18 KiB
I spent years going in circles trying to become a profitable Trader but when I threw everything out the window and traded one simple strategy my trading turned from losing me money to actually making me money this is the biggest Pitfall that everyone falls into when they come to trading is thinking that you can Master multiple strategies and patterns and become profitable with them all but in reality this is probably what's holding you back from becoming a profitable Trader so let me try and fix that for you and save you from the headache of wasting potential years and walk you through the strategy that I spend years waking and trying to figure out so you can try and become profitable faster than it took me so a quick overview of the strategy is I have found it way more profitable to just focus on key areas of support and resistance in the market just focusing on those cuts out a ton of the noise and back and forth that the market does and it allows you to focus on high areas of probability where the market is likely to reverse and at those areas you can get a high risk reward rate you and so what that means is if you risk a hundred dollars you can make three or four hundred dollars and why this is important for trading is because you're not going to win every time that's just a part of the game and when you have a risk reward like that you can have something like a 50 wound rate you're only right half the time but you're still profitable over the long run and that's what's important when it comes to trading and so that's what I found super powerful about just focusing on key areas in the market because that increases the likelihood that it reverses but it also increases the likelihood of how large that potential reversal is and so I focus trading the es Futures on a one minute chart that's what we're looking at right here and what I found future so powerful for is they allow you to day trade while avoiding the pattern day trading rule you do not need 25 000 in your account to execute day trades consistently the rule is with Futures you don't have to abide by that they're a little different but the main thing is you can skip the pattern day trading rule which is very important when you're trying to day trade actually on a one minute chart and so how I like to find these levels is I actually like to use a larger time frame so if we go over and look at a 15 minute chart I like to essentially look at where the market has made a clear double bottom and then when the market comes back and touches that level that's when I like to look for a potential bounce because if you use a larger time frame those signals are going to be stronger and so it increases the likelihood that you're gonna find a stronger support level in that area and when it comes to looking for a bounce because you're on a smaller time frame this bounce right here looks pretty small on a 15 minute chart but on a one minute chart which is what I like to enter in on it can be a very large trade and definitely a big enough trade to make a nice profit off of and so once you have created that level you just sit and wait for the mark to come to you that is a big key when it comes to trading is you want to have your levels already in place when it comes to looking for trades you want to be planning out what you're doing you don't want to be reactive based if you're just reacting to moves in the market as they happen you're more likely to be trading on emotions and not have a structured plan in place having a structured plan in place is extremely important when it comes to your trading and another way I like to draw levels is you can just draw them off of a one minute chart as well is the market has clearly made multiple Bottoms in this area so I like to draw a support Zone off of that and so when the market then comes back and touches that zone right here I'm gonna look for a potential reversal off of that betting that the Market's going to go higher off of that now the biggest mistake you can make is just buying when it gets to these support levels randomly you don't know if they're gonna hold and so I found three key steps to follow when you're looking for these reversals off of these levels because if you just randomly buy when the market comes down to these levels we don't know anything that's going to happen in the market when it comes to trading but it's nice to try and increase your chances as much as possible and so the first thing to keep in mind is you want to make sure that the downtrend into your support level is broken because if the Market's just trending down in a clear downtrend and you have some kind of really nice downtrend in place and it's just respecting that well if the markets come to your level down here and you just get in down here with the buy well the market could just keep going down here and break that level you want to wait for the market to show a clear break of this downtrend and switch that Trend that's going to save you a lot of hardship when trying to counter Trend trade is you have to wait for that downtrend to break in some ways before there's a likelihood of the market to actually reverse and so that's the first big key thing is I like to see the most recent Trend broken and so if we're looking for a reversal off of this area right here you know we have our support level that's the burst key that we even want to be looking out for but then we want to make sure that the downtrend is broken so to analyze this trend right here the Market's made two pretty big swings right here and those those are a little too big to be drawing a trend line off of because we're on a one minute chart there are some smaller Trends here in place you could say there's a downtrend right here and it's broken and then there's also a really tight downtrend right here as well I like to generally go off a couple swings in the market or if the market makes a really fast move like this where the bars are just really one directional then I just draw a really tight trend line based on that and assume when that's broken that that really tight downtrend is broken now a quick side note my bearish bars are