Master the Dip Trading Strategy (Step-by-Step Guide) transcript

in today's episode I'm going to teach a variation of my momentum trading strategy where I focus exclusively on buying dips that is I wait for the price to flush and when other Traders are Panic selling I am buying that dip and looking for a squeeze back through high a day this is a strategy that for me can be very profitable and has a fantastic profit to loss ratio and the reason is because when I'm getting in I try to buy really close to support which means I've got a very tight stop my Max loss is like right there and then if we get that curl back up the profit loss ratio can be 3 to1 4:1 5 to1 it could be fantastic and today we've got some case studies of some amazing trades that I took on a stock that went up over 400% on news this is incredible but here's something I'll tell you a lot of beginner Traders struggle with buying the dip and in fact they have an expression that's called trying to catch a falling kn knife you try to catch a falling knife and you're going to get cut so a lot of beginner Traders will lose money trying to buy dips because they don't have a set of rules that they follow so what I'm going to do in today's episode is I'm going to share with you the rules that I use that help me understand when to buy the dip and when to sit on the sidelines and wait for a better opportunity now let's go ahead and jump into the screen share you're going to see a stock on here now whether or not you're trading stocks Forex Futures you're trading Commodities it doesn't matter because the philosophy here and the concept is the same we're looking to capitalize on momentary imbalances where we get that flush and then the move back up what's important however is that you're trading something that is trending trading something going sideways it just happens to flush is not going to work I need to trade something that is moving up and when it's moving up strongly those momentary dips of panic can be excellent buying opportunities so here we have SG sngx which is just uh the stock that we'll use as our case study for today and in fact I traded it quite well I peaked at about $17,900 on this stock today I've got my live trading archives that um we're going to go over th this is going to break down for you each of the trades that I was taking as I was making my profit on the way up and a number of these were really awesome dip trades so it's going to be a um a really good case study and we're also going to go ahead and jump into uh the slide deck here this is uh an excerpt I'll I'll share with you a couple of slides here from my warrior Pro curriculum um what you'll know for students that have already gone through this curriculum is that a lot of my strategy is based around dip trading dip trading you'll see we've got the dip strategy right here buying into or out of halts is also based on buying dips we call it the dip and the rip the reason is because if we think big picture about what's happening let's jump onto the Whiteboard we've got the price moving up right but the price never goes straight up or like this invariably the price Moves In Waves we get these waves up and so if you can buy the bottom of a wave this right here is a great entry near support for the next leg up the Next Step Up Now one of the challenges that a lot of beginner Traders will face is understanding whether or not we're still sort of stair stepping up so to speak or if we're now on the back side of the move and we're coming back down I'm going to help you differentiate the two in today's episode so let's go ahead and get started I'm going to jump on to the slide deck here and I'm going to begin with um this excerpt from chapter 8 of momentum trading strategy course uh and this is specifically on chapter 8 setup 8 the dip buy all right so we'll go full screen on this here and I'll do presenter viw all right so this is a big slide deck by the way this has this is on slide 905 of nearly 2,000 slides right now so dip buys is when I'm buying on a flush which some people call a wash out or a panic cell this is specifically when we have the price generally trending up but then we get that momentary I sometimes call it a jack knife we get that kind of drop like that now many of you have been in a trade right here long and then suddenly you're in this and you're selling down here in fact you're doing the exact opposite of what I'm going to show you in this episode this is where I want to be buying right here and then I'll add to it as it comes back up here because what often happens with these drops is we get that Panic flush and then we come all the way back up and that's the beginning of the next wave so for me my first entry into doing real dip trades was in March of 2020 when the stock market dropped 35% it was during the covid pandemic and what happened was I started buying stocks that were about to be halted going down or I would buy just after several halts down if they showed strength and I was noticing some incredible huge whips that created almost instant winners so for those of you who are familiar with circuit breaker halts the way these work is when a stock is trading in its normal range here there are circuit breakers that are 10% above and 10% below the current price and if the stock drops 10% in less than 5 minutes what will typically happen is it'll get halted on circuit breaker now I could get into more detail about exactly how these price bands are calculated but for the sake of argument right now we'll just say that they're 10% away from the current price so if a stock suddenly drops down and halts it'll be halted for a period of five minutes so we have a resting period and then trading will resume and if it hals down a second time it goes down another 10% boy there's a lot of notes on that side goes down another 10% then what we end up having sometimes are multiple halts down but what I Learned was that typically after the second halt down you want to start looking for a bounce back up because now this is exaggerated it's almost like thinking of a rubber band that's getting stretched out and when it gets really stretched out we snap back and so that snap comes in the form of buying we'll see it on the level two on the time and sales and we get that squeeze back up typically into a halt up so now we're halted up for 5 minutes and typically when