Home Trading Strategies Breakout Trading Secrets: Don’t Trade Breakouts Until You Watch This…

Breakout Trading Secrets: Don’t Trade Breakouts Until You Watch This…

Breakout Trading Secrets: Don’t Trade Breakouts Until You Watch This…

hey hey what’s up my friend so in today’s video we will be discussing about breakout trading secrets so here’s the thing right and I’m sure many of you love to trade breakouts because when you enter on a breakout the price could actually quickly move in your favour so it’s like you know boom profits right without you know much time and effort on your part but the downside to it is that sometimes or rather most of the times you buy breakouts the market does a 180 degree reversal and it gets topped out and that is sake I know I know what you mean so that’s why in today’s video right I want to share with you a few breakout trading tips a few breakup trading secrets right to help you identify high probability breakout trades so you know which one you should focus on and which are wants to avoid like the plague sounds good and here’s what I want you to do right now right give me a thumbs up right and subscribe to my youtube channel the link is all below just click on the button this way whenever I publish a new training video right you’ll always be updated sounds good so do it right now and then let’s get started so the first secret that I want to share with you is that when you trade breakouts you wanna avoid power moves so what is a Power Move so a Power Move a curette according to my definition is that when the price moves too fast too soon okay when usually when you see the prices move too fast too soon that’s usually the worst time to enter because that’s when the market is primed for a reversal prime for a pullback okay so and also another thing to add on is that when you enter when the market has really moved a lot right there are three things right there goes against you number one is that your stop-loss it’s too why because you don’t have a proper structure then you can lean across right to set your stop-loss so this would require you to set a larger stop-loss right just to you know put a proper stop-loss you need a larger stop-loss and I’ll explain why later I’ll show it to you number two once you have a larger stop-loss right it would result in an unfavorable risk to reward it’s like you know you need to risk so much right and your profit potential is only so little and finally as mentioned right it is prone to versal so let me explain right what I just shared so you can see over here okay this is the chart of a euro Canadian so for example let’s say you know what is the power move right so first of all most I would call this a power move right the market moves too fast too soon this over here let’s see this is another power move right where the market moves too fast too soon so usually when you see a power move right you don’t want to be chasing a market because it’s really right chances are it’s too late to enter and why is that it’s s.

