Lecture Notes: Trading Strategies and Market Environment

Key Concepts

• 88% Success Rate
  • Near-perfect trading strategy.
  • Suggests 9 out of 10 trades will be successful.
  • Highly reliable, categorized as "Bread and Butter" plays.

Bread and Butter Plays

• Definition: Plays that are highly reliable and occur regularly enough to be considered almost guaranteed money.
• Current Market Environment
  • Favorable for "crash into support" plays.
  • The market allows for making a living by focusing on "crash and go" plays.

Trading Strategies

• Crash into Support
  • Involves plays where a market or stock crashes into a support area.
  • Key indicators include crashing into the 200 moving average or narrow state Fab Four.
• Micro Whale Concept
  • A three-part move: initial move, pullback, and secondary leg.
  • Micro whale plays occur in 2-6 minutes and are prevalent at market open.
  • Similar to a "wrecking ball" weakening a support level.

Psychological and Strategy Adjustments

• Avoid Sloppiness
  • Do not assume any red on support is an opportunity.
  • Require the crash or violent motion before engaging.
• Entry Tactics
  • Enter into the violent bar even if late, but with smaller positions.
  • The real opportunity is the bounce and color change.

Risk Management

• Stop Loss Strategies
  • Use "event" or "maximum" stop-loss strategies.
  • If unable to meet stop requirements, skip the initial entry and wait for the subsequent opportunity.

Trading Examples

• Example of Trades
  • Illustration of market crashes into 200, initial crash, and entry points.
  • Importance of taking partial profits and managing trade zones.
  • Continuous adjustments based on market response and maintaining a focus on high-probability setups.

Practical Considerations

• Profit Management
  • Taking profits in layers, understanding profit zones.
  • Managing positions based on the trade's performance within defined zones.
• Continuing Education and Adaptation
  • Importance of understanding market conditions and adapting strategies accordingly.
  • Continuous learning from past trades to refine strategies and improve success rates.