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Stock Market Trading Strategies: Volume Breakouts That Fail

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Stock Market Trading Strategies: Volume Breakouts That Fail

Stock Market Trading StrategiesThis brief and straight-to-the-point video addresses the issue of trading breakouts, which is one of the most popular and commonly taught stock market trading strategies.

Unfortunately many day traders and swing traders find that breakouts often fail. In fact their seem to be more false breakouts now than ever before.

By the way, the title says “Stock Market Strategies,” but what you’ll learn in this video applies equally well to futures, E-minis, commodities and Forex.

Enjoy the video and please leave you comments below.

You’ll find the text below the video if you want to follow along.

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Video Text:

Welcome everyone. This is Doctor Barry Burns with Top Dog Trading. And today I’m going to share with you, one of the most popular stock trading strategies that is well known and used by many, and it’s a good one.

However, today I’m going to show you little nuances that you need to be careful with. Breakouts don’t always work quite as well as people think. But there is an answer to that and I’m going to share that with you in this short video.

So, the strategy is very simple. Basically what we’re doing is, you’re looking for a previous high like this, and then you’re looking for a breakout. So breaking out of that high means you would get a higher high and what you want accompanied with that in this particular strategy, the way that it’s designed is, you want to see volume going with it. Good volume and so here you’ll notice when we get this big move up here, we did have an increase in relative volume.

Then volume declines a bit. And this bar here, we get a little bit of extra volume. It’s not real significant but we do get some. We do make a higher high. Now more significantly those move forward. Volume pretty much stays down here and then we get this big volume bar.

Now doing the same thing, we are going to look for this high here to be broken. So in this way, sometimes volume even be a leading indication, I am not going to say indicator because volume’s not an indicator, it’s just what is what is. Doesn’t indicate anything, it actually measures an actual number which is how many shares are coming through the market.

So this would be an indication that we should break this high and continue with the uptrend. Right. So that’s the traditional thinking and many times that is true.

And let’s see what happens. so the very next bar, yup indeed, it makes a nice gap up. So if you are following this strategy, the typical way to trade this is to wait for to break above the previous high and then when it does, on volume we get 2 bars of nice volume here. Then you would buy, and hope that it continues up. Okay, so let’s see what happens.

So then after that, market, well wait a minute, comes down, comes down, ah oh. Now it broke even below, so if you look over here, these lows, it broke below those lows. Hmm.

Not exactly what we wanted right. We are looking for this thing to buy here and for it to go up. And instead, it actually comes straight down. Comes all the way down to, that’s the 50 period simple moving average, that green line.

It broke these lows. It really didn’t go up at all. Other than that one bar, and then it continues to move down even further.

So what went wrong? What’s the problem? The problem is very simple. As with all stock market trading strategies, it’s contextual, meaning that the strategy works when done in the right context, with the big picture of the overall chart. So let me show you what I mean, when we look at this, we see that the market has already been moving up for quite a while.

So we have these waves. Let me bring out my little arrow here. So we got to move up, and then this would be a trend retrace of consolidation, another move up, retrace or consolidation, another move up, another move up.

So if you use this, just for counting the waves, you would have 1, 2, 3, 4, 5, 6, 7 and what that means is that is now in extended trend. Counting waves this way, the average wave count is 5, which would be right there.

Again 1, 2, 3, 4, 5. 7, and what that means is this is an extended trend and therefore that’s actually a good place to start potentially looking for reversal trades.

Now don’t just take them, there are separate rules for when those are high probability. But at the very least, it’s the low probability for the trend to continue. Therefore, yes indeed we do get high volume on the breakout. But now that volume is to be interpreted differently, that volume is to be interpreted as exhaustion volume rather than continuation volume.

So the bottom line rule is very simple when looking at stock market trading strategies such as this. Early in the trend when we get big volume coming through. Bigger volume coming through on the market. And breaking these highs, then you have good odds of market continuing in the direction of the trend.

The longer that trend continues, the more likely it is to not be continuation volume but rather exhaustion volume, showing the exact opposite, showing a high probability end of the trend. So seeing the big picture, the devil’s in the details, things are, you know the simple rules are nice to have, but simple is good up to a certain point.