a.s explain early let’s say for example you look at a chat and you say oh wow look at a chance man it’s bearish look at the strong bullish bearish candles right time to go sharp but if you were to go shot over here at this level right after you see the market as you know collapse so strongly first question where are you going to set your stop-loss all rather where’s the logical place to put your stop-loss if you ask me right in the bare minimum right it has to go and it’s above here because this is a market structure where price could become a previous support and resistance so you wanna give it some buffer probably over here that’s one so we can see that that’s distance of your stop-loss right from here assuming here is your entry right from here to here your stop-loss stop-loss is very wide this results in a poor risk to reward so that’s a second thing the third thing is as mentioned right when after the market is made such a huge move in one direction it’s usually prime for a reversal or even at least a pullback and worse thing about this is that it came into this market structure which we will talk about later right why you don’t be trading breakouts into markets talking about anyway chasing these markets right we had this sweet reversal right that again right will it to a the market going against you and you have to feel the pain right even though when you think that oh this is such a high probability trade when in fact right whenever you see a strong power move it’s usually a low probability trade so here’s another example you can see strong power move ok market breakout over here strong power move and again let’s say you know you look at the chance you lady they notice oh wow so bullish right man the price is couldn’t break out of resistance time to get long let me ask you ask yourself where is the logical place to put your stop loss okay so if you get you look at a chart or a logical place to put it at least below this swing low maybe somewhere over here and again the distance from your entry to your stop-loss you can see that it’s pretty done why this right offers your poor risk to reward on your trade and finally right don’t forget that you know usually after a strong power move I’m not saying that the market will definitely reverse but more often than not it would at least do a pullback or even reverse completely so in this case right either reverse okay so this is the first tip that I have for you avoid strong power moves when you’re trading breakout so now maybe you might be wondering okay really so how should I be creating breakouts well that’s what I’m going to share with you right now second thing is this you want to be trading breakouts with a build-up now I know what I know when you’re thinking what is a build-up right so for those of you who have been following me for a while now you are probably familiar with that term but for those of you who are new right a build-a-bride refers to a tight consolidation on your chart so let me just you know help you with the visualization let’s say the market is in a range okay then over here you have this tight consolidation over here this is where you notice that the range of the candles it gets tighter and tighter and this is what I call a build-up so why is a build-up different right from creating a strong power move couple of reasons why number one when you trade a build up notice right now your stop-loss it doesn’t have to be very wide because if the price breaks out above this area of resistance where can you reference the market structure to set your stop loss you can just refer to this this low over here I may be some way over here some way bought here to set your stop loss compared to previously right if the market makes a huge move you have the reference right this lows over here possibly to set your stop loss so you can see that if you have a tight build up right you can now reference the swing low to set your stop loss again you don’t ever give a title stop-loss which result in the better risk to reward on your tree second thing right or other tutting depending how how many good pointers I just shared earlier right another thing to share is that when you have this build up over here and if the market does breaks out and let’s see it’s going to reverse signal it’s gonna do a pullback okay now this over here this market structure would serve as a floor to hold up this higher prices that’s not to say that the floor wouldn’t break down it could break down but at least you have a market structure that would help to support these higher prices okay so you know you now have this floor over here they could hold these higher prices which is a gain right it’s a it’s a plus for you it’s a break up trader so let me just share with you right what I mean by a build up so you know how it looks like on the chart aha so you look at this right this is a built up at this area of resistance okay you have this built up over here notice the range of the candles start to get smaller and smaller right a range is constricting so even if you have to buy the highs I mean you buy the breakout on this candle let’s say that the market break and close here okay you can set your stop loss right just below this swing low may possibly over here so your stop-loss now is not as wide compared to trading the power move that I just shared earlier okay so this is what I mean by a build up right a tight consolidation right forming at the either resistance or support and the logic right behind why this works is that when you see a build up at the highest of resistance is telling you that there are buyers willing to buy at this higher prices so this is a sign of strength okay and the build up right it’s a just one type of pattern right if I if you recall the slightly earlier share right there are different variations to it you have a higher lows into resistance or lower highs into support there is another variation of a build up and for those of you who are familiar with chop patterns you know that this is basically an ascending triangle and this is a descending triangle so let me just share with you how it looks like on a shot so this is Bitcoin okay this is a very good example of the build up with lower highs into support so we see the Bitcoin the range of the market right initially was very well right volatility is high then it started to get quiet right look this the range of all these candles getting smaller and smaller okay so this is a not a variation of the build up you can see this over here can be classified as a build up and if you notice them the big big you notice that there is lower highs coming in to support get into support over here so this is a sign of weakness telling you that you know the sellers are just coming in to push the price down lower so that’s for a downside for the upside is just the opposite if you look at this Bitcoin again rights very good example of using our technical tools to read this market what you have is higher lows into resistance and again notice this build up form over here the range of the candle is getting nice and tight okay so this is a sign of strength telling you that the buyers are willing to buy at this higher prices so if you were to trick the breakout on Bitcoin I would say the boy the best possible entry would possibly be buying on the brick of this highs with a stop order a buy stop order if again right you were to be buying using let’s say waiting for the market to close buying and this highs over here this to me is simply right chasing the market buying into a Power Move and if you as I mentioned earlier if you do buy into a Power Move right it’s not favorable for you because number one your stop-loss is white number two right the market is possibly prone to a pullback or reversal and finally right there is a porous to reward for you on the trade so in this case right I wouldn’t even recommend wanting to buy right at this this highs over here even though the market yes he went up further a little bit right you might make a little bit of money right but in the long run right this isn’t a tactic right that I would recommend okay so second tip I have for you is this right trade breakouts with a build-up right offers you a much more tighter stop-loss right which improves your risk to reward on the tree setting not all breakouts are created equal so you can have two charts two identical-looking charts but one has a higher probability of success and one has a lower probability of success and why is that is because not all breakouts are created equal so just to illustrate what I mean let’s say you know the market comes down lower okay then it consolidates this and let’s say bricks let’s say it breaks out over here okay something like that this over here right when you buy this breakup okay let’s say you know you have all the typical build up there’s form higher higher lows into resistance but when you look left right you notice that there is market structure over here right that could I guess selling pressure so if you you would whitey watch by this breakout right shortly after the market is gonna come into this area of resistance which is are you know where potential selling pressure could exist okay so this to me is not the best breakups to trade the best breakers that you wanna trade is where there is no opposing pressure coming in so maybe the market just hit the steep decline goes up consolidate like this okay then it breaks out they may be at this level alright this is where the mixed swing high is the next resistance is is where selling pressure could come in so over here you can see that the profit potential is much larger compared to the illustration that I just shared with you earlier so let me walk you through a few examples so if you see this one over here euro Canadian let’s just go with this one dollar against the Chinese yet okay so you can see over here I dollar gives the Chinese yen so let’s assume that you know let’s say just just imagine right hypothetically let the market comes down lower it forms a build-up right and you remember a Rana says you know there’s a build up right this is a high probability trade and I should go short that’s what we in a see all right but remember the previous slide I say that not all breakout rates are created equal because you want to be aware of where you’re trading into sometimes you’re coming smack into a market structure like support resistance and debt level those area is where opposing pressure exists where they could you know turn the tides and push the price against you so for example let’s say this billable cousin the market breaks down okay you don’t want to be necessarily shorting this market because over here you just if sitting right this is where this is an area of support this is where buying pressure could exist so if you’re just you know interested to get one swing you know just one shot move right okay fair enough you can trade the breakout and exit somewhere about here when you’re looking to you know a trait is long term to hold the move longer then really you don’t be shorting this breakdown over here smack into this monkey structures smack into this area of support why is that because support is an area where potential buying pressure could exist buyers could possibly come in and push the price of pipe so what could happen is the market comes down lower and then boom reverse from there and get stopped out okay so open your eyes be aware of where you’re trading your breakouts into you don’t be trading smack into market structure so let me see if I can find a next another example a pound New Zealand okay so this one another one so you can see that now you have a pretty nice tight build up on this uh pound New Zealand okay but imagine this again if you just look laughs notice that here the same area of resistance okay so if you couldn’t bite me buying this breakout smack into resistance right it’s a breakout of this swing high but it’s coming straight into this area of resistance again this is something that you want to be aware of because that’s where the market could possibly write reverse from so really if you really want to you know stack the odds in your favor you want to be buying breakouts right where there is no so-called obstacles in your way where the traffic is clear in the highways close it just is ran 200 kilometres power traffic is clear you don’t to be you know on the highway where there’s much traffic you’re gonna get stop you’re gonna pause right same thing here for trading you want to have a clear clear puff okay so this is what I’m trying to bring across you don’t have a clear path when you’re trading breakouts without any obstacles in your way so that’s the third thing to share with you all right not all breakouts are created equal all right you want to be again right be aware or avoid trading breakouts into market structure and lastly right the final thing is that the secret to trading explosive breakouts is that the market it moves in a cycle right it moves from a period of you know low volatility to high volatility and low volatility and vice versa so what happens is that when you notice that the market went into a range for a long period of time that is a strong signal telling you that this market is about to explode okay so this is a clue right when the market goes into a range and it’s in a range for you know six months a year or more right tight range can imagine right this is where the market is about to make a you move so don’t try to you know a fitna move don’t try to you know Dignan the move is fake and you don’t trade against it no usually when the market is sleeping for a long period of time this is where the dragon is about to wake on it comes out the big fire breath okay so another example to share with you this case I would say okay Brent crude oil is a good example 2014 not sure if you guys are trading during a period right where the market is just insane it broke out of a consolidation so you can see that this Brent crude oil within this period from here to here it is a weekly shot by the way and again if you look at price action alright this should give you a clue that this market is about to break down lower okay not lower highs into lower highs right not exactly the most obvious but you can see right naturally there is lower highs coming into this area of support okay so it has been arranged from sins you know 2011 old with the breakdown over here which occur at 2014 range from what three years they really broke down oh boy oh boy 104 dollars all the way down to the lows of a this one was low so thing about 28 $29.

