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Learn Day Trading Strategies That Work in Today’s Markets Part 1 & 2

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Learn Day Trading Strategies That Work, Part 1

Learn Day Trading
Learn Day Trading Strategies that Work

 

 

Day traders try a lot of different strategies, techniques, indicators, etc., and most of it doesn’t seem to work, so traders regularly come to me asking, “How can I Learn Day Trading strategies that work?”

It’s an interesting way to phrase the question, and one must ask what is meant by the word “work.” Most of the time I believe traders mean “make money” when they use that term.

The video below will get you started on answering that question.

You can email me at barry@topdogtrading.com and I’ll be happy to show you how to get my Free Cycle Indicator to help you with your day trading strategies.

Enjoy the video and please leave your comments below.

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons at the very bottom of this post.

VIDEO TEXT:

Hey thanks for coming watching this video on how to learn day trading. This is Doctor Barry Burns with Top Dog Trading.

Today we’re going to talk about how to learn day trading. This will be a multi part video, either 2 or 3 parts. We’ll see how it goes. I don’t want to rush through. I like to keep these videos short and to the point so we’ll need at least 2 videos, perhaps 3. So here we go.

This is how I day trade. And it’s actually not too complicated. It’s actually quite simple. Not -saying it’s- easy. Trading is not easy but what I do is very simple.

When I went to Chicago to learn day trading and studied with some floor traders there at the Chicago Mercantile Exchange, I actually was doing pretty well trading, but my system was very complicated and I was actually proud of that. And then I went there I got humbled because those guys were making more money than I was, and what they were doing was more simple than what I was doing.

So I came back and I simplified my trading methodology and it’s been better ever since. So you don’t have to be all that complicated. Now what I do is look at 5 variables. 5 things. That’s it.

Einstein once said, make everything as simple as possible, but no simpler. And I think that applies to trading. I don’t think he was a day trader. So I’m pretty sure he wasn’t talking about how to learn day trading, but I think it still applies to day trading, in fact it very much applies to learning day trading.

You want to keep everything as simple as possible. Why? So that you can keep your mind clear. Your signals are black and white. Mine is very objective. Very rule based. But he also said no simpler, what he meant by that was or at least as it applies to trading is, you need a certain number of variables. Uncorrelated variables to establish a probability scenario. And that’s how we put the odds on our side now.

Not all of our trades are winners obviously. There are no certainties in the market but we can put the odds on our side with this successful trading method.

LEARN DAY TRADING THE “5-ENERGY METHOD”

So here is how I do it.

So the first energy that I look for is the trend. Trend simply refers to the direction of the market. Webster’s dictionary defines trend as the extended general direction of something.

A lot of traders use short term indicators, moving averages or price patterns to measure trend. And what they don’t realize is-they aren’t measuring trend because it violates the actual definition of the word, which is to extend in a general direction.

Now it’s not only important to have a long term indicator or-pattern to identify trend because it’s congruent with the meaning of the word. It’s also important financially so that we have a good reward to risk ratio. We want our winners to be bigger than our losers. And therefore -e want to be trading in a direction that’s going to continue for a while.

THE TREND INDICATOR

So I use something really really complicated. It’s called the 50 period simple moving average. Okay. So it’s not complicated. It’s the simplest thing in the world. It’s one of the most commonly used moving averages and it does do that. It measures the general direction of the market. It’s a lagging indicator, and you know lot of people say, well I don’t want any lagging indicators, why would I want that? I want all leading indicators. And I understand that.

That’s what I used to say to one of my mentors back in the day. He told me we always need a lagging indicator in chart. And I thought he was out of his mind. It took me a year, after he told me that to finally figure out what he meant. And it’s not the topic for today but maybe we’ll do that in another video.

So anyway, 50 period simple moving average. One of the most commonly used moving averages, and you know meets the definition of the word. Now could I trade this by itself? Absolutely not.

INDICATORS DON’T MAKE YOU MONEY

Let’s be clear. Indicators are just that. They indicate. That’s why we call them indicators. They don’t tell and they definitely don’t make us money. Otherwise we’d call them money makers. So they indicate, but we use them as tools to give us an objective measurement of something, in this case trend.

So alright, so trend is up. We had a big gap here. It’s kind of a gap and go situation. So we’re looking to go to the upside.

Now trading the direction of the market is not enough. Again that’s lagging. So we can’t rely on that to make money. But it’s one piece of evidence as we put our puzzle together.

MY MOMENTUM INDICATOR

Now here is my momentum indicator. Alright. And you can use all kinds of things for this, RSI, the indicator called momentum. There are a lot of different options for you.

But look what’s happening here. So momentum is going down. Momentum is going down overtime, while price is going up. And this is a problem. Actually most of these momentum indicators don’t really measure momentum literally but they are literally measuring is acceleration.

