worst possible outcome of that trade before you get into it because you know what you're risking, right? So what risk are you comfortable with losing? You have to pick an amount where you're comfortable with losing it. It's not going to affect you emotionally or psychologically, but it's also not low enough where it's like you're you don't even care. Like if I risk $10 on a trade, I don't I don't care. But if I risk 500, which is what I do, 500 to 600 bucks on a trade, it's not going to really impact me if I lose it, but I I'll feel it, right? Like it's it's not high enough where it's going to affect me, but it's not low enough where I don't I'm going to dismiss it. All right. Before you enter a trade, you have to accept the risk that that trade may not work out. Very important. You always have to accept the risk, right? Cuz losing in trading isn't is inevitable. It's not about being right or wrong. It's about having high probability strategies and then over the long run, if you take enough of those high probability strategies, even though some of them are going to lose you money, over the long run, it'll ultimately make you money, right, with a large enough sample size. But in order to do that, you have to accept the risk that you take on every trade. You're okay with losing the amount that you're risking. If you're paper trading, I recommend risking the same amount that you would use with real money just to keep it as realistic as possible. And if you're a beginner, risk one to $10 per trade. Risk extremely small amounts because guess what? If you can't be consistently profitable risking small amounts, you're not going to be profitable risking large amounts. Develop consistency. Develop your feel, your intuition on small risk. So even if you make mistakes, even if you experiment, even if things go wrong, you're not losing a ton of money, uh focus on the consistency. And then once you're noticing that you're becoming consistently profitable, everything is coming together, that's when you can begin to scale your risk. All right, next guys. So trade management. So a lot of people, you know, they think that getting into the trade is the most important part. That is not the case. That's like literally 25% of the battle. the other 75% of the battle is managing, you know, your while you're in the trade. That's the entire thing. Like your intrade management is what's most important to make sure you extract as much value from that trade as possible while keeping your downside relatively low. All right? So, you need to know how you're going to manage the trade before you even enter it. You need to know when are you going to take profits? Do you have a specific target? How much profits are you actually taking? Are you going to leave a runner on the position? Are you raising your stop loss at any point to break even or to a specific point on the chart? If so, when are you going to do that? Like, if you hit a certain reward to risk, if you're up two to three Rs on your position, are you going to raise your stop-loss? How much profits are you going to take out? Right? If you hit two to three Rs, are you going to take out 100% of your profits or 50% of your profits? Right? All of these trade management concepts you need to have predefined, predetermined within your trading plan. So, when you're in the trade, you don't need to guess how am I going to manage this trade, when do I exit, when do I raise my stop loss, uh uh how do I manage? You don't do that. You know exactly what you're going to do before you even take the trade. Now, as you become more and more experienced, this is going to become more and more discretionary where you can literally make um like in the- moment type of decision where you're managing a specific trade and you can make an impulsive decision based on the management right now. That's once you have experience, you can kind of do it on the fly. Like myself, like I have a trading plan that I do, but a lot of my decisions are discretionary. But in the beginning, you have to keep it systematic. I'd recommend writing on a piece of paper and then once you get a feel, once you develop intuition and experience, you can go more discretionary and you'll know your style. You know, you'll know what psychologically you like to do, right? So, let's create a little bit of a sample trading plan here for you guys. So, you guys know um you know, you guys know the structure of what to actually do. We're kind of running low on time here. We're at two minutes, but whatever. We're going to make this video a little bit longer for you guys. So, if you're below 2:1 reward to risk on the position, you're going to stick with your original stop-loss, right? So, let's say you get into the trade and it's moving in your favor, but it's below 2:1, right? In that case, just stick with the original stop-loss, right? And by the way, you don't have to do this, right? This is just a sample. This is just a framework. This is just me trying to teach you how to think. From here, you need to create your own that will fit your own psychology, right? But let's say you get into a trade, it's maybe one to one reward to risk. At that point, you