00 so you can see right the longer it range 108 rights so another example to share with you okay let’s let’s have a look at another one so this was the thing I’m trying to share over here the longer in range the harder it breaks not on this dollar gets the Mexican dollar is Mexican okay so again can you spot the range period again is here this period range football I would say couple of years over here then it broke out boom okay so again this is a very long period way went into range and another tip to share with you is that when volatility is low right when you look at the range of the cameras getting smaller and smaller again similar to the concept of the build up I just said earlier this is where it’s telling you also that the market is about to break out because no markets will be sleeping no market you know we have low volatility forever revolt Litella t is a cycle up and down up and down so you can see over here again this is where volatilities all right in range of the candles are relatively small if you combat that do you know the previous waves all right notice that you know this range of candles getting smaller and smaller and when you break out that’s it right the market just exploded higher and plus given effect that you know it has been arranged for the last I think two years or more for this market so you see there multiple concepts that I just shared with you is all coming together now and if you look closely right if you look closely right you haven’t even have a series of higher lows if I if you look closely series of higher lows coming into this area of resistance so this this resistance area is pretty wide is this one here and there’s this one here over here buddy can see that you know there are a few concepts right coming in together and some concepts even contradict each other like for example are I’m not afraid to share so let’s say you buy it the break of this over here right and you know there’s another area of resistance coming to market structure so what do you do so one thing that I wanna point out is that trading is not an exact science there will be times where you have you know conflict of you know analysis or information and you have to decide as a trader which one would you give more priority as a weight each so for me personally right I like since I know that this market is a low-volatility environment you have a higher lows and he has been arranged for a long time I might be you know inclined to just pick this up like this bet take this trade right in anticipation at this level will be broken okay so just there’s something just food for thought to to let you know and to share with you and I do have an example for you just one final example shall we so again this one over here it says it’s a really powerful example euro Swiss franc so I’m sure most of you you are aware of what happened is that euro Swiss franc okay in 20 I’m just a zoom a little bit okay over here you might see this this are this chart right you might be me there’s something wrong with the price data of it no nothing is wrong it’s perfectly fine it’s just that in 20 years old I think when was this this was 2015 okay so in 2015 2014-2015 right the euro you can see that this consolidation here right from 2012 almost to about 2015 before the collapse right is that a the euro ECB right pack the Euro against the dollar I mean the Euro gives a Swiss franc at one point too so this is why you notice that there is a floor over here is this invisible floor is not in this it’s quite obvious at one point to write the price at one point oh you’ll never go below one point to because the ECB is supporting and that price level right a constant in buying the euros to make sure that you don’t break below one point two and one finally in 2015 is it I know what it’s enough I’m stop buying it I’m not gonna buy your anymore I’m not gonna support this currency against the Swiss franc and then boom collapse so so let’s say you know you and I we both can’t predict the fundamentals let’s say you know I can’t even tell I’m gonna eat for lunch later right so of course we can’t predict what the ECB is gonna do but looking at the price action would that give you a clue to what could possibly happen well sharing with the concepts that I just shared with you earlier okay look at it right let’s say the first concept the longer-range the heart rate breaks how long has this been in a range about two to three years right this is whole thing same range okay so that’s the first one set second concept we talked about build-up is there a build-up form on euro Swiss franc yes there is this build-up form over here at this tight area right around 1.

