Trading Became SO Easy After I Found This Pattern

being able to spot when the market has trapped other Traders has allowed me to consistently find profitable trades in the market and capture reversal trades just like this one or like in this trade where I was able to risk about $500 and make a return of close to $2800 and what this does is it allows you to not have to be right very often this trade I closed up for about $2,600 and just to show you my results over the last month doing it with about eight trades I have a 50% win rate but I've made over $4,000 with this strategy because all my wins are way smaller than my losses each one of my losses is 400 500 this loss was basically break even at $120 but my wins are consistently much larger than my losses which allows me to consistently be profitable over the long run so let me show you how you can consistently identify these traps and profit from them the basic idea of how they works is in an uptrend you're going to have the market start to consolidate at some point and what happens is a lot of the time is people will see that the trend is strong and that a sideways move is a consolidation pattern this can often be a very strong continuation pattern it's called a bull flag where the idea is if the market breaks out of this bull flag it will continue the previous Trend higher and so a lot of Traders will wait for a breakout of this sideways consolidation and once that does they will buy up here betting that the market is going to go higher and this can be something that totally works and often does work but what happens sometimes is the market breaks out here buyers jump in long and instead big players and the market instead decides to just flip it the other direction and what this does is we'll think about it if you were buying long right here and you're getting in here well where's your stop loss probably going to be it's probably going to be below this consolidation somewhere because that totally makes logical sense but all of a sudden when you see the market start to do this well either it's going to hit your stop loss down here or you're going to say wow there's something off here I was expecting this to just all of a sudden keep going higher and so you're going to get out of the trade and what this does is it starts a domino effect of Traders getting out of their orders and well sellers up here like me are going to see this and say wow this looks like a good spot to actually potentially go lower this massive Candlestick right here is showing a lot of strength to the downside and so what I'm going to do is I'm going to start putting in sell orders here and bet the Market's going to go lower and what all this does is it pushes the market lower and lower and it can start a domino effect where the market just all of a sudden craters lower and generally gives back this area right here and so this is an actual recording of a trade I jumped in once I saw this signal show up because when it comes to spotting reversals like this it's really hard to know when the market is going to reverse but using these traps I have been able to consistently get better signals because of them because waiting for that Catalyst and that domino effect to start to play it makes it way more likely for the market to sell off and it allows me to again get that higher risk reward ratio where right here I am risking let's say $500 and then down here well I think the target is kind of down to this area down here and that's probably $1,500 worth of movements so I'm getting three times my risk roughly on this trade and that allows me to not have to be right every time I can be right only 50% of the time and I'm consistently making money in the long run let me show you another quick example to solidify this for you I've got a major resistance level here and so this is the previous high right here and so what the market did was it broke above there with a really strong bullish Candlestick and so what's going to happen is well it's basically doing that bull flag again most likely it's going to you know potentially consolidate here and keep going higher but instead what happens is it it starts to lose that Steam and fail back in here and it starts that cascading effect where all of a sudden people that are to the long side or buyers that got in up here because it broke the previous highs they are freaking out and realizing that you know it's broken this uptrend it's in a lot is starting to look really bearish and so they're starting to potentially exit out of the trade or people like me are starting to say hey this actually looks good to the downside I'm going to get in short here and so again all these sellers come into play because while I short the market I have to put in a sell order which pushes the price lower and if someone has bought this to close out of their position they have to put in a sell order as well and so those are multiple sell orders coming into play from me wanting to get in the market and someone wanting to get out of the market and so again it starts a domino effect of the market pushing lower and this allows you to again risk a small amount and capture potentially big swings again if you couple this with bigger resistance zones and bigger time frames you can use that domino effect to capture bigger swings down so that trade close out there for a good 2 to 3x and that was a great trade off of just that simple trap right there and so if we look at the es Futures here on a 5-minute chart what we can do with these bigger picture ideas is you can use a larger time frame to see where resistance and support support levels are and you can look for reversals between them and so with the market currently right up here we can look for a potential trap to happen jump in on that and then look to catch a reversal down to the lows of that area and so if we zoom in on this right here the market does a little bit of a breakout here and fails back in and so that's the kind of trap we're looking for and so if we go to a one minute chart to kind of see what that looks like a bit more is here's that previous high is the market has really strong bullish candlesticks here white on my chart is a bullish Candlestick and blue is a bearish Candlestick and so what you have is a nice methodical move higher a little bit of consolidation happens and then all of a sudden you have a big bearish reversal Candlestick and so this is a three-line strike pattern this is a domino effect showing pattern I really like and so what this shows is either Traders are starting to short here putting sell orders betting that the maret is can go down or people people that were buying over here are now trying to get out of their trades and cut their trades for a loss and so seeing that that triggers to me that okay the market is looking to reverse here I don't just jump in when I see this because you can see that the market starts to chop around here a little bit and so what I want to see is I want to see a final confirmation of the market attempting to go higher the whole idea is it's confirming that trap is the market breaks up here comes down and it makes one more attempt to keep going higher here and if it doesn't break this high and starts to sell off here generally making a big bearish Candlestick I will jump in short there and