But the point is that when you learn day trading and have have a trend going up, price direction going up but deceleration, then that’s probably not something that you want to trade. In other which you don’t really want to trade with the trend.

Now this momentum tends to be a potential leading indicator. Nothing leads the market all the time. You need to learn how to read it. But it’s definitely a warning sign. So for example, we make another higher high and price here, as we are making a lower high on momentum.

And again that because quite often, not always, quite often strength will come out of the market before it actually reverses. While its still making higher highs. So in order to make this a true momentum indicator now its measuring acceleration, so we have to add weight to it.

ANOTHER FACTOR IN MOMENTUM

Momentum includes weight and I translate that as volume. So here is volume, and so we see we get volume. Kind of volume triangles. So as long as you get this, okay. That’s pretty cool.

And then when we look at this move here, yup. We still got it going on a little bit. And then we don’t get those spikes anymore. So, and if you notice what’s happening to our spikes, actually let me take those off of there. And let me just get a straight line instead of an arrow.

So here is our spike. And -then after that, see after this high, what happens, doesn’t go back up and reach those spikes anymore. Right and so the momentum is no longer there. That’s the point. So that’s a great indication that, and again it’s a bit of leading indicator in the sense that we have a lower high on volume, while we have a higher high on price.

And what that would do if I was in this trade, this is actually one of my trade setups. That would tell me, oh ok, you know what, I think I will just get out there, I’ll just- take on my profits right now. Because there is no more momentum.

WEAK TRENDS AND STRONG TRENDS

This trend which was strong, here is now turning into a weak trend because the volume is not supporting it. And if it’s a weak trend, even though we have made a higher high, you can’t just depend on a higher high.

Now its higher high on weakness. And therefore I’m going to lock in my profits, take my money and wait for the next opportunity. So those are the first of the two energies, there’s five energies that I look for in every chart. Those are the first two.

Trend. Simply the direction of the market is moving in, and momentum which you can understand as the strength behind the market, which includes both acceleration and volume. So in the next video, we’ll go into that little bit more. Look for part 2 of this series on how to learn day trading.

I’m giving away one of my favorite trade strategies. Absolutely free. It’s called the Rubber Brand Trade. And it has an extremely high win loss ratio. It’s a very simple strategy. You can learn it in about 26 short minutes. 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.

Pay It Forward My Friend

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

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

For another video on day trading for a living, Simply click here:
http://www.topdogtrading.com/trading-volume-on-day-trading-and-swing-trading-charts/

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Learn Day Trading Strategies That Work in Today’s Markets, Part 2

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VIDEO TEXT:

Alright, now we are going to move on to Learn day trading strategies that work in today’s market part 2.

In part 1, we talked about 2 of the 5 energies that I look for in day trading. The first energy is trend, which is the direction of the market and then energy number 2 is momentum, the strength of that trend. so right here on this particular chart just as a review.

We use the 50 period moving average for trend which is just direction and we may or may not trade in that direction depending on whether we have momentum behind that trend. And here is our momentum indicator down here and that will determine whether the trend has strength. And only if it has strength do we want to take the trade.

In this case it does, however here as we put in this final high and notice that this strength would roll over from here, is weakening. And therefore that case, that will be a final high and great place to exit the market. But before that, as far as getting into the trade, yeah we got strength.

Now one last thing I wanted to mention about trend before we move on to the other two energies today, which is Cycles and Support Resistance. And that is this, there is a saying that you probably have heard. Very common saying when people learn day trading, that the trend is your friend till the end. And the reason for that saying is to remind us that it’s a higher probability to enter trends early in a new trend. And a lower probability trade to enter after that trend has already been developed for a while.

LEARN DAY TRADING: THE TREND IS YOUR FRIEND, UNTIL …

You want to get early and not late. And that’s a general rule in trading anyway. The pros always get in early, the retailers always get in too late to the party.

What we do to help us to know how early or late we are in a trend is we count waves. I’m not talking about Elliot waves. But I’ve a very objective way of counting waves that does not limit the trend to only 5 waves and I never recount the waves. They are always very objective, in fact I can program them in as I’ve done here.

I have have an automated little script that counts the waves for me. And we don’t have to recount them, they are never recounted, so it’s very objective. So the 1, 2, 3, 4, 5.

Now the average trend, even though based on the way I count waves which we don’t have time to go into in this video. Maybe we’ll do that in another video. But it’s basically higher highs and higher lows, that’s essentially what I am looking for, and there’s a few extra rules regarding candle sticks but it’s pretty much that simple.

The key is that, yes it can go more than 5 waves but the average trend is still based on this approach is 5 waves. So 5 waves is the sweet spot to exit your trade, because even though trend can go longer than that, it’s less likely to continue be on 5. That’s the average, that’s the sweet spot, that’s where I’ll get out of most of my trend trades.