Then to become a professional trader, you need to understand the new answers. So that you don’t get hurt.

Leave a comment below telling me what other stock market trading strategies you’d like me to teach in the future.

Also I am giving away one of my favorite trade strategies. Just fill out the yellow form at the top of the side bar on the right. Once you do that, I’ll personally send you an email with first video.

For another video on stock market trading strategies and chart patterns, learn about how to trade Triangles like the pros. Simply click here:
http://www.topdogtrading.com/how-to-day-trade-and-swing-trade-triangles/

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E-mini Futures – A Profitable Trade Strategy For You – updated

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E-mini Futures Strategy

E-mini Future’s – How To Create “Structure” For Price Action

This short day trading video (6 minutes) shows how to use 4 moving averages to help you see direction and support/resistance on all markets. Yes, the title says “E-mini Futures” but this works equally well for the stock market and Forex. It also works for day trading, swing trading and investing.

Enjoy the video and please leave you comments below.

You’ll find the text below the video if you want to follow along.

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons below:

Video Text:

Today we are going to talk about a strategy trading the E-mini future’s and actually this strategy can also be used for all stocks for Forex or commodities. It’s about the structure in the chart.

Lots of people look at charts and they can’t make heads or tails out of them, they can’t see any order in them. And it’s very important to have clarity, so that’s where I am going to help you today. By using certain moving averages.

Here are the moving averages I put up on my charts:

  • This black one here that is a 15 Exponential Moving Average.
  • Then the red one is a 50 period Simple Moving Average.
  • The yellow one is a 100 Simple Moving Average.
  • And then this purple one is a 200 period Simple Moving Average.

Those are the four that I put up on my charts. Now they serve 2 different purposes:

  • Number 1 is support/resistance.
  • Number 2, we look for how they align with each other and interact with price.

So for example, here as you can see, in this area, really all through here, the price is kind of stuck in the moving averages.

The first thing to notice is that all four moving averages are very close together. So basically what that literally means is, price hasn’t really done much for the last 15 bars, 50 bars, 100 bars, 200 bars, and therefore we call that a consolidation time and it is very similarly dynamic to a Bollinger Band squeeze.

Bollinger Band squeezes are where they have a low volatility time. And that actually is a wonderful time to look for a trade. Because there are cycles in the market, many different types of cycles. I think when most people think of cycles, they probably think of just up/down cycles like that. Sorry my artistry is non-existent. And they would see these as cycle high, cycle low, cycle high, cycle low. And that is true, that is one type of cycle and a very important one.

But another type of cycle is expansion/contraction cycles. And those can be played very well for trading. Can make a lot of money doing that. What we look for is a contraction cycle. Lot of people do this wrong. They will scan markets. They are looking for high volatility markets, thinking, “Oh I want to be in a high volatility market because that means market’s moving a lot and I could make a lot of money because it’s covering a big range in a short period of time.”

The problem with that strategy is that by the time that shows up on your scan, there has to be enough data for that to be actually calculated and show up on your scan. Quite often you are going to be coming to the end of a high volatility period. And then it’s going to go in a low volatility period. That’s the expansion/contraction cycle. So the better thing to do is to actually scan for low volatility patterns and again Bollinger Band squeezes are great.

But here is another thing you can look for and that is simple. Again, this works for E-mini future’s, stocks, Forex and other markets: These four moving averages all clustering together like that. And then we look for a break out. You can trade it different ways. You can use your favorite indicator, use whatever you enjoy doing. You can look for a break out of that high. And notice how the moving averages now start pulling apart. And of course then the market just takes off.

One last thing that I will show you on this particular E-Mini Future’s video. Let’s move forward here, and when we get a trend reversal. Okay, here’s another way you can see structure. By the way this is called the stacked moving average pattern where we have the 200 at the bottom. 100 above it. 50 above it, and the 15 above that. And that’s generally consider a trending type of structure when that happens.

Now the other thing I really like is the 15 EMA. Some people use  the 20 MA and that’s fine. Again, the exact number you use isn’t going to make a huge amount of difference but just from trading literally decades now, I decided I like this one.

