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Learn the 7 key tactics that winning day traders at the top
firms are using (rarely ever revealed to retail traders)
Going back to our example, just assume for now that this market
is coming down into a predetermined support zone that you’ve
identified on your chart. So what are the retail traders taught to
do in this instance by the vast majority of trading educators out
there? They are taught to wait for some kind of strong bullish
candle in order to prove the support zone is working and trigger
their entry, as shown below.
As you see, right after that big green up-bar shows up off of this
support zone, price chops around for a bit and then tanks right
back down. This is a very bullish looking setup that seems to fail
very quickly. Why?
Now if you follow the common advice or wisdom and buy that
seemingly bullish candle in a vacuum, without understanding this
context, what usually happens is that you buy it at the top of the
candle with your stop below it, and you take a loss faster than
you can realize what just happened. I'm sure you've experienced
this yourself. You think you’re in a great long off support because
everything is looking so bullish, and next thing you know you’re
sitting with a loss, wondering what just happened. Then you're
watching the price action, and you're thinking, "I can’t believe I
just took a loss after this super bullish candle triggered my entry.
This market is super weak- it’s probably going to break support".
So you do the seemingly logical thing and short it on the next
small bounce up, placing your stop above the last high where you
had previously entered. But instead of having a weak bounce like
you expect, it does this:
It seems too good to be true that one simple technique can do all
this, but you’re about to see how and why that’s possible.
That’s it.
And here is the main reason why it’s not crazy- and in fact it’s
quite logical- to just place your order at the support/resistance
zone without waiting for any confirmation that the market is
holding and price is beginning to reverse: The bullish candle (or
bearish one in the case of resistance) that you’re taught to wait
for doesn’t actually prove anything. It doesn’t prove that the zone
is holding. And it doesn’t imply that price is beginning to reverse
and it’s now safer to enter the market. In reality, it’s a
meaningless piece of data.
Why?
So you see, the bullish candles that you're being told improve
your accuracy, because they prove that the support zone is
working, are nothing more than normal chop or balancing action
at a support zone. They are not bullish in any larger sense. A
single candlestick bar means nothing without taking what's
happening around it into account. So this thing that you're
waiting for actually doesn't buy you anything. It does NOT
improve the accuracy of the zone working and it does NOT
make your entry safer or higher odds. The zone is either
going to work, or it's not, and the initial price action that occurs
as the zone is hit holds very little weight with respect to it
eventually working or not.
Well, if your long order is down at support and your stop is down
below the support zone, the first huge benefit is that when the
market fills you and then has a quick upward reaction as the
sellers hit a wall of buy orders (any good support zone will
already have professional traders and institutions with their
orders already in the book waiting there) you get instant price
movement in your direction, which makes it much easier
psychologically to hold the trade and not miss out on the eventual
big move. Compare that to waiting for the up bar and entering
after it closes, and then most often instantly sitting through price
retracement against you, which either makes you panic out of the
trade or hits your stop loss which is usually right below the big
bullish bar you entered on. When you enter at the
support/resistance zone without waiting for confirmation, when
the market comes back down and looks so bearish, you're still at
break-even because your entry was much lower. And most often
Now a lot of people at this point might say, "Yeah, but isn't this
buying a falling knife? Isn't this something that we shouldn't
do?". This is where we have another huge misconception. Not all
So for everyone that says, "You can't just buy it right at the zone
without confirmation because what if it just slices right through,"
I say fine, it slices right through 15% of the time and I take a
loss that I would have avoided if I had been waiting for price
confirmation which never materializes. But what about the other
85% of the time where it gives a nice initial reaction? If you
bought after the market had already put in a reaction, you're
getting in at a much worse price and you're getting chopped up,
while I’m getting a great price with a correspondingly further stop
and avoiding the chop. That also makes it easier for me to stay in
the trade and eventually take advantage of the big move that
you’re being faked out of. So given that, I’m more than willing to
take a loss a small minority of the time that you would avoid, and
in return get a better price and avoid the chop the large majority
of the time which you would get stuck in. The difference that this
simple technique can have on your results is greater than you
could ever imagine.
If that wasn't enough, yet another benefit is that not waiting for
this pop to get in actually improves your accuracy. Now how do I
Well, if you buy up at the top of the bullish candle, to get eight
points the market will need to travel further to hit your profit
target than if you had gotten in right at the support without
waiting for a bullish move to start, since you would have gotten a
better price and can capture your 8 points earlier. In a lot of
other cases, what's going to happen if you wait for price
confirmation is that the market will go up, and before it reaches
your target, it'll hit a high, and then turn around and come back
down. I’m sure you’ve experienced this before. Whereas if you
were in from a better price, and your target was closer, the
market will hit that target a higher percentage of the time. Any
closer target is going to be hit a higher percentage of the time
than a farther target.
But what does that mean? What does hitting a target a higher
percentage of the time mean? It means higher accuracy.
Accuracy, by definition, means that your trades get closed as
winners. Well, if you get winners more often because the targets
Think about it. If 95% of traders lose, and all those traders are
being taught to wait for confirmation and price triggers before
entering their trades, wouldn’t it make sense that you could get
on the winning side by doing the exact opposite of what they do?
And why don’t most traders have this edge? Well, the first reason
is that they’re taught very wrong and ineffective information by
the trading education industry, most of which is run by educators
who were never profitable traders. And the second reason is that
psychologically, it’s not the easiest thing to go against the crowd.
So the mind has to be trained to do that, and most traders never
take the time to train their mind to do it. I’ll be emailing you a
simple but powerful method of training your mind to do just that,
so definitely be on the lookout for that.
And if you want to learn more ways of aligning your trading with
the pros, be sure to sign up for and attend my 2.5 hour free
online trading workshop.
Ziad Masri