TECHNICAL ANALYSIS

Profit From Trapped Traders

and learn how to trade breakouts and false reakouts

Are you one of the following traders?

Your risk-reward ratio is not your strongest point. This way your losses are usually larger than your winners.

You want to find the big move before it occurs, but you don’t know how.

The market seems to stop you out of your trades, just before reversing back in your favor (and you’re no longer in the trade).

This feeling is awful, right? Well, not anymore. In this article you’re going to learn:

• How to improve the risk-reward ratio of your trades

• How to profit from “trapped” traders instead of the ones being stopped out

• How to identify big moves in the markets before they happens

Let’s begin...

First, stop doing these two things and you’ll improve your trading performance:

1. Stop “chasing” the markets

2. Stop trading against the trend

Stop “chasing” the markets

The first thing that you can do to improve your trading entry is, stop “chasing” the markets.

What does it mean?

It’s when price made a substantial move and you start having the fear of missing out (FOMO). This led you to randomly enter a trade, in the hopes of capturing a piece of the move.

An example: On Chart 1, where are you going to set your stop loss?

Chart 1

“Chasing” the markets is rarely a good idea, because there isn’t a logical place on the chart to set your stop loss.

Stop trading against the trend

“Rome was not built in a day, and no real movement of importance ends in one day or in one week. It takes time for it to run its logical course. “ - Jesse Livermore

Look at the chart 2. Which side do you want to be on?

Chart 2

I’m sure you want to trade with the trend, right?

Some of the benefits are:

• Higher win rate

• Better risk-to-reward profile

Now, I’m not saying counter trend trades are wrong because there are traders who are profitable taking counter trend trades. But for the rest of us, it’s far easier to simply trade with the trend.

How to use support & resistance and improve your risk-reward ratio

If you want to buy low and sell high, how do you define what’s low and what’s high? This is when support & resistance (SR) comes into the picture.

Support - An area on the chart with potential buying pressure to push the price higher. This is where you’re are looking to buy “low”

Resistance - An area on the chart with potential selling pressure to push price lower. This is where you’re looking to sell “high”

You can see a few examples on charts 3 and 4.

Chart 3

Chart 4

Next>>