you halt up you open higher and then move even higher when you halt down you open lower and move even lower so after two or three halts up we look for another halt down and in fact we've had stocks that have been so volatile we're just trading halts we had a stock a couple weeks ago that traded 40 that halted 41 times in one day it kept getting halted because it was so volatile which is kind of nuts but in any case that that was the origin of this strategy recognizing that sometimes after several hals down we were getting these really big bounces and so I realized that um this is kind of similar to what we see on some of these charts so I'm going to show you an example um let's see just today I'll pull up uh this chart here and I bet we're going to be able to go back in here and we'll we'll find a we'll find a nice little dip somewhere in here so this one for instance you know that's kind of a big flush this one right here that's another big flush now these this one flushes down and it pretty much immediately bounces back up this flushes down immediately bounces back up flushes down and immediately bounces back up so while there are people that are Panic selling I would say that this is becoming a level of support right so I would say there's support right here in other words people are buying right into this area and there's demand because every time it comes down to there it pops back up in fact look at this here we halted up we dip down and then we rip back up the low is the bottom of this candle we go from 6 80 all the way up to 840 so these are all examples of dips you see these low bottoming Tails so these are opportunities to be buying and catching a spring back up but clearly some of these are working better than others right some are just continuing low continuing lower others are pushing a lot higher that's a nice dip right there that one makes way for a move back to the new high right so that's the type of dip that we really like this on the other hand dips it does bounce back up but then it kind of goes sideways it doesn't get back to the highs so how do we sort of differentiate the two types of setups all right well let's jump back into the slide deck this is where we're going to learn so a panic selloff dip by setup can occur while a stock is extremely strong in total it's very strong but it has a momentary bit of panic where suddenly people bail out and this is going to happen especially on a stock that's up oh I don't know 400% on the day right when you have a stock that's up this much on the day you're going to have some candles like that those are created through a combination of people bailing out who have perhaps been holding for hours and are just taking profit and and it could also be short sellers hitting the bid doing what's called a bare raid so a be raid is a tactic that short sellers will use where they sell aggressively hitting the market they try to get the stock to flush and they try to get people to stop out when people stop out more sell sell orders are sent to the market which creates that sort of cascade effect where you get that Panic sell off now in fact that can go all the way to a halt down and prior to circuit breaker halts we would actually have what we called flash crashes where the waterfall would it would just start executing cell after sell order after sell order and you we would have a 70% drop and then it would bounce right back up up which obviously is unstable price action and that's why Regulators came in and said we've got to slow this down and create these halt levels because the highfrequency trading algorithms are actually making these um these flushes worse so understanding how these algorithms work uh will help you in your trading and I'll I'll talk about them a little bit I think as we go through this class but but what we're looking for is that momentary dip that momentary little Panic so it can occur because an individual sends a market order or a marketable order for a huge position it can happen uh because of the high frequency trading algorithms it can happen from a bar raid so there's different causes and we won't always or probably ever know exactly the cause of a particular flush but nonetheless when it's happening that's when I begin to look for a dip now I think it's worth separating the different types of dips so we have um what I would call a perhaps small dip and then we have a huge dip all right so these are both valid we're going to start here because this is an easier place for a beginner to get started so for a small dip we're going to picture that the price is moving up uh pretty nicely right here it pulls back uh for a moment kind of like this and it dips down here like this this and rather than waiting for the first candle to make a new high which is what we're this is the pattern we're expecting right here and you're going to buy right down here that's what I'm doing in this small dip strategy setup so rather than waiting for the confirmation and taking my first entry here I'm taking a starter down here or perhaps in here and then I'm adding to the position here so rather than having a cost basis up here my cost BAS is going to be down a little bit lower now you might not think well what's the difference between here and here you know either way but if we're going to be fair our stop is always going to be at the low of the pullback so the tighter we can get our stop the better the risk to reward ratio so if this is a 3 Cent stop and the profit Target is a retest a high a day and that's 30 cents away we've got a 10 to1 profit to loss ratio in fact you only need to be right on that trade 20% of the time in order to be a profitable Trader very profitable and if you're right on this setup 50% 60% 70% time now you're going to do really really well because you've got your risk so well in check now the second is the huge dip so this is where you know we'll see something kind of moving up like this it pulls back you know easy gol lucky whatever it pops up here oops where's this runaway pen it goes up here like this just let's say for instance and then it does one of these huge drop right so suddenly you get this massive drop and it could be a red candle um you know it's obviously be a red doesn't have to have a huge bottoming tail it could be just a huge red candle just like this and the whole thing is solid red so this is what