And so what I look for is, that’s the first line of demarcation where things are expected to change. So that is what happens right here. Price goes below the 15 EMA and then notice what happens, it stays below that 15 EMA all the way down. So then it crosses the 15, the 100 and even the 200. But it’s this 15 EMA, as I said before, they provide support/resistance as well. That’s what I look for and that works out beautifully.

So putting these four moving averages on your chart can start to give you some structure, a visual structure to price and be very helpful. Oh, look at that we got a new release for a Ninja Trader. That’s great. Well I am going to go download that now. But while I am doing that, I hope you liked this video. And if you did, please click the like button below and leave a comment telling me what you’ll like me to cover in future videos. I am very responsive to that. We’re kind of forming a community here and I love that.

Also I am giving away one of my favorite trade strategies. Just fill out the yellow form at the top of the side bar on the right. Once you do that, I’ll personally send you an email with first video.

For more videos on the E-mini Future’s click here: http://www.topdogtrading.com/emini-day-trading-strategies/

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Emini Day Trading Strategies – 3 Steps To Success

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Emini Day Trading Strategiesa

Emini Day Trading Strategies

3 Strategies to Day Trade the E-minis

Trader Kingdom
Trader Kingdom

Emini Day Trading Strategies: 3 Steps To Success

Emini Day Trading Strategies are a dime a dozen. You can find them everywhere.

But what really works for trading futures online?

In this post (actually 3 posts and 3 videos in one!) you’ll find 3 short, to-the-point videos demonstrating some of the most important day trading strategies that have personally helped me with E-mini futures trading.

You’ll also get the brief descriptions below each video for your reference.

MAKE SURE TO READ ALL 3 PARTS – EACH ONE BUILDS ON THE PREVIOUS ONE – AND THE LAST ONE HAS SOME VERY UNIQUE TECHNIQUES THAT CAN CHANGE YOUR TRADING FOREVER!

Enjoy!

1. Emini Day Trading Strategies, Part 1

This 1st of 3 videos in the series was originally conducted as a Google Hangout. It’s a brief description (about 6 minutes) of one of my oldest day trading techniques (it’s withstood the test of time).

It’s based on trading with the trend, but also finding an EDGE, a trading anomaly that gives us a high-probability trade.

Enjoy the video:

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Here’s an summary of the video:

Dr. Barry Burns here and today I’m going to show you one of my favorite Emini day trading strategies. Actually today’s the first series of many strategies that I’ll be sharing with you so let’s get started.

This is one that I’ve been doing for a long time – years and years and years. This set up is really consistent so I just love this it works so well over time. I can say this thing’s been consistent, and consistency is so important in trading.

So here is an E-mini 300 chart. The main line here which you’ll see turns red when going down and green when moving up. That’s the 50 period simple moving average. I use that as the line in the sand and that’s the key to this mini strategy along with price action in relation to it.

There are a couple of other moving averages here:

The black line is the 15th exponential moving average

The yellow line is the 100 simple moving average

The purple is the 200 moving average.

All of the the moving averages I use are simple moving averages except for the 15 which is an exponential.

The normal thing for the market to do is this: When the market is moving down, the 50 simple moving average will down as well. When the market goes up, the 50 simple moving average tends to go up as well. That’s just the general rule that alone is not enough to trade with because it doesn’t provide enough evidence.

That doesn’t give us an edge, and in trading were always looking for an edge, we’re always looking for something that’s a little abnormal thing that is not typical, and that will often give us an edge.

I have my 50 simple moving average color-coded just to make it real clear visually whether it’s angling up or down.

So here is the structure for the trade:

The price bars are below an upward angling 50 MA is a signal for a long trade. Again normally would see the 50 MA turned down at this time, but it’s still angling up and the price bars starts moving in the direction of a reversion to the mean back to the 50 MA.

This trade setup is normally a short scalp trade, but sometimes these trades can go for a long time and often as you can see this one to a very nice winner.

All right so now you can see we’re back into our typical type of up trend where prices are above the 50 and the 50 MA is angling up. Then the MA goes flat market, and the market goes flat back, then that’s followed buy the market going back up into a typical uptrend and here we go again. Now we get another example of the same kind of thing.

