Once you see the price breaking the upper trendline, you buy in and ride it to at least the highest pre-market price or high of the day to take your first profit. You will also see this happening to the short side when a stock is gapping down significantly. The flag breakout is a comprehensive trading strategy. After move up or downwards on a lot of volume , the stock consolidates with a flag pattern. You draw a trendline against the initial move and as soon as is broken you build up a position and take the first profit at the high of the initial move or at the low of the initial move when playing to the short side.
All the shown high probability trading setups only work, if you analyze the trend of the stock. Always create a plan when you trade. Even though these setups have a high probability, there is still a chance they fail. If you want to be a successful trader, consider checking out our free trading guide.
Save my name, email, and website in this browser for the next time I comment. How to Recognize a Trend Before I show you my highest probability setups, I want to show you how I recognize trends as this is essential for these setups.
The price has been moving up several days with at least one higher low or lower high if you want to trade a downtrend. Price has broken resistance or support zones in a downtrend with substantial-high volume. After a higher low the stock moves up heavily with large volume.
The up-trend has been established and I can look for setups. Volume indicates strength When I see a high volume move, I will always look for a pullback because chances are, that it will move even higher. Setup 1: The Triangle Squeeze Suitable for. Connect 2 low points to get a trendline. Buy after it hits trendline again. Set your mental stop-loss below the most recent low. For example if you risked 50 cents with your stop-loss you take some of it off after you got 50 cent.
After that move your mental stop-loss to your entry price and let the rest ride up. Heavy move down on a lot of volume not respecting the VWAP at all.
Short sell as soon as you see VWAP being respected as resistance. Move the stop-loss to your entry price. Most high-probability trading setups revolve around trading on the support and resistance model. How these levels are determined can differ from setup to setup; however, one thing remains constant across all these models: it is only at these levels that the probability of a profit is the highest.
At the other levels, there is only a low chance of the trade being profitable. These levels are important, as they represent decision spots: these are the price levels at which the trader has to decide whether or not the price movement is reliable enough to open or close a trade. Identifying the right decision spots is a crucial step towards maximizing the chances of your profitability.
However, merely this is not enough. What a profitable trader also needs to do is look for triggers. Triggers are actions that, upon their occurrence, indicate that the conditions are right for a trade to be opened. Put; they are signals of interest that the trader looks for when the price touches a decision spot.
It can be thought of as a call to action and an indicator that the time is right to trade. These triggers determine whether a trader will be trading on the bounce or the breakout in support and resistance trading. As explained in earlier articles, there are various indicators that traders use to ensure that their signals are right and that they are not simply misinterpreting the data. Confluence is basically a situation where multiple indicators point towards the same outcome and can be used to increase the potential profitability of a particular trade.
The important thing to remember while using confluence to trade is that the indicators you use need to be different; otherwise, you will engage in confirmation bias. For example, if you have already used the Simple Moving Average Indicator, you should not also use the Exponential Average or Weighted Average indicators, as these will not add to the value of your setup and will only serve to confuse you further.
Normally, traders tend to use several types of indicators to confirm their ideas and maximize the profitability of a trade. These indicators include an averages indicator, a volume indicator, as well as a momentum indicator. However, the kind of indicators you use will depend entirely on your own preferences, which will be developed over the course of your experience as a trader.
The wide-open space in a trade is the difference between the decision spot where the trigger is achieved and the next decision spot, which would potentially represent an exit opportunity or a reversal in price direction.
This is identified at a confluence level. If there is only a little wide-open space in a particular trade, say the candlestick trend reversal is occurring only a short distance away from the designated resistance level, this would indicate that there are not many exit opportunities for the trader. Therefore, the profitability potential for this trade is also quite low. If there is a lot of wide-open space, it indicates that the trader can make higher profits and that the trader can exit at any time in the space without worrying about a reversal in the direction of the trend.
There are several trading patterns that you, as a trader, will be on the lookout for to maximize your profits and ensure that you consistently make money on the stock market. However, the best trading patterns occur in a support and resistance level chart.
Before delving deeper into them, you need to understand what resistance and support levels are and what trading patterns can be spotted by using these levels. Support and resistance are two price levels that represent decision levels, as these are the price levels at which the price is most likely to reverse the trend. The support is the lower level of the price movement, at which the price normally changes from a downtrend to an uptrend and is usually considered a good place to go long in case you can see the support levels holding.
Similarly, the resistance levels represent the upper limit, where the price will change from an uptrend to a downtrend, making it a good location to short the price if the levels are holding. Of course, these levels might not always hold, and occasionally, the price might break through these levels and continue on the same trend.
When this happens, that is also an indicator: this indicates that the same trend is likely to continue for a while, representing a good opportunity to ride the trend. One of the simpler ways is to look at the price movement over a long time and see what the resistance and support levels have historically been.
For example, if you look at and trade on 5-minute candles, your support and resistance levels will be determined by the price movements over the past 2 months. For traders with a longer timeline, the history of the price action that they have to look at gets longer accordingly. The other way for traders to calculate these levels is through the use of pivot points. These can be calculated using the price movements of the previous day and yield several decision spots that are unique to a given day.
Hence, they represent exclusive, high probability trading setups that traders often use to their advantage. You can find our article on trading using pivot points here. This is when introducing the concepts of decision spots and triggers are crucial! Decision spots are important and key levels of the time frame of your choice. This is critical because setups in the middle tend to be of lower probability and setups at key levels are of higher quality.
First of all, it does not cost a trader any money. Most importantly, traders do not have to worry about missing a setup, chasing a setup, entering a setup too soon, etc. It is an enormous help for remaining patient and keeping the discipline needed to succeed in trading. Plus traders can avoid revenge trading by keeping a cool mindset.
Taking too many doubtful trades can easily lead to overtrading which leads to a slippery slope where a trader wants to earn back their money quickly. The trigger is the signal of interest a trader is waiting for.
The trader has been patiently waiting for the price to move to one of their decision spots. The trigger provides confirmation on how to trade at the decision level. It provides clues whether a trader will go long or short, or in other words whether they will take the break or bounce.
Each Forex trader can choose their own indicators, tools, patterns, trends, and support and resistance for the roles of decision spot and trigger. There is no right or wrong method and you should pick something which you like to use and that matches your trading plan and psychology.
With that said, I will now present to you my own preferences for various decision spots and triggers and it is up to you if you use the same. For decision spots, my number one tool is the strike trigger candle and trend lines. Runners-up are support and resistance , patterns, and moving averages. For triggers, my number one tool is the candlestick and candlestick patterns. Runners-up are fractals and trend lines.
Here is an example: the price is in an uptrend but far from support. After a while, the price moves back to the support trend line. The trend line is the decision spot. Price can then show 2 different reactions via candlesticks.
Hence the candlestick pattern is the trigger:. Other sweet spots can be identified by using the concepts of impulse and correction.
Price is always in either of the two and it depends on the strategy for which one is better for you. For my own trading, I prefer catching the completion of a correction, the middle of an impulse and also the start of the impulse.
I try to avoid trading the end of the impulse, the start of the correction, and the middle of the correction.
0コメント