just stick with your original stop-loss. Or you could raise your stop loss to break even. That's another option for you. You hit one to one reward to risk, raise stop loss to break even. That's an option, right? And let's say the trade doesn't work out. It doesn't even go in your favor. You cut you get out at your stop loss. That that part of management is actually really easy. If it's a losing trade, it's incredibly easy to manage because you just stick with your stop-loss. If it's a winning trade, that's where it gets difficult because you want to extract as much profit as possible. So, under 2:1 R to R, stick with the original stop-loss, right? You could do that. If you hit 2:1, right? Let's say you're risking $100. The trade is now $200 in profit. What you could do is take 50% of profits. You take $100 off the table. You move your stop loss to break even, and then you trail the back half of your position. And there's a bunch of strategies that you could use to trail your trades. Trailing just means raising your stop-loss when you're in the position. I would just watch my free Templar course. It'll teach you how to do that. So, this is an option for you. Or at 2:1, you could take 100% of your profits. Or at 2:1, you could stay completely in the trade and just move your stop loss to break even. It's up to you. Whatever you want to do, right? This is just a framework. Next, let's say you're up more than 2:1. Let's say you're up 3:1. You made three Rs on the position. You take another 50%, right? So, we took $100. So, we took $100 off the table here. We have $100 left in the position. From here, it goes up to three Rs. You take another 50% out. So, now you have a quarter left in the trade. And then you trail the rest of it where you raise the stop loss and you let it stop you out for the rest of the position. Or if you make five to seven Rs, you take full profits no matter what. So, if you're in a trade, hits five Rs really fast, let's say you take full profits no matter what, right? This is another really, really great option. So, it's up to you what you want to do, right? And a couple of other things uh I like to have in my plan is if a trade triggers you in but doesn't give you follow-through, like let's say you get into a trade but it doesn't go right away, it doesn't go in your favor right away and it sort of just chops around at your entry, look to get out quickly, right? This is a great uh thing that you can do, right? Like if the trade doesn't immediately work in your favor, look to trail tightly. Look to get out quickly because there's something wrong with it, right? If the trade's not, you know, uh playing out to your thesis and to your conviction and it's just chopping around your entry, you could just get out close to break even. If you have really high conviction on a trade, you're going to have looser management, right? You're not going to be trailing as tightly. you're going to give the trade room to fluctuate to ultimately continue in your direction to your, you know, uh, prof uh, to your target. If you have low conviction on the trade, let's say there's a trade where it's good enough to take, but you're not that confident, you could have tighter management, so you limit your losses or you could take faster profits. This is just a framework, guys, you know, and this is how I would structure it. If you're up one to one, what are you going to do? If you're up 2 to1, what are you going to do? If you're up 3 to1, what are you going to do? When are you raising your stop loss? When are you going to trail to break even? These things should be on your mind, guys. So, trade management, very important. Another, are you leaving a runner, which is kind of what we talked about as well, but you have to think about how you're going to manage a trade before you're even in it. Next, guys, I have a bunch of super good rules that we could follow. I'm going to kind of hurry up here. We only got around what, two more minutes, not even. So, trading rules, your system is only going to be as profitable as how strict your rules are. I don't even know if that makes sense, but you get the idea. Your plan needs to be extremely strict off what you can and can't do in the markets, right? If you're building a building, right, you're going to have it's going to be very strict for where you put the blocks, how you build the foundation, how you build the support for the structure. Same thing with trading. You need to be extremely strict with your rules. So, here are a couple rules that you could use. All right, protecting profits, right? Um, one really good thing you could do is protect 70% of your daily profits. If you're up $1,000 on the day, you have to protect 700. This is a really good way of making sure you're retaining the money that you're making, that you're keeping the money that you're that you're working on, right? A lot of people don't do this. They'll make thousands of dollars and then they'll give it all back that day and then lose money. You need to have rules. If you're up a certain amount, you have to keep by the end of the day a certain percentage. Another example of this is you're up three hours on the