HOW TO APPLY THE RULE OF GETTING IN EARLY

Alright so what we want to do really is enter on wave 2. That’s the 1st retrace in a new trend based on the 50 MA angling up, by the way, 50 MA is the green moving average here. Once it turns green, we know its angling up, that’s why here we get our first cycle low, after the 50 MA angles up. That’s wave 2. That’s our first retrace in the trend. That’s the earliest, you can take a trend trade.

These are great trades, especially with momentum. See here momentum is above the line. Here is the zero line, and momentum is this colored line. And again it’s turned from red to green and it’s above zero meaning that its bullish momentum and we’ve got volume going up. So that’s all fantastic. Direction’s up, volume’s up, we are early in a new trend. fantastic. That’s exactly what we’re looking for and then as I said, to get out wave 5.

DAY TRADING SUPPORT AND RESISTANCE

Now this is the screen capture that I used for the last video, for part 1 and people commented that I have too many lines on my chart, so look at all these lines in here. It’s very confusing right. Actually to see all those lines cluster together like that is very helpful. It’s telling you something, its information you want to know. And the information is essentially that.

There are a lot of support/resistance lines. That will be seen by various types of people who use different support resistance levels and that means it can be hard for the market to get through. There’ll be so many people who won’t want to buy into those levels and therefore they won’t.

GAPS

So what specialists will do sometimes or at least have been reported to do is to, at the beginning of the day, just like this is here, if they don’t want to do with this, they want to move the market to a higher price, they’ll just gap it over those resistance levels. So we closed here and then they opened us up here. And that way it’s like okay, done.

Don’t have to deal with it, don’t have to deal with people worrying about all that. And you notice it stays above that zone, and also you’ll notice that once we get above this cluster of all these lines, then the lines space out again.

So we’ve got R2 here, and there is yesterday’s high. Yesterday’s high kind of marks the low of that zone. Here we get a couple of mid pivots, I’ve talked about these in another video. And well, wave 3 does come in to mid pivot but your primary levels are those. So support resistance levels are very very important and the primary ones that I use by the way are yesterday’s high, low and close. This is for day trading. Now those are seen by pretty much everybody as some of the most important levels.

Also previous major swing highs and lows. Those are going to be the ones that just stand out to everybody that people say, oh well, there is a major high so this one is one and that’s what this blue line is, the blue line is marking that high, has been one that stands out in the chart and that market participants were respond to. So in fact it’s the high of the day so far during that day.

FLOOR TRADER PIVOTS AND FIBONACCI LEVELS

Another one that I use is floor trader pivots, very common for day trading. So you’ve got, whether it’s your mid pivot point and there is R2, R1 is in here, again all these labels get kind of squished together because we have all these levels coming in together.

And another one that I will use is Fibonacci levels. So those are primary levels that I use for support resistance which are a blockage of the energy so people use these to buy off of, sell off of and to take profits into, so very very important you have them.

However again, remember today’s lesson, and last time’s lesson. You can’t learn day trading by using support/resistance by itself. We have to look at what kind of energy the market has, as it comes into those levels because support resistance levels are broken all the time. All the time. And so therefore we have to ask ourselves, so for example just look at one example right here. Here is R2. A floor trader pivot level. The market comes up into it. Now the question is, will it hold this resistance level or will it break through it? How do you determine that?

PUTTING IT ALL TOGETHER

Well first of all, the trend is up. That’s the green line here, the 50 moving average is angling up. Okay. That’s fine. But is it a strong trend that we do see a lot of momentum. So here is your zero line, is way down here. And yeah, momentum is well above the zero line. It’s up here and this is our moving average of momentum. And it is angling up, so it’s strong trend to break through resistance, you have to have strength.

Now when we get over here to wave 3 for example, look here is our higher momentum. Momentum’s going down to zero, and then even though we put in a higher high in price. We put in a lower high on momentum. So this is a weak high.

Yeah price is higher but momentum has come out of the market. Therefore when we come into that resistance level, which is again mid pivot between R3 and R2. That resistance level holds. Market cannot break through it because it doesn’t have the strength to break through it. Right. So that’s how we determine which support resistance levels that the market will break through in which it will bounce of off.

We’re going to come up with part 3. In part 3 we are going to talk about, what I call the energy of scale or the fractal energy. And even though we may have trend and momentum and cycles and support resistance, even if we have all 4 of those energies on our side, I still will not take the trade unless the energy of scale conforms it. That’s one of the crucial issues when you learn day trading.

CYCLES FOR DAY TRADERS

Oh by the way we didn’t get to talk too much about the energy of cycles. That’s because that’s a pretty big topic, so I do a webinar on that. it’s a free webinar and I give you my cycle indicator absolutely free, and give you a tutorial on how to trade it, so since this is recorded and you might, I don’t know when each of you’re going to be watching this video, it can be any time in history.