a huge dip is characterized by a red candle that is far bigger than any of the other candles that you've seen so far it's going to be one of the top 10 biggest candles of the day so when you're looking at the chart it it's kind of easy to differentiate what would be at least in my opinion a small Dip versus a huge dip so that right there that looks like a pretty huge dip that looks like a pretty huge dip these look like pretty big dips right here okay this area in here it's a little bit of a smaller dip this area in here a little bit of a smaller dip you know I mean at the time they might have been felt pretty big but but for the most part you could visually see which are bigger and which are smaller now I'm actually going to show you um all of my trades from today so I'm finishing the day here uh $1,796 34 it's a good day but I was up close to1 18,000 and I gave back a little profit off the top and you know what's interesting is I actually gave back profit not on dip trade but on just standard run-of-the-mill breakout trades that just happened to not work now I my goal is always to be very transparent with you to show you what does work to show you what doesn't work in Total there's no question that trading momentum and breakouts works but there will just be days where for whatever reason dip trades work a lot better than breakout trades or vice versa so you have to be able to kind of adapt to the market that you're in okay so now let's jump back onto the slides here and talk a little bit more about the entry so I I mentioned here that wild dip trades have been a great addition to my strategy I remind everyone that when timed wrong they can also produce really big losses as you're buying right into a selloff so the ultimate question is how to determine when to buy and when to wait I think that getting really good at dip trading requires a degree of educated intuition and an ability to read to tape the time in sales and to see the level two and to really be connected with it so I don't think dip trading is probably a good beginner strategy for like your very first strategy I would say standard momentum trading of actually waiting for the confirmation of that first candle making a new high makes a lot more sense it's easier to visualize is easier to understand but once you've mastered this standard uh setup which I would call call my micro pullback strategy then it's time to take it up another notch now if you want to download a PDF that has the rules of my micro pullback strategy and also has my small account strategy built into it it's a big collection of my PDFs I'll put a link down in the description so you can download that for those of you guys that really want to get good at dip trading I would encourage you to do a twoe trial at Warrior trading and I'll put a link in the description for that as well the reason is during your twoe trial you'll be able to listen to my audio video broadcast and you'll have the benefit of of being able to sort of piggyback off my commentary off of my educated intuition as always my results aren't typical but the the the really important thing is that you're learning from someone who's proven profitable and dip trading is a lot easier to show you and and for you to learn in that classroom setting where we're watching the market in real time now fortunately today we do have um my live trades from this morning so we're going to refer to those um and of course those you guys that are uh doing a two week trial already would have been able to watch these live okay so we're going to look at um just to get oriented here um we're looking at s ngx and sngx I'll just pull this up on my chart uh real quick here so this is a stock by the way uh today that did have breaking news so if we pull up um the news window here we could scroll down we would see that uh this does have breaking news it came out at 7:30 a.m. and basically immediately the stock started squeezing up so they've got a headline here um this is a a US company late Stage biopharmaceutical Company so it's not Chinese stock which is you know an area where we are a little bit cautious um you know this is a oh and there you go it's actually uh making even a new high here as we speak that's that's great to see I love seeing that so now it's up let's see a high of 535 per. that's fantastic breaking through the 200 moving average on the daily chart okay so so SX um the thing here is that when it first started squeezing what I knew about it was that the float was less than a million shares and it was moving fast so I was like okay this is definitely the type of stock that I want to pay close attention to all right so if we jump into the live trading archive here let's see we're going to start with one of the small dip trades so we're going to start with something a little bit more moderate and then I'll we'll get into the stuff that's more complicated so the level two for sngx is um is right here this is our level two window and this is actually the time and sales uh for it so the time and sales starts at the top and goes down you I will end up moving sngx to this position usually this is where I have the two stocks that I'm watching the most closely but um just in this case um today I I left it in um in this bottom window for the beginning of the day so so sngx here has um squeezed up right in this area and as it's pushed higher let's see right here we dipped down so you see how we had this high of about 422 and we pulled back we climbed back up we dropped down we popped up and then right here we just dipped down now something that is important to note is that the position of the price right now is very close to what it's very close to a half dollar and a whole dollar so one of the places that I always like taking an entry is when we're near the half dollar or the whole dollar so the best tips are when I'm already watching the stock and what seems like in a flash it drops 50 cents or dollar a share to a half dollar or a whole dollar because what we know is that a lot of these stocks will trade with a great deal of respect for half do and whole dollars that's where the orders tend to get stacked up buyers are buying at the whole dollar and half dollar sellers are selling there and so the way I'm looking at this is I want to take an entry I watch it right here I'm watching the level two 3.99 do you see how it just