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How To Find High Probability Breakout Trades

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How To Find High Probability Breakout Trades

hey hey what’s up my friend so in today’s episode i want to share with you on how you can go about finding high probability breakout traits so in essence right what i’m about to share with you are the things i look for right to find the best of the best the highest of the highest probability breakout trades and and i’ll be honest right sometimes you just can’t get all the stars to align but if you can get you know as many of these stars to align right you are pretty much in good shape okay so here are the things i look for number one uh if you’re trading stocks right or whether you’re trading currencies or whatsoever you want that instrument to be trading at all-time highs i think this is something common right for stocks and the reason for this is that if a stock is trading at all-time highs what this means is that the stock is pretty darn bullish there’s little to no selling pressure people are just you know flying on board right wanting to get a piece of the action of that particular stock and and here’s the thing right about buying stocks or or buying any other markets or instruments right that is trading at all-time highs is that there is no price structure where sellers can lead against to short markets so let me explain what this means so if a stock right let’s say it’s uh it’s trading at all-time high if you look to the left i can assure you that there is no swing high there is no resistance where sellers can use those levels right to time their short entries because the stock is at all-time highs unlike a stock that let’s say you know it is approaching resistance about to break up if you look left right there might be resistance there might be swing high but for a stock that is trading an all-time high there is no such thing and that’s you know really sweet right to be a buyer you know uh for such uh stocks right and to look for you know breakout opportunities when the stock is trading at all-time highs number two you want that particular stock okay to to have a high rate of change so what this simply means is that let’s say over the last 12 months okay you have let’s say you have two options stock a has increased 30 in price stock b has increased hundred percent in price which stock do you want to be buying i hope you you choose stock b right you want to be buying stocks which are strong stocks that have moved a lot right recently because these are the stocks right that are likely to continue right to outperform the market so one simple way is again right just look at the rate of change or rather the percentage change over the last 12 months the last six to 12 months those that has moved the most during those period are the ones likely to outperform the market number three third thing you want to have you know the breakout right the range right to have at least 80 candles or more so if you are trading on the daily time frame that means the market has been in the range of at least 80 days or more and the reason for this is quite simple is that it’s based on my experience right the longer that the market is in a range the harder it tends to break so the longer that the market is in the range right what happens is that traders who notice the range they look to buy low sell high buy support sell resistance and when you buy support cell resistance right at the ends of the range right it will accumulate more stop orders so let me explain so let’s say if you buy at support where will you put your stop-loss i’m guessing you put your stop-loss you know below the lows of support right that’s where your stop-loss is and if you think about this right someone who is long at support there their stop loss is in essence a sell stop order right so if the market you know goes against them it hits their stop loss there’s a sell order to get them out of their long position and likewise right if you are selling a resistance your loss is probably above the highs of resistance and that stop loss is a buy stop order so if you are shot the market and if you want to get up the trade you need to buy back right what you have sold earlier so that’s a buy stop order above the highs of resistance so the longer that the market is in range the longer this you know uh stop orders will accumulate above the highs of resistance and the lows of support right and when the market eventually does break out of the range right it can be fast and furious because you know many traders rush for the exits and again you know uh push the price right much further at the breakout point and on top of it no momentum traders stack onto the uh come to the party and join in right they can’t even push the price much further so the longer the market is in range the harder it breaks and that’s why i look for you know at least uh 80 candles or more right when you’re trading breakout this is one thing to look for as well uh number four a build up so here’s the thing right before the market breaks out you want it to form a build up some traders can call it a tight consolidation some traders call it a volatility contraction so meaning right when the market is in a range and let’s say you approach resistance you want it to consolidate at the highs of resistance and there are a couple of reasons for this first reason is that number one it tells you that there is a sign of strength it tells you that buyers are willing to buy at this higher prices that’s why you have this consolidation and resistance okay number two uh when there is a consolidation at the highest of resistance there is a reference point which is basically the lows of the consolidation where you can set your stop loss so imagine right two range market one range market is the market just go up down up down if you buy the breakout of resistance where is the logical place to set your stop loss possibly below the lows of support in another condition let’s say market is in range up down up down right but this time around it forms a build up at the highs of resistance if the market breaks up where can you put your stop loss well you don’t necessarily have to put it below the lows of support because you can just set it below the lows of the consolidation below the lows of the build up this gives you a tighter stop loss which improves your risk to reward on the trade okay so this is why uh the fourth thing is you know you want to look for is a build up and the fifth thing is just a uh a quick one is that you know if you follow uh the four things that i’ve just shared with you the fifo is simply you know to make sure that market is uh trading above the 200 day moving average just make sure that you know you’re buying in a long-term uptrend but you know if you follow the earlier tips that i’ve shared with you most likely that market will also be above the 200-day moving average but i just want to you know put it out there just make sure i don’t miss it as well okay so here are the five things right you want to look for to identify probability breakout trades number one the stock the market is trading at all-time highs number two uh the stock has exhibit strong momentum right over the last six to twelve months so basically it has a high roc value high rate of change value right the larger the price increase the better number three you want the range to be at least of 80 candles or more if you’re trading on the daily time frame that’s 80 days for the weekly time frame it will be 80 weeks number four uh break up with a build up basically looking for a tight consolidation prior to the breakout and number five uh the market is uh in the long term upgrade above the 200 day moving average so with that said i have come to the end of this episode and i’ll see you in the next you

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