trade, you need to protect two. All right? So, very important. If you're up three hours, you're up, let's say you're risking 50 bucks and you're up 150 on the trade, you have to protect at least $100. You need to have rules to protect profit. So, you actually keep what you're making. Okay. Next, cannot overk this. This is I mean obvious predefine your max risk. We already talked about that in the determine your risk. You you risk what you're okay with losing and you can't over risk. You have a maximum risk. You stick to it. You're strict with your maximum risk. And you need to predefine your max risk before you take the trade. And then you have to size it accordingly. Size the position accordingly. So if it does hit your stop-loss, you lose what your max risk is or you lose less than your max risk. Okay? Very, very important. Next, what do we got? Never add to a losing trade, guys. Please don't do this. I saw my dad uh do this at some point when I first started trading. He did it. He ended up making money on the trade, but after he was like, "Do not ever do this." If there if you're in a losing trade, it's probably for a reason. Why would you add to a losing trade if it's not working? Why would you add to a failing trade? Doesn't make any sense. Never do it. Never DCA in. I know your thought process. I know you're like, "Oh, yeah. Well, if I add to it, it decreases my average price and then if it moves up a little bit, then I'm going to be back to break even or in profit. Don't do it. Save yourself the money that you're going to lose. Just don't do it. Trust me, it's a cardinal rule. Next, you have to have rules when to step away. If you feel emotionally or psychologically compromised or if you have more than five losing trades in a row or if you lose your maximum daily risk or if you feel those emotions trickling up within you, step away. Very very important. You have and and this is like personal, right? Like you have to think about it yourself like like when you feel certain emotions, you have to step away or go on a walk or or go um talk to your friends or whatever you got to do. But if you're feeling emotional, you h you have to know when to step away from your office. All right, guys. Next, no outside beliefs or biases. This should be a very, very important rule. Don't read earnings reports. Don't read the news. Don't read financial statements. Don't listen to your friend who thinks he's an expert on investing who only took like one college course. Don't listen to your financial advisor that your dad recommended you maybe for investing, but we are trading. As traders, we exclusively focus on price action. That's what we do as traders. We don't focus on outside news, outside beliefs. Because most of the time all these beliefs, all these news, all this information are already priced into the stock. Only focus on price action and the relationship between the buyers and the sellers. Now, these are rules that you could have just example, but you need to have rules, right? Very important rules. Another rule that you could have is if you lose [snorts] two or three trades in a row, right? Lower your risk to a certain amount. And then once you have one or two trades in a row uh winning trades and you're feeling confident again, that's when you could scale your risk back to what you're comfortable with. All right, guys. We're we we went way over 20 minutes, but I don't care. This is going to be a banger video. All right, next. Practice pair, right? What's pair? Prepare, execute, analyze, refined. You're going to be doing this through journaling. All right, it's very, very important, guys. The only way you improve as a trader is to improve your system. So, what do you do? You prepare your trading plan. Exactly what we just did. You're going to do it for yourself. Once you prepare it, you execute that plan. Take 10 trades, 20 trades, 50 trades, what, however many is enough for your own style. That establishes a large sample size. From there, analyze what you did wrong. Analyze what you did right. Analyze what makes you money. Identify what loses you money. Identify strengths, weaknesses, how you executed your trades. Did you follow your risk? Did you follow your plan? Did you follow your rules? what setups are working for you, what setups are not working for you. Once you analyze all of that through journaling all of your trades, which is very, very important. You're going to refine your plan. This is when you go back into this giant plan that we just made and you refine it. You could refine the certain qualities that you need to see for a setup, right? Or you um change your risk or you trade your uh change your management, right? Analyze what management ends up making you more money. Does raising your stop loss to break even after one one RTOR make sense for you? Or does taking half profits at 2:1 make sense? You have to analyze all of this and ask yourself, right? Ask yourself, is this making me money? Is this actually effective for me? And from there, you make the changes. You go back to your plan and you change stuff up. And then what do you do as you're changing it? You're re-preparing your plan. Then you execute