The Daily Market Forecast... tops and bottoms

Today’s Lesson: Breakout rules.

Since the winning short yesterday was a 25-point breakout trade (see chart), it’s timely to review rules of entry. You may be using different rules that are working for you. Stay the course. There is no “one and only way” to beat the market. The key is to find a strategy and style that is in harmony with your personality and time commitment.

The rules followed by the team here are simple and very effective for avoiding the “Fakeout” breakouts. We do miss a few because it’s a more conservative entry, but the stats over thousands of trades assure you the results are much better.

Here was the trade suggestion yesterday: “Short Level: If price closes BELOW 4693.25 short the retracement back there with a stop at 4698.75 (5.50 risk).”

Notice that the breakout was not taken simply because price TRADED below the level. A 2-point range candle (or 2-minute, tick or volume) had to CLOSE below. The short entry was then placed above at the limit entry price. This expected reversal will prove the sellers were still there. Apply this in reverse to long entries.

There is more to learn about entries and exits. Click here and scroll down to the “Traders Open House” video. This is an orientation for new members in the trading room. Enjoy!

Trade Well,

Mike Siewruk

P.S. Join us every Saturday morning @ 10:00 ET for our weekly LookBack (5) trade review session. Every trade for the week is analyzed. Now open to the public. Meet the team. Ask questions. Register here.