blue here and my bullish bars are white the reason why I do this is that purely for emotional reasons if you think about it red and green are extremely emotional triggering colors when it comes to trading you want to try and keep things as neutral as possible so these are very Zen colors and so they don't trigger me as much when it comes to trading seeing you know a trade go against me seeing a bunch of red bars that really adds up to affecting you when it comes to trading but so with this trade right here is looking for a bounce off of this Zone I would consider right here this as a break of that downtrend now over my time analyzing the market I've realized that when the market breaks a downtrend that doesn't necessarily mean it's going to quickly reverse off of that area now of course that can happen but in terms of being consistently profitable I have found that it's better to wait for the market to come down break that downtrend and then make a pullback and then this is where you make that decision to get in because there's a couple things that can happen in this pullback right here is one the market can actually continue lower because then this could just be a pullback in the downtrend where it continues lower or it can then start to shift higher essentially what this pullback here is is it's an inflection point in the market it's either the market attempting to break lower and continue that downtrend and that's attempt failing which is a really good signal if you're you're looking for the market to go long and go up higher or it just continues lower and it confirms that hey the trend's still going down and it's not time to get in yet and you avoid that trade and just move on to the next trade and you don't take a loss which is really important when it comes to trading is it's not about taking a ton and ton of Trades the same reason why this strategy works so well is you're just focusing on just a few key areas in the market and if you can just take a couple of really good high probability trades a couple times a week it's going to be way more beneficial than trying to take 10 or 20 trades in a day and so once that pullback happens what I want to see is a really strong Candlestick that reverses in the direction I want and so because we're looking for a long trade here I want a really bullish candle and so on my chart those are white and this candle right here is very very bullish you can see it Market opens here essentially breathing into the Candlestick The Market opens here pushes lower and then Rockets higher and it does have a little back here and so that's pretty much exactly what this Candlestick says but what it's telling us is it's come back to this area where the market previously bottomed and buyers came in and really wanted that area and so once I see that I like to get in either at the close or break of the high here and bet the Market's going to go higher and then I like to put my stop below this swing low because what that does is if the Market's going to decide to go up here and keep going up great my Stop's not going to get hit but if the trends going to actually keep going lower well I want to get out as soon as possible right there's no reason to risk more money or give it more wiggle room because in my eyes this pullback here should hold if it's going to actually reverse and then from there I like to manage the trade which we'll get into with a live example in a second and in this case one key thing that happened is there was a nice little up channel here you gotta hold through the chop in the market sometimes the market right here really took a while to get going and that's just a part of trading right it's not gonna just be a extremely fast reversal in your favor right away but you know once it gets going it can go quickly and that's when you want to potentially get out right in terms of getting out of a trade you want to be looking at where the highs are there's a there's definitely a resistance level up here the markets kind of come up here multiple times and reversed and so seeing the market rocket up into this when you're in a trade you definitely want to be getting out once you kind of get up to those highs because the easy money's done it's potential to have a lot larger of a pullback you can see the market did kind of get going up here and make one more push higher but it did eventually kind of sideways and holding through this kind of pullback is really hard and you don't know when that's going to happen you don't know if it's going to happen right here or right here so let me walk you through a real example of this strategy in practice and so first off what we want to be doing is looking for our support level so just to show you on a 15 minute chart where I found that is looking at currently you can see the market made a nice bottom here kind of moved along and it made a pretty good bottom here as well and so my thinking was okay I want to draw a support Zone off of this level I like to use zones because the market can really come and touch the area anywhere it's unlikely that it's gonna Just Bounce perfectly off of the level and so you want to use a Zone and so that support zone is right here and so what I looked for is hey when the market comes up pulls back into that level that's when I want to get in betting that hey I like this area for a potential buy and I think the Market's going to go up and so that's what I looked for let me just walk you through that a little bit let's just zoom back in this recording and so the setup for getting to this is just that simple checklist having a support Zone looking for a downtrend to be broken we kind of had a really quick downtrend like in our previous example here and then looking for a Candlestick pattern so the market essentially made some pretty bullish reversal candlesticks here and that's when I wanted to get in and so I put my stop right below that swing because the idea is hey if it pulls back here and breaks this area it's probably just going to keep going lower and I'm wrong and that's okay I just want to get out at that point and move on to the next trade but if I'm right and