By the way the times at the bottom of the chart are California times and we’re about 45 minutes into the Trading Day. In California the markets open at 6:30 am.

So here again we got up with price bars coming below the 50 MA and we’re looking to trade in the direction of the 50 MA. Now there’s a couple of rules here:

One is you have support and we do happened to have support at the 100 SMA.

Now sometimes the market won’t move very far because this is often a quick scalp trade. And if that’s all you get out of it which is not much, that’s enough for me because I made some money and it’s a high win/loss ratio trade when done right.

There are a couple of the rules. The primary structure most important thing, is that the structure of the market is for price to be below an upward angling 50 MA.

Also you want to have support to be bouncing off of and I also use the next higher time frame to help me. I have some other free videos that explain how I do that.


 

2. Emini Day Trading Strategie’s: 3 Steps To Success, Part 2

If you didn’t read part 1 of “Emini Day Trading Strategies,” that post is immediately above, so I encourage you to read that article and watch that video first.

This 2nd of 3 videos in the series was originally conducted as a Google Hangout. This video is also brief (only 8 short minutes) and covers a different type of trade setup.

The first day trading video taught my Rubber Band Trade, which uses the trend, but isn’t really a trend trade. It’s more a scalp trade for quick profits.

Today’s video focuses on getting early into a new trend for an excellent reward-to-risk ratio.

Enjoy video part 2:

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This “First Retrace in The Trend” trade is one of my favorites and also one of my students favorites. It’s a very clear and simple setup.

Because trend is defined as “the extended general direction,” trend trades are designed by their nature to have a nice follow through after you enter the trade. This can provide you with a big reward, compare to the risk you’re taking.

This allows us to follow the famous adage: “Cut your losses small and let your winners run.”

This specific Emini day trading strategy, trading the first retrace in a trend, gets you into a trend EARLY which is key to capturing that big winner.

I only trade trends early in a new trend to avoid the warning of the famous saying: “The trend is your friend until the end.” This of course advises us to not trade late in a trend.

You’ll see my cycle indicator in this video. If you’d like to get that indicator, and a free tutorial on it, please send me an email at Barry@TopDogTrading.com and I’ll let you know when my next free webinar in which I share that indicator for free.

In the video you’ll also see that I’m counting “waves.” These are not Elliott Waves. They are a more objective way of measuring waves which is simply higher highs and higher lows.

By doing this we aren’t “forcing” the count of 5 waves on any trend. A trend can be 3 waves or more.

To get more of my free videos, SUBSCRIBE TO MY YOUTUBE CHANNEL BY CLICKING HERE. When you do, you’ll be notified each time I upload a new video (about once a week) including, but only, more videos on Emini Day Trading Strategies.

Encourage me to keep providing more FREE trading tutorials and LEAVE A COMMENT below, I’d love to hear from you!


3. Emini Day Trading Strategie’s: 3 Steps To Success, Part 3

If you didn’t read parts 1 and 2 of “Emini Day Trading Strategies,” those posts are immediately above, so I encourage you to read those articles and watch those videos first.

This final of 3 videos in the series was originally conducted as a Google Hangout. This video is also brief (only 5 short minutes) and covers a different type of trade setup.

The first day trading video taught my Rubber Band Trade, which uses the trend, but isn’t really a trend trade. It’s more a scalp trade for quick profits.

Today’s video focuses on using the energy of momentum to help increase the probability that the market will continue to follow through in the direction of your trade AFTER you get in.

Enjoy video part 3:

<<< IF YOU LIKE THIS DAY TRADING VIDEO, PLEASE SHARE IT WITH OTHERS BY CLICKING ONE OF THE SOCIAL MEDIA ICONS ON THE LEFT. THANK YOU!

This video introduces some unique concepts not taught by others.

Momentum is critically important for all traders to measure because it indicates whether a market move is strong or weak. This is essential for you as a trader because strong moves are likely to follow through AFTER you enter the market, whereas weak moves are less likely to follow through.

This is why many traders find themselves getting stopped out so often after they enter trades.

We’ve all been taught that the market price action moves in trends. But it’s extremely helpful to compare the TREND OF MOMENTUM as it relates to the trend of price.

