Master Trader Breakout: Breakouts and Breakdowns are great setups as Igniting or Continuation trades in trending markets. But many fail without the proper clues or, using the poker analogy, “Tells”. Master Trader teaches how to buy/short the initial Breakout/Breakdown, as well as retracements and reversals to Support/Resistance, as well as continuation patterns. With all Breakouts and other bullish setups, we need a Price Void (i.e., insignificant resistance to the left) to allow the issue to move higher.
Real Master Trader Trade with Compelling Pattern.
Wide Range Breakdown and Bearish Consolidation
Chart Review: On 6/13 (first blue arrow), RSG was in a strong uptrend, where a Buy Setup triggered at the rising 20-MA which was above a parallel and rising 50-MA – a visual sign of a bullish uptrend.
However, it didn’t advance far and started its bearish consolidation under the 20-MA suggesting weaker demand.
On 6/25 (second blue arrow), selling picked up and it closed with a bearish Wide Range Bar (i.e., a wide range red bar compared to others with little to no tails, -WRB) Breakdown, closing below support and the 20- and 50-MA, with a Price Void.
It then consolidated for four days in the bottom ½ of the range of the -WRB, bearish price action.
Setup -123: A Master Trader -123 Continuation is a simple setup where we have a -WRB from consolidation (and not far from the 20-MA, as is the case), followed by an inside candle which stays in the bottom 40% of the -WRB.
This is a very high-probability Setup actionable on any time frame. You short under the low of the two bars with a stop over the -WRB until it falls as intended, where you can then trail over a prior bar’s high.
Why is the -1234 Setup Better: Following the -WRB Breakout and one inside bar, it had three more inside bars that stayed in the lower part of the -WRB with at least one of the inside bars trading over a prior inside day’s high, creating a mini–Upside Shakeout. These are higher-probability setups than 123s!
Trade Execution and Additional Analysis
The entry is the same with a -123 or -1234: under the low of all the bars.
After entry, we are always in management mode and monitoring price action with bar-by-bar analysis.
After entry, we covered some into the quick weakness and trail stopped out of some.
Profit: As you can see, the trade made a quick $268 profit (3% return) in an easy-to-manage 2-day swing trade. Had you bought 1000 shares and followed our trade management, you would have made $3,670 profit.
Conclusion
Master Trader Strategies (MTS): Learn our proven methods for high-probability trades in all market conditions!
Directional Swing and Options Trades daily in the Advisory Swing and Options Trader Letter.
Master these strategies and achieve consistent trading education and success.
Money Management for Trading and Investing
Proper money management for investing and Trading starts with position-sizing based on the amount of money you are willing to risk on a signal trade.