showed 3.99 on the bid showed 3.99 on the bid and 402 on the offer 3.99 and I'm buying right here off off of support so with an entry right there I'm in at 403 and my stop on this basically is 3.99 now whether or not I would get out at 3.99 without a little bit of slippage it's hard to say I might get a little bit of slippage but I'm in at 403 average and my stop is basically if this breaks under four and isn't able to get right back above four so I have a four five cent stop on this with 6,000 shares I'm risking $300 to $400 now again it's possible that when I press the sell button I I could get some slippage on my exit which is the difference between where I want to get filled and where I actually get filled and that could make the loss a little bit bigger but I'm still in very close to support and I'm in right above the whole dollar of four what's my price Target what's my goal 420 okay so that's 20 cents a share well 17 cents a share that's still a pretty good risk to reward ratio now in this case this stock was very interesting because as it would come up to the highs look at this Flash and still doing it even to even right now as we just saw on the side chart how it popped up to $14 a share and it did it basically in one candle that just kind of spikes up so this has been putting in these spikes like this kind of all day which has been really impressive and I mean honestly I love seeing that so it spikes and instantly look at this I'm up 1,950 $ on this trade I'm still holding the full position we've got 37 on the offer so that increases my profit on the day from 4500 and I'll end up taking some profit up in this area and and I end up getting myself up to 6,500 so what you're going to notice is that a lot of these dip trades are going to correspond to half dollars and whole dollars so $4 $455 Etc so when I'm watching this pattern forming this is our standard micro pullback pattern also known as a bull flag we got several green candles up a couple candles of pullback but instead of waiting for that first C to make a new high if I notice it's pulling back and it's right around a psychological area I can take a dip as a starter right there so I call that a dip trade because I'm buying off of this support level with the expectation that it's immediately going to reclaim that level now of course if it doesn't I'll get out very quickly but if it does then I'm in the driver's seat and I can add to the position then we still get that standard breakout and I can add to it as if I'm only doing the breakout trade so I still take that trade so in other words I'm taking multiple setups at the same time I'm buying the dip I'm adding on the breakout adding perhaps into the next half dollar and if this starts to go parabolic up to five then I've got a great entry down here from a 403 starter or in this case if it stalls out at you know whatever 37 or 38 that's fine too it's still a green trade now let's um look at an example of a huge dip okay so these are definitely going to be a little bit more complex uh for beginner traders to get their head around so we're going to watch here this is coming into the open so coming into the open I'm watching sngx and I'm really curious to see how it trades now as you can see it's started to pull back a little bit as we've gotten closer to the opening bell so right now let's see we'll just zoom this forward we're just a let's see 30 seconds maybe that'll probably be enough so we're going to get oops Let's see we got to back up here so we're going to get right to the open there it is so that's the open so we're going to back up okay so so this is the we're so the Market's about to open right here so we're now officially open and I'm looking for a possible dip so watching the tape and we're now on um on this level two right up here so watching the tape what this is the tape obviously seeing a lot of red going through and I'm waiting for that dip so what we're going to see here is 44 on the ask 36 on the ask so see how a seller has come down here and look at how stacked it is we've got a big seller here at 36 but I look at that and I'm thinking this thing just dumped basically 30 cents like that now I'm seeing a little green on the tape if this seller gets bought up where do you think we're going to go we're probably going to Spring right back to where we were which is 660 so when I see that green coming in right down here boom starter look at that look at that that's like picture perfect the second I'm getting in there I'm getting in and now we're right back to 65 that is such a fast dip trade now on this one it sold off a little bit more the entry was above $6 of course but we were kind of in between cuz I was in right at 635 which is kind of right in between and I started to buy and you know what I think probably happened on this so you've got a sell order right here sell order right here my order is at 37 is at 670 it's a limit order so it's got a high offset just because that's where I I left it now I pressed the buy button and I got filled some of these shares were mine but I also for sure for sure got massive slippage CU let's look at this for a second one of my orders is filling 2,000 shares at 620 and the other is filling at 650 I mean I see a few orders went through at 650 but I don't even like my order maybe hasn't gone through the tape yet but that's kind of like 30 cents a slippage that's $600 a slippage I should have had the full 4,000 shares down there at 20 cuz I pressed the buy button when it was at 20 but somehow and this is what the thing this is the thing the way the algorithms work is when they see those orders come in sometimes they'll just move the price right out of the way so you get a bad fill so anyways I got a little bit of a bad fill on the second part of that order it's now at 46 54 on the offer 5565 and there I take half off the table at 61 all right so taking a little profit there and this now puts me up over 177,000 on the day taking a little more profit at 55 and still holding a th000 shares left of that position now we're about to see another fairly dramatic drop here in just a second so so let's watch this so we we sort of creep back up to 660 675 and then all of a sudden the Bottom's going to fall out and you don't really see it coming I'm sure there are people that are buying in this area looking for that trade to the next level but look