Send me an email at Barry@TopDogTrading.com and I will be happy to let you know, at the time you email me when the next webinar and cycle is going to be held. And again it’s absolutely free and I give you the indicator and give you a tutorial on how to use it. It’s about an hour long so that’s why we don’t do it in these brief videos. So that’s it and in next one we’ll cover the scale or fractals.

NOW FOR THE GOOD STUFF!

I’m giving away one of my favorite trade strategies. Absolutely free. It’s called the Rubber Brand Trade. And it has an extremely high win loss ratio. It’s a very simple strategy and a great way to start to learn day trading. You can learn it in about 26 short minutes. 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.

Pay It Forward My Friend

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

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

For another video on day trading for a living, Simply click here:
http://www.topdogtrading.com/trading-volume-on-day-trading-and-swing-trading-charts/

Go here to Subscribe to my YouTube Channel for notifications when my newest free videos are released:

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Day Trading For A Living – How To Avoid Losing All Your Money

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Day Trading For A Living – How To Avoid Losing All Your Money

Day Trading For a Living
At the corner of profitability.

For day traders, the most fundamental question of all is, “How can I do day trading for a living?”

Beyond all the indicators, price patterns, techniques, strategies, market philosophies … this is the bottom line. Everything else is just an end to this means.

The video below will get you started on answering that question.

You can email me at barry@topdogtrading.com and I’ll be happy to show you how to get my Free Cycle Indicator to help you with your day trading strategies.

Enjoy the video and please leave your comments below.

PLEASE “PAY IT FORWARD” BY SHARING THIS VIDEO & ARTICLE ON FACEBOOK OR TWITTER by clicking one of the social media share buttons at the very bottom of this post.

VIDEO TEXT:

Welcome to this video, Day trading for a living. One of the most important things when it comes to day trading for a living is managing your risk. You know, there so many people who email me saying, “Gosh! Barry I blew up my trading account. I don’t have any money left.”

They say “I’ve learned trading on my own or bought an eBook and have tried to learn trading. And now I’ve lost, you know x amount of dollars,” and the x amount of dollars is usually a ridiculously huge amount of money. You will have to guard yourself against that if you want to do day trading for a living.

You know as professional traders, yes we are interested in good trade setups and indicators and price patterns and all that sort of thing. But really above all of that, what we work with is money management and risk management to keep our losses small and make our winners big.

You’ve heard that phrase before, keep your losses small, and let your winners run. And that’s how you get a good risk/reward ratio. I’m going to give you some practical day trading tips on how to do this, because this is really what you have to do in order to start day trading for a living and make a significant amount of money consistently, and have that equity curve climb.

STEP ONE IN DAY TRADING FOR A LIVING

Let me give you one tip today. And what we’re going to do is we’ll go to this bar. So this right here by the way, don’t have time to go into what kind of setup this is, why we’re taking this, but that part doesn’t even really matter right now. So the point is, any time you find a setup that matches the trading rules of whatever method you’re trading, right this happens to be one of mine. And this is a great one.

I love this trade, it’s beautiful. And so what we’re going to do is we’re going to enter one tick above the high of this bar. And then we’re going to put our stop one tick below the low of that bar because this is a cycle low. It’s one of my cycle low patterns right there.

By the way if you’re interested to know more about this cycle indicator and the patterns that we trade on it. Feel free to send me an email at Barry@topdogtrading.com and I’ll let you know when the next free webinar is going to be where I give away the cycle indicator and teach you how to use it as huge step forward in doing day trading for a living.

But anyway, right now back on topic, risk management. So if we look at this, okay that’s where we’re going to enter, so let’s put a little, lets click on this. Now if you look over at the data box on the left, you’ll see that the high there is 1201.50. So these are the E-minies. This is a 2 minute chart of the S&P E-minies. So I would place a by stop at 1201.75. So that’s where we getting in. Then my protective stop would be placed at the lowest low in this cycle which would be low of the bar previous to that. 1199.75 is the low of that bar so my stop would be at 1199.50.

The spread between 1201.75 and 1199.50 is 9 ticks. Now each tick in the E-minies is worth $12.50. So therefore I’m putting at risk a maximum of $12.50 per contract. Now that’s per contract alright. If you’re only trading one contract that is your risk in trade from where you’re placing your entry to your protective stop.

PLANNED RISK VS. ACTUAL RISK

Now I have to say on the side here, just for, well for fair warning, that we don’t always get stopped out where we want to. That’s replacing your protective stop, nothing is always perfect. Stops can be, depending on what type of stop would use, limit order or whatever. if you use a market order, you may get filled but not at the price you wanted. These are all, you know qualifications for my statement here. One of the ways to help overcome that is to hedge, but again that’s way beyond the scope of this topic today. Just need to throw that in so you are fully aware of that.