2 13 what’s the third thing it’s dairy yeah we have the ratio we have built up where we even have lower highs ok lower highs coming into this area of support so this should give you a strong clue that you know that you wanna be buying this market okay okay many people bought this bucket and on hindsight it looks easy to say all this right but let’s assume that they do know this is gonna happen okay if you just look at the price action structure right this should tell you that there is a sign of weakness in this market okay and and why right why you know you’re such a huge move usually after the market has been arranging a long period of time is because stop orders it gets built up over time so let me just illustrate to you okay final point over here so as the market is in a long range right okay you can be sure that traders when they see this rate they’ll look to you know shut the highs right by the lows shut the highs by the lows and when you keep doing there what happens is that no this traders will send us set that will set their stop-loss right just above the highs just below the low if you’re lonely put your stop-loss below the loose if you’re sure you put your stop-loss above the heights okay and as the range gets along there longer this cluster of stop-loss are it accumulates and not only that right breakout trader so look at this chart you see oh man right in this market right is about to break out let me know go with a buy stop order if the price breaks above this highs let me you know shot if the market breaks down so can you see that we have these two forces come together and there’s no cluster of stop losses above the heights which is in other words right if you think about is a stop loss order for traders who is shot right this over here buff is a buy stop order okay and traders who one thing to buy the break up what to do is they just have a buy stop order to buy the breakout so this you can imagine right knee by stop others above resistance is so strong because there’s just so much orders of people wanting to buy at a particular point in time so when the price does eventually break out it’s usually pretty done powerful okay so this is a one of the reason why right you know the longer it rains right in the harder it breaks okay so we have you know covered quite a bit in today’s uh today’s lesson training let’s do a quick recap shall we number one avoid buying right or shorting right after the market has made a power move because I share with you many times right poor is the reward large stop-loss right and a market prone to pullback or reversal in state you want to be trading breakouts with a build-up I believe your tight consolidation or it can be the fall before higher lows into resistors or lower highs into support number three avoid trading breakouts into market structure right so let’s say you have a breakout trade buddy notice that this break or if you buy is coming smack into another area of resistance so it is something that you have to consider as well you don’t necessarily want to be trading that breakout if there’s two types of breakup you want to be choosing the breakouts that have no traffic no obstacles in your way and finally I spoke about right the longer in range the harder it breaks okay it’s just explained earlier why why the market usually no it tends to make a big move of the sleeping right for a long time okay so with that said right if you’re a lot more about you know how I trade my trading methodology and stuff like that go down to my website over here trading with Rainer calm I’ve got this a couple of trading guides over here but what is relevant to what if you learn to ladies price action trading so go over here right up click this orange button right and I’ll send you this free ultimate guide to price action trading will go further in depth to what you’ve learned today we talked about market structure support resistance candlestick patterns and much more completely free so just go down to my website right now download it right and you know have a good read and if any questions feedback right let me know below if you are still watching this video hit that thumbs up if you’ve not done so and subscribe to my youtube channel the links all below the button click on it and I’ll talk to you soon you


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