at this drop see how fast that just dropped what do I do I buy now unfortunately I wasn't very quick to press my buy button and I pressed the button that I have for a small order for 250 shares that's great when I'm trading a stock like GameStop but on this one I should have bought 2500 in any case it's fine so I'm in at 609 and I'm already up 10 cents off the bid off off my entry so let's back that up and I'll just show you that drop again so you can see the candle formation so basically all of a sudden you get this capitulation you get this bailout where people start selling what does the algorithm do it moves out of the way and all these people get a ton of slippage and now they're filling at 625 610 they're bailing out they're getting terrible fills on Market orders and now I see a moment of pause and a little bit of green going through the level two the tape so when I see that I think this is a good spot to buy with a stop at six so now I'm getting in with a stop at $6 and that makes sense so again that's that entry where I'm getting in right with my stop at the basically cuz we we in this case we flushed you know it's the numbers are different but basically all the way down here so buying off of that that whole dollar actually we went from 80 all the way down to like here so buying that dip here and then looking for that spring back up now two things can happen well I guess three things could happen in this scenario uh when you take a dip trade like this scenario number one is it bounces not at all you get in at 609 and it's sideways so if that happens if you get in you get this drop and it's going sideways right here that is a bare flag for the next leg down so you don't want to be holding right there if it's just going sideways that's not good so if it's just going sideways that's bad uh scenario number two you could get in and you basically got in in the middle of the move and it keeps dropping however if you waited to see green on the tape like I did at 609 that shouldn't be a problem so we're going to start writing down The rules for this strategy where's my Eraser okay so rule number one the rules for dip trading okay so number one we need um volatility and and basically in other words volume sorry volume and volatility which means the price should be up probably 30% or more on high relative volume HRV High relative volume number two so this is based on stock selection right the type of stock we're trading now again I'm trading stock but you could apply this if you're trading cryptocurrency you're trading Forex um pairs you're trading Futures that's fine or you're trading large caps if you see a flash drop that's often a buying opportunity as long as um we check one thing which is going to be in these rules so number two we want to make sure we want to try um look for entries near half n whole dollars all right so this is always my preference because a we're buying support buying support um which can be ascending or descending resistance levels or um ascending or descending or it can be horizontal horizontal all right and then uh see the the half and whole doll so we want to buy at those levels number three we want to make sure when we're looking for a dip trade that we're not going to be um in a halt down so halt risk we'll talk about that in just a second okay so if we go back here and we look at sngx let's back this up for one second so the Hal levels on this are actually 20% above the current price these are wide halt bands because this stock on the previous day was trading between uh 75 cents a share and $3 um so Hal bands Warrior so I'm going to grab this blog here that you'd be able to see so the halt down on this is at 521 so 521 is lld Limit Up limit down halt up is at 782 so I'm not worried about getting caught in a halt on this um this is a um this is an article here Warrior train.com Circ circuitbreaker halt you could also search it if you're on our website um but this goes over the halt bands and how they work I've got some videos on it on YouTube as well if you want to watch those so this it the reason I don't want to be caught in a halt is because it's going to stop trading for a period of at least 5 minutes and during that period news could come out or I could find out that the reason it dropped was because we have breaking news that's bad and then the price is going to resume lower and I will have effectively caught a falling knife so I have to be careful about the halt levels the fact that this had the halt level further away when it dropped here I wasn't worried about getting caught and a halt down I was getting in at 609 right above $6 and I knew I could turn around and stop out at six if I saw that for example the halt level was 603 I probably wouldn't have taken this trade because I would know that a little bit more Panic selling read on the tape and it's going to be halted down and I'm probably going to be stuck and then I'm looking at a you know halt down open lower and you know if there's bad news it could go down even more and that would be a problem so I I want to really be careful and mindful of that now let's see I think I've got another um another drop that we're going to jump forward to here so let's move forward a couple minutes we've got another big drop that we can look at here this one's around 44 this one's even bigger so I know I laugh just because they're so ridiculous um they're abusing retail Traders like us so okay so first we get that drop and then the price whips back up and it goes all the way up to over $7 a share which is impressive now we do have a couple of issues you'll see that I have a blue horizontal line drawn here this is a resistance line based on Resistance here and here from pre-market I also have this yellow ascending support line which I had drawn from several levels premarket it goes way back so I know that we're going to resistance here and we might have resistance right up here so we're kind of coming up to resistance which is a bit of a risk factor okay so we come up to this level we're sitting here at 697 688 688 and then all of a sudden it dumps so let's watch this 85 on the bid 67 you see how it just dropped in basically an instant it goes from 680 to 675 to 667 the sell orders are just you know relenting people are hitting the bid they are hammering it so now it's dropping to 70 all right so it bounces for a moment