So here is our planned risk. Now the key is, we want to then look at that risk based on the size bar trading accounts. So for me personally, I don’t like to risk any more than 1 or 2 percent of my entire trading account at any one given trade. So just as an example, let’s say that you only trade one contract. Then at a risk of $12.50 cents for this trade, if you would only risk 1 % per trade, if that’s what you decide to do. That’s your money management rule, and risk management rule.

HOW TO DETERMINE THE THE NUMBER OF CONTRACTS/SHARES/LOTS TO TRADE

So what I am saying here is that you really want to manage risk by looking at how much am me risking on each trade in relation to the size of my trading account. We don’t have time to do this today, but what I do is, I look at time interval like a 2 minute chart, you can do this with 1000 tick chart, whatever time interval you are using. Look at a bunch of your entries, whatever your entries are for your trading method.

And I would go through about 20 or 30 of them. And do this for each one and see what the average risk per trade turned out to be. Then use that, the average risk per trade of about 30 trade samples or more, you want to use more rather than last to get a more accurate reading. And then you’ll know okay, here is how much I can risk.

How much you can risk on each trade based on your trading accounts size, and then also perhaps how many contracts you can trade. Trading one contract is pretty hard to deal and make money. Of course I trade a lot more than that now. But just because of money management principles as are in the trade, I like to see some profits quickly, like some money, move my stocks up to break even and so from only trading one contract, I can’t really do that. I got to be perfect every single time, which is nearly impossible.

PROTECTIVE STOPS THEY DON’T TEACH YOU, BUT YOU ABSOLUTELY MUST USE

Now one last thing that’s also critical, absolutely critical. It pains my soul when people call and tell me, or email me and say, Barry, I blew up my trading account or, you know can you help me if I take your courses. Can you help me get it back or whatever? Wow. Here is the problem, they were not taught the things I teach in my courses, and that I’m teaching you right now about money management. So not only do you need to have a protective stop on every trade, you also need to have a protective stop on every day you trade, on every week, on every month, on every quarter and every year.

So for example, let’s say that in the percentages you decide are up to you. I would never, personally I would never risk more than 2% at any one trade. And then I would never put at risk more than 5% on any one given day. That’s, that even makes me nervous. 5% of my trading account on one day, that’s huge. Never, never, never. So if you get to 5% loss of your trading account on one day, you’re done, shut down. Now again, these numbers, I’m not prescribing as good numbers for you. Keep these numbers smaller the better.

And then let’s say the end of the week, you lose, you know maybe 7% would be your max. These should not be proportionate each day. You want them to be smaller. I prefer something like 1% per trade. And perhaps 3% per day. And then 5% per week, and then maybe 10% would be my maximum allowed loss for a month, and each quarter, you may want to allow 20%. Per year, you could consider 30%. The actual percentages are up to you.

WHEN YOU’RE STOPS ARE HIT, STOP WATCHING THE MARKET

These still are huge numbers. Hopefully we are not going to hit them. But they are there to protect us so that you’d never blowout your trading account. You hit those percentage losses, you’re done. Your percentage loss for the day, maximum loss percentage per day, you shut down your account, let me tell you from a practical point of view, do not sit there and watch the market. Because the temptation to take more trades is way too great. You stop, you shut down your account, you totally take down your charts, you do not look at them, you remove the temptation.

If you hit your weekly stop, say that’s, you know 5%. And you hit it on Tuesday. You are done for the rest of the week. You do not trade Wednesday, Thursday, Friday. If you’re going to watch the market, you put your account in demo mode or simulator mode, don’t even allow your order entry to be up. And then if, and the same thing applies, you get the idea. So if you lose, it might be at the end of the first week, you lost the maximum amount for the month that you have allocated for the month. Well guess what, you don’t trade for the rest of the month.

By the way, these rules apply whether you’re day trading stocks, futures or Forex.

IF YOUR DAY TRADING STOPS ARE HIT … IT’S TIME TO REGROUP

If you hit those numbers something’s wrong. Something is wrong, and there is no reason to keep trading because you’ll continue to go down the rabbit hole deeper and deeper and deeper.

So this is just one simple step, one practical simple step in preserving your money, not blowing out your trading account, not allowing yourself to blow out the trading account, and of course moving you closer to day trading for a living. And here’s the other thing, when if you hit, if, hopefully you won’t, but if you hit those percentages on any one of those, you know stops per trade, stops per day, stops weekly, stops monthly, stops quarterly, stops annual stops.

That sends you a message that something’s wrong. Something’s wrong. You need to go back and regroup. Stop trading with your money. Go back, regroup. Maybe get a coach, or mentor or at least analyzer on trading and find out what is going on. Because there is something consistently wrong. You are having a consistent problem at that point. And do not put your money at risk.