it again on a large sample size of trade. Then you analyze and you improve. Pair guys, if you build this plan out based off your style, you do all of this right. You have clear rules that you can and can't do in your trading. You have very clear trade management on where you're taking profits, how you're trailing, how you're raising your stop-loss, what to do when you're when it hits target one, two, or three. You actually like if you have all of this, you know what your risk is, you know what setups you're looking or what qualities you're looking for in your setup. you know the setups that make you money. Like if you have all this listed and then you're actually executing it, analyzing, refining it through journaling, it's impossible to not improve. You will 1,000% improve over time. All right, guys. This is what I would do. This is what I did when I first started. Um, at this point, guys, I don't really have a plan on paper. My plan is ingrained within me. It's ingrained within my bra uh my brain, ingrained within my DNA. Now I just know what my plan is. I am my plan. I am the system that I created for myself through five years of experience. That's who I am. My system. The reason I'm able to make money consistently is because I have a system that works for me. And you need to find a a system that works for you. That is the goal here. All right. Please actually apply everything that I just taught you in this video. Trading psychology is one of the most important components of becoming a profitable trader. And in this chapter, that is exactly what we're going to be talking about. I'm going to share with you my 5 and 1/2 years of trading psychology experience, and exactly what I would focus on to improve your mindset, to improve your ability to control your emotions, and of course, to improve your overall trading psychology. So, let's hop right into this chapter. Now, let's go ahead and get started with the actual class. I have a shot clock right here. We'll do 17 minutes. All right, let's get it going. So, the worst advice that I see all the time on social media about trading is trade like a robot. This is the worst advice that you could hear and it's literally impossible to apply. We, ladies and gentlemen, are not robots. We are human beings and as human beings we have emotions. They are inevitable. Our job as traders shouldn't be to not have emotions. It should be to learn how to control those emotions. That is the difference between you making money with trading and you you know being an extremely successful trader. It's the difference between success and failure. Your ability to control your emotions and master your trading psychology. But you need to accept that they're they exist. They're going to happen. And your priority, you know, stop focusing on not having emotions. Focus on learning how to control them. And ultimately, there are two emotions that that are rooted in every single trading issue that exists within your trading psychology. It all comes down to two different emotions. And we're going to talk about the first one, which is greed, right? And and by the way, this is every issue. Every issue Whoops, almost dropped the mic. Every issue that is within your trading ultimately comes down to greed. And there's one more that we're going to talk about in just a second. But what is greed? Greed is your desire to make money. And ultimately, your strong desire to make money is what's stopping you from making money. And we're going to go over the exact ways that's actually happening. The first way is overtrading. This is when you are taking way too many trades. But to be more specific, this is when you're taking low quality setups. You're forcing trades and you're trying to force profits, right? You're forcing setups that aren't there, that don't actually fit the criteria in your trading plan. Why are you overtrading? Ultimately, you want to make more money. Why do you want to make m more money? Because of greed. This ties into greed. You need to really accept that. So, how do we fix overtrading? Like, if you're overtrading right now, how do you fix it? Well, you need to have a very detailed plan of what goes into a highquality setup and what goes into a lowquality setup. If you don't have a plan like that, you're you're you're never going to become successful. When you're looking at the charts and you identify a setup, there should be like alarm bells in your brain that are like, "Yep, that's a high quality setup." Or, "Nope, that's not a high quality setup." There's specific qualities, criteria that go into it being high quality setup. This needs to be written down so when you're looking at a trade, you can identify, is it a good setup or a bad setup. If it's a bad setup, don't take it. You don't trade that setup, right? If you do trade it, that's overtrading, right? you only focus on A minus to A+ setups, maybe occasionally a B+ setup if you're feeling aggressive. Now, if you don't know the criteria or the qualities that go into A+ setups, I highly recommend watching my free 10 plus hour course. You could find that in the description of this video. It'll be linked. You could start it. It's 100% free. It's 