the Market's gonna reverse here I think down here is a great spot for my risk and then we can see what the market can do with that and so just to quickly kind of Zoom forwards this a little bit I like to have it pretty fluid management style and so once the market kind of breaks up here I move my stop to break even because I like to take some risk off the table there is kind of a downtrend line right here and if the market decides to you know sell off of that well I want to get out right I I would rather get out at break even versus trying to hold on to it that's a really big mistake is trying to give your trade too much wiggle room it's good to give your trade some room because the market does ebb and flow it has ups and downs even in an uptrend and so you have to be able to give it a certain amount of room and that's hard to know that definitely takes practice but what I found is once it makes a good break in your favor go up to break even but just like when it comes to entering in your trade and analyzing the trend you want to be analyzing the trend when you're in a trade as well and so if the market comes up to this level I want to jump out and I want to be able to try and read into things and know when it's good to get out of the trade really the most important part is getting into a trade and so if having a more fluid management style is too complicated at the start that's totally understandable just have a simple risk reward ratio of trying to go for two times or three times a risk and then get out once it hits there I don't really have a profit Target I just have one just because my system puts one in but I mainly just get out with my stop loss and so a big thing here too is we're kind of Awards this resistance level up here now a big key is this is kind of a minor resistance level and so I want to get out if it sells off of that level here and so you can see I move my stop up again below this kind of little micro pullback we had here the thought process is hey we have a really nice bullish move here it's broken my little trend line I have drawn right here if it pulls back and keeps going up that's totally fine I'll stay in the trade but we do have this little micro resistance I have to respect that and there's no reason to get greedy betting that the Market's gonna push all the way up to the larger 15 minute resistant right away and so the market kind of just plays out flagging out at this level and so that can be really hard to hold through learning to pull through trades when it's just kind of sitting there is a skill I often like to actually just go and walk around and and vacuum or something you know try and essentially keep myself busy of course I'll look at the charts but if your stop loss is in a solid spot and you could say your profit Target is in a solid spot too that's totally okay you know I have this up here because it's like if the market all of a sudden smashes higher and hits me well I'm okay getting out you know that's still three or four times my risk I'm not gonna complain right it's better than you having no profit Target the mark comes up here and then reverses all the way down here and you missed it because you were you know not paying attention and so it's definitely a fine line in doing that and so just seeing the market puts along here I was just moving my stop loss up with these little pullbacks with the idea that hey this is a pretty good breakout here I want to you know move my stop-loss up and capture that little bit more of profit and now one thing I'm starting to see here as I'm analyzing this is this is pretty much a bull flag in terms of a pattern and that's just a continuation pattern so the thought is as soon as it breaks this bull flag that it's going to make another push higher like this the market likes to move in pushes of two I mean a good example is here it made one push down two pushes down and then reverse so my thought is okay I've caught the reversal on the other side and it might make two pushes like this and so here you can see it starts to do that it makes a pretty bearish candle there and I move my stop up again below that candle with idea that that's another little micro pullback and once the trade gets up to above three times my risk I like to be be really tight with how I managed to trade just because it's great trying to capture really big trade like this but on average I have found that when I get up to about three times my risk which is up here it's more likely to have a pullback that is not going to be worth it holding through you know sometimes yes you can have a larger pullback and it keeps going higher but you know it's a fine line if you give the trade too much wiggle room it's more likely that on average you're just gonna be giving a lot more back it's better to take the easy money and run essentially because you know that's just how trading goes and so the market makes a really big climactic handle here I like to call it when the market makes a really big Candlestick at the end of a trend like this especially close to the resistance level of the highs it's more likely that it has a deeper pullback because think of it like the market has energy right it's taken a lot of energy to make these two moves and it's gonna need essentially to take a and so when it has a very large move like this at the end of already using all of this energy in One Direction it's gonna need to recover and so that increases the likelihood of a larger pullback and so there you can see I pretty much got out right as I saw it start to look like it was losing momentum and the market did have a little bit larger of a pullback here and so I was able to get out with a really nice profit there so if you want to learn more about this strategy check out the link I have in the description below it is a class that goes way more in depth into this it's free and it will walk you through everything you need to know about this strategy and if you want a video that dives more into entries and exits of these trades check out this video right here now a quick side note my bearish bars here are blue and my up bars bars what is the upper bar