bet the market will go lower because that'll confirm the trap for me and so again we're here on a one minute chart in the es Futures and essentially after seeing this Candlestick print that was good enough for me so to show you what that looks like in real time right here the market is attempting to break higher here and it starts to to fail is it makes a good bearish reversal Candlestick right there and then followed up by a big bearish Candlestick as well and so I think that is a great signal and so I put in an order there and bet the market is going to go lower and then I always put my stop loss above that lower high swing that was made that I signaled to get in on and so from there you have to let things play out another thing that actually confirmed my signal is over here on the left on a 5minute chart is it made a lower high as well so to me what that does is it signals a lower high confirmed here it's a nice big bearish Candlestick and so getting in short there it's aligning with the 1 minute chart and so from there I look for the market to go lower and so on my recording you can see now I switched over to a 5-minute chart and the whole idea with this is using that bigger picture to Domino into capturing the larger swing in the ring and that's the whole goal of using these larger time frames to find a resistance or support Zone because from there once the market starts to break down here well the only thing holding it is there's a little micro you can see there's a little micro support level here and so my thinking is okay Market's looking great I just have to let it do its thing while the trade plays out I think that it it might find a little bit of support here but I don't think that's the big picture Play I Will move my stop loss down and break even once it kind of gets down here that was my whole idea is because well you know I don't know what the Market's going to do it could come down here and bounce and go higher if that happens I want to get out but I think it's probably not going to do that I'm fine giving it a little bit of wiggle room because I do think the big picture is it's going to move to the downside here and so that was my whole goal it was just managing the trade and letting it move as far into this swing as possible because I think it's more likely to find support somewhere down here with the idea that it's I think it's just air here I'm okay letting it have swings back against me now if we zoom into a one minute chart because I like to manage on a one minute chart when there is a clear downtrend in place right here you can see there's a nice downtrend line kind of bouncing off of from this high bouncing here and now it's starting to confirm that it's bouncing off of right here and so that's why I move my stop loss down again is you know I want to capture my profits as the trade moves in my favor because at the end of the day you don't know what the Market's going to do it could just decide to all of a sudden have one Candlestick reverse all the way up here and so you have to capture your profits as the trade goes in your favor now of course big picture-wise I would love to try and hold the trade all the way to those lows but you know the market will sometimes have moves in the Middle where they knock me out and so currently we're about three times my profit and that is my general Target that I like to go for anything more than that is great but I'm also perfectly happy with managing the trade a little bit tighter if it breaks us down trend line one thing I want to highlight that really helped me manage this trade is on the left side we have the NASDAQ futures and on the right side we have the es Futures both on a 5-minute chart and you can see that they are very very similar but both of these being at the same time about 7:40 in the morning is you can see that the NASDAQ was already at the support level that I had drawn and the es Futures were not there yet and so to me what that says is well maybe we start to find some support here because one of these markets has already given that whole move up and so I think it's less likely that we keep going lower and we could find some support here and so because of that I started to think about okay what does this look like if it's going to keep going lower or reverse and go against me and so for here what I did was I again I still want to move with this downtrend here but once it starts to break lower here I trailed up to right here and so what happened here is the market did the exact same trap on the reversal side is it on the NASDAQ here it looks a little more cleaner is it barely broke lower and then reversed starting to look for a potential reversal higher and so from there I jumped out of that trade capturing a really nice profit on that swing and so because it did that trap on the other side I stayed watching the market now switching over to the NASDAQ futures thinking well maybe the Market's going to reverse higher now because what I see here is a trap to the downside and a really nice head and shoulders pattern now the overall trend is for the day so far is pretty bullish to the downside so I did kind of go a smaller size because I wasn't as confident in it nonetheless I still jumped in the signal you know you can't be by sometimes or scared about things when you see a signal happen you just have to jump in and go with what the market gives you and so from here I just again like I normally do is jumped in on this nice little double bottom here nice signal to go higher and I just let the market play out and so my thought was you know maybe we come up here and hit a little resistance and instead the market just kind of goes in a sideways Trend but you know I'll probably have time to go break even by then or if it breaks out a little bit here I I was probably planning to go break even if the market broke here instead what happened is the market just reversed pretty pretty quickly on me and my thought was well I need to hold through one pullback cuz the market could totally come back here and then just keep going higher and so instead it knocked me out and kept going lower and that's okay you know not every signal is going to work out again I only have like a 50% win rate this month but it doesn't matter in the long run and so a big thing that has really helped me find these trades and be successful with these trades is really reading into the K 6 and creating that domino effect I was talking about and so this video right here is going to walk you through even more trades and how to set that domino effect up to Domino the 1 minute time frame into the 5 minute time frame into the 15minute time frame so you can capture larger swings than what could be originally possible

Channel: Riley Coleman

Views: 48,805

Keywords: live day trading futures, day trading strategies, futures trading, futures trading for beginners, futures trading strategies, trading strategies, stock market for beginners, price action trading, Price action trading strategy, price action trading for beginners, price action trading small account, trading price action, scalping strategy, trading patterns technical analysis, trading patterns for beginners, trading patterns forex, trading patterns for day traders

Id: hLdgRKm24OA

Length: 14min 24sec (864 seconds)

Published: Sat Apr 27 2024