10 hours long. It is genuinely better than most paid courses on the internet. It'll teach you all of this stuff. The next way that greed could be affecting your trading is overleveraging or overrisisking. Right? You could, you know, trade profitably and make a bunch of money for 3 months, 6 months, a year, and then one trade you can give it all back. One trade can ruin your account by overleveraging or overtrading. Now, why does this happen? It happens because you have a desire to catch a big trade and to make a ton of money ultimately because of greed. The way to stop overrisisking and overleveraging is honestly be disciplined with your plan, right? When you like in your trading plan, you should have a specific risk that you cannot go over. Like for me, I can't lose more than $5 to $600 on a trade. That's I just can't do it. It's not in my plan. Like if I I don't ever do that. I'm very very strict with it. Right? The way to stop overleveraging and over risking is to be strict with your plan and to have a concrete risk that you cannot go over in a specific trade or in a specific day. Have a rule where you can't lose x amount in a specific day. Like for me, if I lose more than like a,000 or 1500 in a single day, I'm done with the day. I'm done trading. You need to have that rule for yourself. You need to have rules that limit the amount that you lose in a day or in a trade. Okay, the next way that over le or that greed can kind of materialize in your trading is through revenge trading where you take a setup uh on a stock or whatever you're trading. You lose on it and now you have feelings, you have you know those emotions to essentially make your money back or you know make your money back and then also make profit. This actually plays into the next emotion we're going to talk about. We'll we'll talk about that in just a second. But what is revenge trading? You're you're trading because why? Not because there's a quality setup, not because there's specific criteria that you like to see. You're trading because you lost on that setup and now you're trading it again to make your money back. That's not a reason to take a trade. Just because you lost on a setup doesn't that's not a good enough reason to take that setup again. You need a you need quality criteria to take a trade, right? So, you're you're again you're forcing profits. you're forcing yourself to, you know, either break even on that trade or to make money back. Ultimately, this materializes in greed. How do you fix revenge trading? What I like to do is, um, if I lose more than two to three times on one stock, if I'm scalping it, I remove it off my watch list. It's a really great way of doing that. If you're only trading one to two securities, maybe you only trade NQ or ES or something. In that case, you can, you know, after two or three losing trades, you're done for the day and you limit yourself, right? You just got to be disciplined with it, right? So, have rules in place for overrisking for the maximum amount that you could lose in a day or on a trade and have rules for revenge trading where you stop trading after one or two or three losing trades. Okay. Next, another way greed can materialize in your trading is impatience. And this is not even like like from a trade to trade basis like not I'm not saying like being patient within a trade. I'm talking about the impatience of trying to make money and become a profitable trader trader as soon as possible. Okay. A lot of times most people who get into trading, I talked about this in my last video, you're not actually interested in becoming skilled traders. You're not actually interested in learning, you know, what goes into a high quality setup or how to manage risk or how to manage your positions correctly. You're just focused on making money. You're not actually interested in becoming a trader and you're impatient. You're so, you know, eager to make money that you skip the process where you try to like cut corners. you skip certain steps and you just have to for this, you know, you have to change your expectations when you're going into trading. Stop thinking about the money. The more you think about the money, the more it runs away. The more you think about becoming a skilled and profitable trader and focusing on the process, the m the more money comes to you, right? I've never met a really really good trader that doesn't make money, but I've met a ton of people who want to make money with trading who don't. Right? focus on becoming really really good and the money will come to you and that could take time. You need patience, right? Trading like think about it. You go to school for four years to get a degree that doesn't even guarantee you a job, but you're not willing to spend 3 to 12 months to become profitable. Doesn't make any sense. You have to shift your expectations and be patient with it. Focus on act on learning the actual skill set. Don't focus on the outcome. Next, holding too long. This is when you're in a profitable trade. The trade is making you money. You're up, let's say, two Rs, three Rs. You're feeling super good. And then you decide to hold too long because you want to make