that's not too bad and then uhoh there it goes again another flush all the way down to 605 and now here we're $6 on the bid five look at this $579 so my order I pressed the buy button first order got rejected I had to change it and use my hot keys so the reason my order got rejected was because pressing an order for $721 when the current price is at $579 is more than 10% above the current price your order will get rejected because of risk parameters that they set um at at my broker at least so my order got rejected but I pressed my hotkey twice or three times and bought 750 shares at 79 so again buying basically this Panic flush now here we're bouncing right off support of volume weighted average price is it at the half dollar the whole dollar no but we have another level of support here that we're paying attention to so I guess we should add that support could be um ascending or descending resistance lines horizontal resistance lines or um half doll whole dollars or something like vwap uh vwap or Mas moving averages something like the 200 EMA would be fine okay so then in this case here we do end up getting a bounce all right so let's get this bounc let's see so I'm already up here 80 89 on the offer back to 80 on the bid and as we know this ends up bouncing and going all the way back up to 12 1314 a share so it bounced up a lot as the day went on of course but just for a short-term trade you could think of these as scalps because it's a quick entry and a quick exit so locked up my by profit there on that trade uh some of them have however are going to be more so when I was talking about the the three sort of scenarios the first is that the price basically does nothing you get in and it's sideways which means we're bare flagging the second is the price keeps dropping the third is that well it works exactly as we expected and it bounces and then it's just the degree of how much it bounces sometimes they really spring back up and in an instant you're up 30 4050 cents a share at that point it's like the wind is at my back all I have to do is set my stop it break even and let's see what this thing wants to do because now I'm in the driver's seat other times it bounces but the bounce is a little bit smaller so let's look at a smaller bounce here we're going to go back to um let's see minute 36 and 19 seconds so here we go uh perfect right to 3619 that was very good all right so so this is another dip um this one's a little bit smaller what you can see here is um a couple topping Tails topping Tails a little topping tail we just had a jack knife which is that red candle the price popped up and then reversed back down so as it reverses back down here uh I end up jumping in this at uh 75 and the reason I bought here was because I saw this big stack of buyers on the level two which gave me a sense of confidence I was like okay we've you know I I think I can get in here and feel good about that so I'm in at 75 and I want to see it hold this level now basically as you can see instantly I'm up 5 six cents a share so I'm up 240 bucks on 4,000 shares now if this thing bounces up to 85 and up to 90 I'm in better shape but you can see right here I'm already taking profit because it bounced but now we're under a whole dollar so it seems like we're kind of having some resistance here and if we look at this chart on the one minute or on the 10sec it's B down and then sort of sideways which could look like a bare flag so this at the moment is looking a little iffy so I end up taking my profit on it it's not a big winner but you know can't really complain it's a small green trade I'm happy for that let's jump forward to to the next one this is going to be at minute 5024 okay so back here let's see minute 50 all right so this will be close enough so all right so let's see so right here so I just looks like I sold a position there I'm up 11,000 on the day and looking for a bounce off of six so see right now we've got a seller there at 601 they were at 608 they came down to 601 and I'm going to buy this dip right here I'm in right there at 601 average 602 average so now once again getting in right at well we erased that I need a a three-sided whiteboard right at the half dooll whole dollar so I'm in at 602 stop is about 5.95 about 5 Cent stop on this and once again I'm immediately up $276 $300 so you can see what I mean where if you do this 10 15 times in a day with 80% accuracy next thing you know you're going to be up a couple thousand bucks now my accuracy comes from a combination of following the rules knowing the right stocks to trade making sure I'm looking for entries at support half dollars whole dollars ascending descending horizontal and vwap moving averages avoiding halt risk and one thing I should also add here let's have uh rule number four we're running out of space we need a whiteboard extension is um front side so dip trading on the front side not the back side we'll just see BS trading the backside is BS we don't trade the backside so backside is no good the reason is so to differentiate the front oops to differentiate the front side and the back side let's well let's just finish this um this live example for one second and then I'll go back and and show you that all right so so in this particular example here um yeah that was a good one um so all right so let's back up so I added right here at 602 so I'll ask you the question do you think we're on the front side of the move or the back side of the move right now well this is alltime highs so are we on the back side we just had three candles to pull back we've pulled back to the half dollar whole dollar of six check the macd macd is open do we have a huge rejection candle or volume top like a massive topping tail no we don't so we're probably still on the front side of the move macd is open not a big rejection candle we're on the front side of the move it's pretty clear when you switch from front side to back side so we're on the front side of the move right now uh so I'm in at 602 average with 6,000 shares now I've got a cushion on the day so I'm starting to take a little bit more risk I could just take the profit off here at 69 but instead I put a new order at 625 and I say you know what I think I'm going to add to the position as long as this thing holds 6 what's my profit Target profit Target and move back to high a day around 650 okay so I'm risking 