So, well that’s it for this lesson on day trading for a living. Hope you appreciated, hope you will apply it. Please for your own sake, stop sending me emails, stop sending me emails saying that you’re blowing out your trading accounts, but I mean you could do it if you want to. But I’d rather you actually apply this and say, Barry thank you. I applied these rules and guess what, now I don’t blow up my trading accounts anymore. In fact now I’m making money.

A PRACTICAL BENEFIT OF USING CONSERVATIVE STOPS AS A DAY TRADER

The other side of it, I’m going to throw this real in quick. Apart of what this does, here’s a side benefit. When you apply these kind of stops per trade, per day, per week, per month, per quarter, a side benefit that you can have is to make you more careful on the trades you take. To take what I call fewer, better trades.

When you know that you’re only going to be able to, you know take so many trades in a given period, it can, I won’t say it always does this for everybody, one of the psychological benefit that some people experience is that they get more selective and more picky and more conservative with the trades they take. And that has an extra benefit of giving you a better win loss ratio and helping you to stop over trading. Which I would guess is probably about one of the number 1 problems that I hear people having, is over trading. So be more conservative, be choosier, and as they say, take fewer better trades. And believe me, you will be happier.

Employ these recommendations and it will take you a lot closer to day trading for a living.

I’m giving away one of my favorite trade strategies. Absolutely free. It’s called the Rubber Brand Trade. And it has an extremely high win loss ratio. It’s a very simple strategy. You can learn it in about 26 short minutes. 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.

Pay It Forward My Friend

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Day Trading Rules – Which Fibonacci Levels will Create Tops or Bottoms

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Day Trading Rules for Fibonacci Levels

Day Trading Rules
Day Trading Rules to Buy or Sell

One of the most often asked questions I receive about day trading rules is: “How do I know which Fibonacci levels price bars will bounce off and which ones they will slice right through?”

That’s an important question because Fibonacci and other price levels are where we look to buy, sell and take profits.

The video below helps to answer that question to help you apply this and other day trading rules profitably.

You can email me at barry@topdogtrading.com and I’ll be happy to show you how to get my Free Cycle Indicator to help you with your day trading strategies.

Enjoy the video and please leave your comments below.

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VIDEO TEXT:

Hey welcome to this video series. This is Doctor Barry Burns with Top Dog Trading and today we are going to talk about day trading rules specifically with regard to Fibonacci Retracement levels. What are they? Okay. First thing is Fibonacci Retracement levels are support resistance lines. And we are basically plotting levels on the chart after an impulse move defined how far the market will retrace before it continues in the direction of the trend.

So let me show you exactly what I mean here. You see the E-minis. So here is an impulse move and what we are looking for here, first thing is a major move in the market. A very significant move, and we are looking for a significant high, that will stand out to anybody on the chart, and a significant low. In other words highs and lows that will visually stand out to pretty much anybody looking at the chart. That’s one of the basic day trading rules.

DAY TRADING RULES USING FIBONACCI LEVELS FOR TRADE ENTRIES

Now after we get the impulse move, the question is, and the day trading rule that we are going to apply is, if we want to trade in the direction of this trend, now we have a retracement. And it retraces, okay we can see in hindsight, it went this far. But if we’re trading in real time, we don’t have that benefit. We want to know, well is the market going to retrace maybe just this far, and then go down? Or maybe it will go up this high, and then come down?

How would we determine that the market will only retrace this much, in other words this would then be a great entry point, to then take a short, in the direction of this original trend. And that’s the question we’re answering with today’s day trading rules on Fibonacci.

WHICH FIBONACCI LEVELS TO USE

Alright, so first of all let’s look at what these Fibonacci numbers are, let’s bring those up so that you can have them on your chart. So here are the numbers that I use. And we are going to specifically look at these. Remember this is a percentage of how much the market retraces back toward the initial impulse move where it started.

So we’ve got 0%, if it doesn’t retrace at all. 23.6, 38.2, 50, 61.8, 76.4, and 100. So those are the numbers that we’re using. Write those down if you need to. Import them into your own charting platform. And I’ll show you what it looks like here in just a moment.

HOW TO USE THE FIBONACCI DRAWING TOOL

So we go up here to our Fibonacci Retracements drawing tool. We start here. That’s the beginning of our impulse move. We bring it down to the bottom. And now you can see these numbers draw on the chart. So this is where we started from, if the market goes down here and it doesn’t retrace at all, how much is it retracing? 0%.

If it goes all the way back to where we started, it retraces a 100% of the move. So then we have these ones in between. 23.6, 38.2, 50 halfway, 61.8, and 76.4. So as you can see, now we are just going to be using this tool from this point on.

Now here is the tricky part that lot of people don’t talk about, with Fibonacci retracements for day trading. And by the way this works for swing trading, works for E-minis, stocks, forex, whatever. So we come to our first Fibonacci retracement and these are support resistance levels, is essentially what they are.