more money. And this is when you ignore your exit plan because you want to hit that home run trade. You're not happy with two Rs. You want to make four Rs. You're not happy with $1,000 profit. You want to make $10,000 profit. Your desire to make more money on that trade is stopping you from making any money at all. Like if you're up, let's say a,000 bucks on a trade, you could take take partials, take half, take 500 bucks off the table, take 750 off the table. You're still in the trade, but you took some profits already versus you're up a,000, you want to make 3K, and then all of a sudden you you don't you um ignore your exit plan and next thing you know, it becomes a losing position. That's ridiculous. That ultimately comes down to greed and you just wanting to make more money versus focusing on actually trading the right way and following your exit plan. If you don't have an exit plan, I would watch my free Templar course. I go over how to create an exit plan. It's extremely useful. Everyone should have a plan on entering into a trade and a plan on exiting that trade. Okay? You can't have one without the other. Next, guys, so though this is all about greed, right? If one of these is your issues, like that's because of greed. And hopefully some of my solutions helped you out there. Now, the next emotion is fear. There's greed. Your desire to make a lot of money. And then there's fear. Fear is being fearful that you're going to lose money or fearful that you're not going to make money. Okay. The first way fear materializes is the fear of being wrong. And I have just around seven minutes. Okay. The fear of being wrong. A lot of times I see beginner traders, they're more interested in being right versus wrong versus making money because they have their ego plays into it. They can't handle their ego being wrong where they enter into a trade, they're so confident it's going to go higher. They're so confident that's going to happen that when it moves lower or when it doesn't play out the way that they think it's going to, it hurts their ego. It hurts to be wrong. And you can't do that, right? You you can't be focused on being right or wrong. That's not what trading is about. Trading is about making money. Okay? So, if you feel like your ego plays a heavy role in your trading, you need to find solutions to that. You have to realize that, you know, you should have a much stronger desire to make money than to be right. And sometimes the best way to make money is to limit your losses. All right? So, if you have the fear of being wrong, you have to shift your perspective and focus more on making money versus just being right. Okay. Next, fear of losing. This is when you are risking money on a setup and you hesitate where let's say you see a really high quality trade and you hesitate on that trade or you second guess yourself and that trade actually works in your favor and then you're thinking to yourself, why didn't I take that trade? I I knew it was going to go down or I knew it was going to go up but I didn't take it. Why am I so stupid? Right? It's happened to me. This ultimately boils down to your fear of losing. you're fearful that you're the money that you risk, right, you're going to lose it. That you're you're fearful that you're going to lose money. The way that you fix this is to number one, lower your risk. You're risking way too much money if you have a fear of losing money. You have to pick when you decide how much you're going to risk on a trade, you have to pick an amount that is not going to kill you if you lose that amount, but it's also not going to be so low where you're like, "Ah, I don't care." Like if I risk $10 on a trade, I don't care, right? Okay, I'll lose it. I don't care. But if I risk $500 on a trade on one hand, I'm not going to feel affected that affected if I lose it. But if I do lose that amount, I'm still going to kind of feel it, right? You have to find that sweet spot. But if you're like actually fearful when you're entering into a trade, it's because you're risking way too much, right? lower your risk to the point where you're comfortable with losing that amount and then you're not going to have that fear of entering into trades because worst case you have your stop-loss. You know exactly how much you're going to lose. So, it's okay. You know the worst possible outcome when you enter into a trade. You're going to lose what your predetermined risk is. And you need a predetermined risk. You need that in your trading plan. FOMO. You fear you're missing out on the trade of the century. So, you break your plan and you overtrade. A lot of people go through this, the fear of missing out. This is when, you know, you see a trade, you feel like you're missing out on it. Maybe you were late to it. Maybe you didn't spot it in time. Maybe you passed on the position. You just like let it, you know, you didn't decide to take it. Then it starts to move in your direction and you FOMO into it because you fear like you're going to miss out on some amazing opportunity. Understand there are hundreds, there's going to be thousands, tens of thousands opportunities in your lifetime, in your trading