Many Emini day traders are also familiar with wave counts, especially through Elliott Wave theory. However I find a significantly added benefit by counting MOMENTUM WAVES as well.

Much of this is to help us get into market moves earlier than the crowds, a hallmark of professional traders.

Even though I don’t address it, you’ll see my cycle indicator in this video. If you’d like to get that indicator, and a free tutorial on it, please send me an email at Barry@TopDogTrading.com and I’ll let you know when my next free webinar in which I share that indicator for free.

This specific Emini day trading strategy can help you not only with trend trading, but also with trend reversal trading.

To get more of my free videos, SUBSCRIBE TO MY YOUTUBE CHANNEL BY CLICKING HERE. When you do, you’ll be notified each time I upload a new video (about once a week) including, but only, more videos on Emini Day Trading Strategies.

Encourage me to keep providing more FREE trading tutorials and LEAVE A COMMENT below, I’d love to hear from you!

How To Day Trade and Swing Trade Triangles

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How To Day Trade and Swing Trade Triangles Before we get to today’s topic: How To Day Trade and Swing Trade Triangles (one of my very favorite trading price patterns) …

I want to thank everyone who voted for Top Dog Trading in the Technical Analysis of Stocks and Commodities Magazine “Readers Choice Awards.”

This is an annual awards poll conducted by “Technical Analysis of Stocks and Commodities Magazine.”

By the way, this is a great magazine that I personally subscribe to and highly recommend. You can learn more about it by clicking HERE.

I’m especially proud of these awards because the winners are chosen by the readers themselves – meaning the users of the products and services.

Generally it’s mega stock market trading corporations with huge marketing budgets that win these awards. But I’m honored and humbled to say that I was graced with awards in both categories for which I qualified:

  • The “Technical Analysis Websites” category.
  • The “Trading Centers, Schools, Training” category.

The Trading Schools category was especially an honor because the only schools that achieved higher awards then me were FREE educational sites. Mine was the highest paid educational program, coming in well above all the “big boys” in the trading education world.

To be given such high rankings above massive stock market, E-minis and Forex trading companies is quite an honor and I thank all of you who voted for me.

Okay, now for TODAY’S VIDEO:

How To Day Trade and Swing Trade Triangles

There are many popular price patterns that we can trade:

  • Head and shoulders
  • Double tops
  • Wedges
  • Channels
  • Cup and Saucer
  • … and many others

Of all the large multi-bar price patterns to day (both for day trading and swing trading), triangles are my favorite.

Back in the days when I was the head moderator for a live chat room, I was known as the Triangle King. I was finding and trading Triangle patterns consistently when others couldn’t even see them!

I like symmetrical triangles, ascending triangles, descending triangle … it doesn’t matter. I trade them all.

One of the reasons I love trading them is that they are part of my “Ex-Con” trade patterns, which I love. These are setups that identify the market cycle between contracting (low-volatility) markets, and expanding (high volatility) markets.

These are fun and profitable to trade because getting in at the beginning of a new high volatility cycle provides us with the opportunity to enjoy and big fast move in the market (and potentially big, fast profits).

One of the most common questions traders ask me is how to determine if the market is going to break out to the upside or downside.

The common wisdom is that ascending triangles break out to the upside and descending triangles break to the downside. Beware: the statistics I’ve seen gathered on that are based on daily charts and don’t apply to day trading.

Personally, the direction of the triangle has no bearing on whether I’m looking for price action to break out to the upside or downside. I use the fractal energy to provide the direction of the breakout.

This video will provide a bit of insight on how I trade them differently than most people.

There are 2 common ways to trade triangles:

  1. Trade the breakout of the upper or lower trend line.
  2. After the breakout, wait for the market to retrace back toward the triangle and then enter in the direction of the breakout.

I don’t personally like trading either of these techniques, though I’ll trade the second approach if it presents itself (usually I’m adding to my position at this point).

My preferred technique for trading the pattern is enter the trade “inside” the triangle. This is a rare approach I’ve not seen others teach.

Enjoy the video and please LEAVE A COMMENT below and also SHARE ON SOCIAL MEDIA if you liked the video.

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