5 cents a share so I go ahead and add another 2,000 shares there at 610 it's jumping around but notice this candle see that bottoming tail now we have a bottoming tail that's formed I mean it's just you know I got in off of support at $6 and it started to rise back up and before the candle closed it ended up bottoming out now if you were trading on a one minute pullback pattern you you would have gotten in right here so this would have been your spot to buy right here which is probably where that volume came in it was traders who were taking that first one minute candle to make a new high which was closer to 825 I would say so around yeah around 8:25 was the first one minute K to make a new high I'm already in at 605 average 625 sorry so oh gosh darn it um that's okay so 625 average sorry I'm I'm in at a 605 average we're going to back this up 105 seconds so there we go all right so now we've got 625 on the offer 633 and we're looking for a move back to now I'm up $1,700 of unrealized profit right now and in this case I end up taking a little bit of it off the table because we kind of end up stalling out here underneath the high for whatever reason we've got high volume like it we should have gone but we just sort of stalled out to be honest maybe I was getting a little impatient and I think in hindsight I'll probably think I should have held a little longer but at the end of the day green is good got to lock up that profit got to be consistent and you know that's my goal to show up every single day to trade every single day and to try to find profit and to try to make sure I walk away before I give back too much of it and more often than not I'm walking away in the green as you guys have seen certainly from my my metrics my track record uh one thing that I'll tell you is that every single day you're doing one of two things you're either giving back profit or you're leaving money on the table now today I left some money on the table because I chose to stop trading I was like I'm I'm going to be done trading I've done I've done well enough I was up just under 18,000 and then I felt a little fomo that I stopped too soon so I decided to get back in and then I proceeded to give back profit which means I both left money on the table by taking a break and then gave back profit anyways by coming back a little bit later and taking some breakouts that didn't work so that's kind of discouraging you want to avoid that but I'll tell you the emotion of fomo is so strong that if you're sitting here and you're watching these continue to go up it it can be almost impossible not to trade it so sometimes the best thing is to walk away and to not come back that's challenging for me because I'll walk away and take a break and then I come back to usually record my recap or to do an episode like this and then that's when I'm sitting down and I'm like well maybe I'll take a couple trades before I start recording so anyways it's all good but um finishing here well let's see I guess I'm where am I at on the day um so on the day I'm sitting at uh 12,000 $796 which is still a great day more than double the daily goal uh however um in the interm here uh you may have noticed uh this chart suddenly looks a little bit different we actually had some news come out uh that the company is exercising uh warrants so they sold warrants at $6 a share $700,000 of them uh 700,000 shares worth of warrants so some bad news came out here uh and that's not totally uncommon when you have a stock that's up 400 500 I think we peaked at 600% you're the company's going to raise money that's not uncommon at all and so one of the things that I'm thinking about on these um companies is looking at the filings understanding what they have in terms of shelf registrations if they've sold warrants what the strike what the prices are of those warrants because then that gives you the sense of well if this is trading above $6 we've got the risk that these warrants could get executed and the price could drop and that's where buying um a flush can be really dangerous so for what it's worth the to differentiate differentiate the front side and the back side of the move I think at this point this is where I walked away this morning and that was a Fine Place to walk away we ended up going sideways and we put in another leg higher which I missed we then started to curl right here and I actually took this trade and I was looking for the breakout holding for the break of 12 and then we got a reject ection and unfortunately on this because I was taking breakout trades I was already in before the flush this is one of the things that can be really frustrating so if we look at this trade this is a fine little micro pullback I bought that dip there for the move through 12 and then it pulls back and I stop out right here now actually so I stopped out but I added to the position down here and it brought my cost basis from 1180 down to 1118 but it wasn't enough to get back to break even and I sold right through here for a loss which is fine I still don't want to panic sell I still want to add into these drops as long as I'm not looking at getting caught in a halt down as long as that's not the risk and it you know I'm getting in around $150 half dollar whole dollar I'm okay with that if it looks like we're getting to the point of being caught in a halt down and I'm in it that's where I have to panic at exit and I hate having to do it but you got to manage your risk you got to cut your losses and you know that that's what ends up happening and then there's another stock that I went red on which was atnf and this was actually on a um a pullback setup as well not sorry not a pullback setup a um a momentum trade which was really trading uh right off of the highs and we ended up getting a rejection so uh it was actually right well I'd have to get into the 10-second chart on it but but that's okay so anyways let's go back here to our slide deck so um so when do I avoid buying dips I want to really emphasize this because this is important when a stock is dropping due to breaking news if I know that the news that it's just got news that's just come out which I'll sometimes see because in the chat room we've got the news headline and so it'll say offering you know stock symbol and now I know that it's dropping because of news I'm not going to get into that it's going to have a