THE ANSWER TO THE BIG QUESTION

But here is the big question, here is the tricky part. So we have a resistance level right here. The 23.6% retracement of this impulse move right. How would we determine whether that level is going to hold and market will continue to go down from there or if it will break through. See in this case, it breaks through, so that resistance level didn’t work.

This time which one work. Well the 38.2 worked, right. That’s where it went to, oops. It went to there, and then it continued on down. But it could have also gone to 50, or could have gone to 61.8 or could have gone to 76.4. Heck, could have gone all the way back to 100% or even above.

So the big question, the tricky question here that very few people will answer for you is fine, everybody or not everybody, but lot of people know how to draw these levels, but they don’t tell you the secret. How to determine the day trading rule as to which one of these will be the final resistance level that will hold, and then the market goes down, back in the direction of the trend after that. Because, and that’s so important, because that my friends, that’s going to be your entry point to go short.

THE “HOW TO”

So let me show you how to do that. So now I’ve added the cycle indicator to the bottom of the chart. And this makes all the difference in the world. So as I said, Fibonacci levels as well as some other levels like pivots and so forth, they give us price levels where we would look for potential highs and lows on the market.

The other thing though is that a chart is a 2 dimensional object. So yes, we have price over here in the y axis, but then on the x axis we have time. And that’s it. That’s what you got to work with on a chart. Time and price. So we are looking for the confluence of time and price, in order to find where and when the market is going to put in a high and then continue back in the direction of the trend.

ADDING CYCLES TO YOUR DAY TRADING RULES

So the Fibonacci levels, they give us potential prices, where the market could top out. But what we would also need then is time. And that’s where the cycle indicator comes in. so you’ll see here, this is a topping of a cycle. The key element here is where it turns from green to red, right. In there. And then we match that with the price level. So again time and price. And that’s one of the day trading rules that helps us to determine that.

Now the price is pretty easy. The cycle indicator is a little more tricky. It’s not something I can go into now. This video is already little over time. But I do offer a free webinar periodically where I give people this indicator and teach them how to use it. It takes about an hour but the webinar is free.

Since this is being recorded and people will be watching this for months and years to come. I can’t give you a one particular link where you can access it, because we change the schedule of webinar and, but here’s what I will do. I will give you my email address and if you want to send me an email, at any time in the future, ask me when the next webinar is going to be. Where I give away the cycle indicator and teach you how to use it. I will be happy to do that.

So there you go, there’s my email address barry@TopDogTrading.com. Send me an email if you like to attend one those free webinars about timing your entries, and we will let you know when the next one will be, whatever month, year, decade, you respond.

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

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 day trading 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 day trading rules, Simply click here:
http://www.topdogtrading.com/trading-volume-on-day-trading-and-swing-trading-charts/

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How To Use Volume In Day Trading

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How To Use Volume In Day Trading

how to use volume in day trading by Top Dog Trading
Everyone loves Top Dog Traders!

The analysis of volume you’ve been taught for trading stocks, Forex and futures is generally designed for trading daily charts, so when learning how to use volume in day trading, you must use a little different technique.

Volume patterns on intraday charts are much different than they are on daily, weekly and monthly charts.

The reason? Before you can use volume signals for day trading, there’s a “metapattern” of volume to every intraday chart that must be understood. Watch the brief video below for more details.

You can email me at barry@topdogtrading.com and I’ll be happy to show you how to get my Free Cycle Indicator to help you with your day trading strategies.

Enjoy the video and please leave your comments below.

You’ll find the text below this 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 at the very bottom of this post.

VIDEO TEXT:

Welcome to this Day Trading Tips Video. And today we are going to talk about how to use volume in day trading.

You know it’s interesting that a lot of people read about volume and get very enamored with the interpretation of volume patterns. And that’s a good thing. It’s good to learn how to read volume for sure. But there’s a big difference in how to use volume in day trading, as opposed to how to use volume on daily charts, where each bar represents one day of activity. And I’m going to show you why that is.

So first of all, let’s take a look at what we’ve got here. We’ve got a nice move up this day, then goes sideways, and then from there it just goes up the rest of the day. During the sideways time we got big volume in here. And that includes this section where the market is retracing. So it’s actually retracing on very high volume. In fact some of highest volume of the day if we take this across.

Then when it goes sideways, volume kicks in to roughly about this level here. We get a little bit of a volume spike in this section, and if we carry that up to the price action nothing really happened in price. It just still stayed within that consolidation. Then we do get a nice little volume spike here, and that does help to propel the market into a new uptrend.

But a lot of people would think then that volume should say strong, in order to sustain that uptrend. And it does not. In fact it stays below the level that we had earlier in the morning. And it stays down into about this zone, until about 30 minutes before the close. So the sustained uptrend, if you notice that, for the majority of the day, stays below the previous volume. Actually it stays about equal to the volume of the contraction period. And it stays below the volume of the morning.

