Planning Trades for Entry and Exit
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TECHNICAL ANALYSISTools of Trading
• Goal: Identify special cause as quickly as possible, not predict the future
• Match the tool to the market
• Keep it simple but robust
• No two markets are ever the same; hone your judgment
• Like fertilizer, more is not always better
• SUPPORT is a price level where buying becomes stronger than selling and prices rise
• RESISTANCE is a price level where selling becomes stronger than buying and prices fall
SUPPORT AND RESISTANCESupport and Resistance Defined
TRADE CONDITION 1Gap Fill
Gap
Gap defined
Gap fill and reversal
TRADE CONDITION 1Gap Fill
Gap fill and reversal
• Look for reversal candles at fill point
• Watch for volume confirmation
• Protect above fill point
• First target is the gap starting point
TRADE CONDITION 2Channel Breakout
Breakout: any significant move outside an established trading range
Channel
TRADE CONDITION 2Channel Breakout
Breakout
• Closing price outside the channel
• Watch for volume confirmation
• Protect above channel support or below channel resistance
• First target is the channel width from breakout point (measured move)
• Use stop orders to protect entry price
TRADE CONDITION 3Role Reversal
TRADE CONDITION 3Role Reversal
Role Reversal
• Wait for the price pivot
• Look for trend reversal candles
• Protect below role reversal support
• First target is the previous high
• Be prepared for multiple entries if price starts channeling
TRADE CONDITION 4Retracement lines for support and resistance
• Retracement lines from highs / lows
• Applied to multiple time frames
• Based on the Fibonacci sequence: 1, 2, 3, 5, 8, 13, 21…
• Retracements based on the Golden Ratio: .618, (1 - .618) = .382
TRADE CONDITION 4Retracement lines for support and resistance
TRADE CONDITION 4Retracement lines for support and resistance
Retracement
• The key is choosing the correct high and low
• Tighten stops at each retracement price
• May trade breakout or reversal
• Watch for new high/low legs
• May be used for daily, weekly, monthly – weaker when used intraday
TRADE CONDITION 5Trend reversal candles
1. Uptrend
2. Resistance3. Shooting Star
4. Confirmation
TRADE CONDITION 5Trend reversal candles
Trend reversal candle
• Make sure it meets ALL requirements
• Wait for confirmation if required
• Protect above resistance
• Target is identified support or measured move
• Choose a few key candle patterns to start with
Session 1:Technical vs. fundamental analysis, analyzing trends, top 6 candle patterns, moving averages, volume, RSI and MACD
Session 2:Option building blocks, stocks vs. options, buying calls, buying puts
Session 3:Income and hedging strategies, spreads and collars, protective put, covered call, buy/write, bull call spread examples
Trading by Numbers:Determine trend and volatility, moving averages, linear regression, ATR and standard deviation, 7 keys for managing risk, 12 core option strategies, Bollinger Bands, Fibonacci, trading earnings and gaps, MACD and channels.
ESSENTIAL OPTIONS VIDEO COURSEwith Trading by Numbers $140
Planning Trades for Entry and Exit