career. You're you're going to have trades that same day, you're going to have a trade the next day, you're going to have a trade the next week. Don't get so caught up on one trade that you end up getting into it late because of your emotions and then you end up losing money. There's plenty of opportunities to make money in trading, guys. This past week, there was a trade that if I literally I kind of misplayed it. If I played it right, it would have made me like 20 to 30K. I swear. And instead of FOMOing in late, I was like, you know what? It is what it is. I'm going to let it go. It was a tough pill to swallow, but I had to do it. Right. So, just understand there's there's going to be plenty of opportunities. Don't get so caught up on one trade. There's th there's going to be thousands of setups in the markets. All right. [snorts] Next, fear of not being good enough, lack of confidence, switching strategies. So, ultimately, lack of confidence and uh switching strategies. This is go going to boil down to the fact that you're not confident in your trading. you're not confident in your ability to make money, maybe because you're a beginner, or maybe because you're not profitable. Honestly, the best way to actually fix this is to have a coach or a mentor in your trading. And it doesn't have to be me, it could be anyone, but someone that could show you how to trade the right way and someone that you could trade with every single day. Um, if any of you guys are looking for, you know, a full-time coach or a mentor, I do have a mentorship program. I will be completely transparent where I take traders under under my wing and I scale them from zero to 10 to $50,000 a month with trading. I trade live every single day. I take you under my wing. I teach you from A to Z. And ultimately, we're trading together every single day. You're learning how to trade by doing it with me. I share my screen. We're on the same uh call. We're trading together. We're making money together. And most of my students, they never have lack of confidence. They never switch strategies because they learn how to trade correctly from the very, very beginning. All right, guys. We have just about 1 minute and 30 seconds left. So, if you do want a full-time mentor, you're serious about becoming a full-time trader, you want to do this, you know, as fast as possible, you you don't want to figure it out by yourself, uh you can apply um in the link in the description and we'll we could see if this is a good fit uh for me to work with you and for you to trade live with me every single day, guys. Next, in terms of fixing a lot of these trading psychological issues, we kind of talked about it, but real quick, uh, something that's really helped me is start the trading day in the green. Even if it's a small winner, when you when at 9:30 hits, the opening bell hits, make sure your first trade is a winner. Even if it's a small winner, even if you have to lower your risk, make sure it's a winner. Me doing this like was a gamecher for me. When I start off the day positive, I just have such a different psychology moving into the rest of the day. Just do it and you'll see the results. Create a trading plan. I'm not going to go over it in this video. Just subscribe to this channel. This is the next video that I'm making. When in doubt, always lower your risk. This is so freaking important. Whenever you're emotional, you're feeling doubt, you're feeling lack of confidence, you're feeling anything that's not a positive feeling in your trading, lower your risk. Always lower your risk in times of doubt so you could protect your downside. Another thing you should be doing is focusing on becoming a break even trader before becoming a profitable trader. Most people try to go from uh losing or beginner to profitable. Instead, you should be going from beginner to break even trader, break even trader to profitable trader. That step in the middle is extremely important. Oh, there's a timer. But real fast, we'll finish these. Step away when you feel your emotions get to you. Just step away from your desk if you feel like you're getting emotional. Have rules. And ultimately guys, every single one of these issues in your trading, the greed, the fear, overtrading, overleveraging, revenge trading, impatience, everything. Fear of losing, it all boils down to your discipline. Being disciplined and making sure you do the actionable steps within your trading plan to prevent all of this from happening. Whether that's you stepping away from your trading desk, whether that's you lowering your risk, whether that's you having rules on how much you could lose on a day or on a trade, whether that's just specific rules just to you for how to not overtrade or to how to, you know, uh or what to do when you feel FOMO, whatever the case is, you need to be disciplined with your rules. That's what's going to help you with all this trading psychology. All right, guys, that's the end of the video. Make sure you subscribe to the channel. Um, make sure you leave a comment if you found this valuable. Leave a like. It helps the YouTube algorithm. And hopefully you found a tremendous amount of value in this video.