INTRADAY DAY TRADING VOLUME METAPATTERN

So some people might wonder, well that seems strange. How can that be? Alright. There are a couple of reasons for that. Number 1 is that as I said. Intraday volume is interpreted differently than the volume on daily bars, weekly bars and monthly bars. And the reason for that is that intraday, there is what we call a metapattern of volume. And that volume metapattern is basically this …

The key to learning how to use volume in day trading is to understand the intraday volume metapattern.

It will be high in the morning, and then it will kind of come down like this, and then towards the close it goes back up. And that’s your basic metapattern. It’s almost like a saucer but it’s a little more weighted toward the end of the day, and it’s that saucer pattern that is your metapattern. That when you read the individual bars, volume bars with the associated price bars, you have to take into account the metapattern that is fading against the individual pattern for each bar or set of bars.

Not knowing this, is what makes traders stumble when trying to figure out how to use volume in day trading.

You have that on intraday charts because you have most of the volume is on open. And then in the first hour or two of the day, we get a burst of volume at the end of the day, and then during the middle of the day, during lunch and even after lunch. Normally not as much.

IT HAPPENS MOST DAYS, BUT NOT ALL DAYS

Now it’s a metapattern, it’s not true every single day. But it is true most days. That’s surely a general pattern. So this is a general pattern that’s going on, that really doesn’t mean much with regard to interpreting price action. It’s just that’s how the number of participants time their participation in the market, during the day, during day between the open and the close.

So the patterns are skewed a bit by that metapattern. In other words, the smaller patterns, the micro patterns on volume are skewed by the overall metapattern. So when you’re studying volume, make sure that you are, if you are an intraday trader, if you are a day trader, make sure that you are reading volume patterns that are specifically designed for day trading, and not for longer term charts. Now let me show you one more thing while we are around this topic.

So that’s the key to How To Use Volume In Day Trading.

HOW TO READ PURE PRICE/VOLUME ACTION

Now that you understand how to use volume in day trading, let’s look at how to read volume on a daily chart.

Now I have switched it over to a daily chart. And now volume becomes much more meaningful because we are not fighting that metapattern. We are able to just read pure volume patterns based on how price is acting.

So here we get an obvious peak in volume. And the market head going down dramatically, so that’s an exhaustion pattern. And that’s very good. Now here is the key, so we look at that, we mark that and then we look here and we see that the market comes back to retest this low over here.

Now what happens with volume, it’s much lower, much lower. So that’s a signal and you can read this purely with price and volume without having to worry about battling that meta pattern we have in intraday charts. And that’s a good signal that that market is probably going to put in a low there because you don’t have as much strength going down.

Now interestingly, as the market goes up, a lot of people would think, okay that’s a very nice move. That’s a big climb. Why isn’t volume going up? So this is where lot of people misunderstand volume. You don’t always want a dramatic increase on volume to continue a trend, in order to sustain the trend. And the reason for that is that if it’s too strong early on, then all the market participants that want to participate already are in. and there’s not a lot of people to come in later. So a gradual addition of volume over time actually helps to sustain trends.

THE VOLUME PATTERN YOU DON’T WANT TO SEE

Now what’s interesting though, which is we don’t want to see is this. So market comes back down, and then it goes back up. Retest this high. Now when it retest this high, what happened with volume. Okay now volume went actually down. That’s not a good sign for the sustaining of an uptrend. In other words, you want it to maintain but you don’t want it to be too dramatic. So like over here, we were so dramatic and that was the end. Right. That was capitulation.

So you want a nice, steady continuation of line to come into sustain a trend but you definitely don’t want it to decrease. And when the market’s decreasing in volume, and comes back up, retest a high, when ones already been established. That’s not a bullish sign.

Then we get an increasing volume here. Again volume decreases here, alright. And that lines up with this move here. Then we get another increase in volume. We actually make highest high in volume since over here. And when does that happen, that happens right here. That move starts there. And so once again, we get a nice move of volume. Remember it’s an increase in volume, even though the price is going down. So you don’t necessarily want the volume histogram moving in the same direction as price. If you want to see a strong move, you just want to see good volume.

And again, because it reaches up to this high, it’s an exhaustion pattern. It’s an over extension of volume. And again, it’s coming back down to this support level over here. Which is already established. So that support level combined with an exhaustion pattern of volume indicates that that’s a very high probability low and that’s probably going to be at at least for now.

So that’s how you read volume when you are just reading it purely. Just understand that when you study volume, whether it’s in the book or course whatever, you have to study the patterns and volume for daily charts and then you have to also be sure that if you want to know how to use volume in day trading, you’re studying different patterns.

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

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 day trading 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 volume strategies, Simply click here:
http://www.topdogtrading.com/trading-volume-on-day-trading-and-swing-trading-charts/

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