poor profit to loss ratio if it hals down it's going to open substantially lower but if a stock is dropping simply due to panic and it's still trending up in general even if it does halt down it's often still worth watching for a bounce coming out of the halt or if it doesn't halt then just for a bounce off of what I can find as the nearest level of support um on the chart so this is a this is an example here where you can see a number of these bottoming tails bottoming Tails bottoming Tails bottoming tails and I got myself into this groove where I just kept looking for these dips to get in now I'll say that it's not um like you know I'll reiterate that for a lot of beginner Traders getting to the level of Flow State where you're watching the level two you're seeing this dip and you're having the confidence to jump in it that's not going to be the place for most people and let's actually go back here I want to show you this trade at um let's see it was minute 4540 so 4540 let's go back here um so on this trade here this is a momentum trade uh but this one's pretty interesting so here we have a stock well it's the same stock but here we have a chart pattern where we kind of had this pop and then we had the jack knife you recall I bought the dip down here we got the move back up so I'm sitting up 10 grand on the day we hit a high of 547 and now we're kind of struggling right at this level so um as I'm watching this area I'm trying to get a trade for the break through 550 and what I believe is that based on what I know about half dollars and whole dollars which right we erased that is that if we can break over 550 and we can hold over that level we should get a nice move higher up towards 6 so in this case here we've got um we've got 550 I just banged my foot under the desk a I so la last year um I oh I hurt my toe so bad I I well I broke it anyways um I got to be a little careful so let me just back that up um so I got in here at 547 and it goes to 550 uh oh it doesn't break what do I do I bail this is called breakout or bailout I only give it a second and I'm like you know what I'm in too high I'm going to get out so on 4,000 shares there I lost like a 100 bucks uh three cents a share two cents a share it's not a big deal I get out and I have my order here at 560 I'm ready to get back in but I just need to so I get back in here because it comes back up and I'm thinking all right we're coming back up I'm going to give another try now you might that maybe I shouldn't have even gotten out but I got out and then it comes back up I get back in and now if this thing can hold I'm looking to add for a squeeze up to six this is a momentum trade so right now we've got what you can tell is a bit of resistance around 550 we're kind of struggling at this area now to set the stage a little bit more at this moment this stock is the number one leading gainer in the market it's up 173% 13 million shares of volume 1 million share float relative volume is crazy we've got news so is this the type of stock that has a high likelihood of continuing higher I think so some might say well geez Ross it's already up 176% how high can it go it's not going to go to 200 not 300 not 400 certainly not 625 which is what we saw but that can happen so I'm looking at this thinking if this starts to break away what's the next level of resistance we've got a lot of room right half dollar whole dollar that's the next logical spot so as we start to pull away here I add to the position I'm in at six at $550 the half dollar and now I'm looking to add for the move up to $6 so this ends up being a nice trade all of a sudden here we pop up to 6465 and I could take profit right here but I don't now the thing is for what it's worth this trade carries a little bit more risk than a dip trade because it could have dropped all the way back down to um like 30 so I'm risking more like 20 cents on this trade um so I kind of need to make you know 30 or 40 cents to have a better risk reward ratio so right there I take half off the table and that puts me up just under 12,000 on the day and I I regretted it immediately I was like I sold too soon I should have waited for it to tap six but the problem on this is that I added to my position I scaled up to 10,000 shares so now I'm in heavier and I'm up well I'm up only 15 cents right now and since I added at 70 when it came up to 80 and then it stalled right there what I saw was I think we have a hidden seller here at 580 and for that reason I said I better take some profit so let's talk for a second about exit indicators this was a special request um that was asked of me um today so let's talk about what my exit indicators are to sell why did I sell there now I would say that one of the indicators I'm using very closely in my trading is level two I trade using level two it's a tool that I'm using so this is the level two right here I'm I'm clearly watching the level two I'm watching the time in sales and I'm looking at the chart so I'm a very technical Trader but the problem is right here there's a there's a seller at six there's a hidden seller at six and we're having a hard time breaking it so when we come up to a level and we see a lot of buying but we fail to break that level that tells us that there are people that are unloading stock at that level so that level has a high degree of Supply so we're going to put our um put our lines back on here for a second so we go through what happened here this was working just a second ago all right so we go through um whatever six we come up or five we come up to 550 you know we pull back for a second and then we punch up here and we come up to six so what we know is that if we looked at the distribution of orders you would see in terms of sell orders as we were looking at this not a lot of sell orders and then a lot of sell orders up here not a lot and then a lot not a lot and then a lot so as the price goes higher essentially this is is a map telling us where we're going to have possible roadblocks so when I see sellers stacked on the level two at 550 it's not surprising but I know that if we can break through this wall that the next area where we're going to have sell stacked is up at the next hold down with lower price stocks this is the way it is with higher price stocks like Tesla or something like that um it's it's not as much of this issue but but it is with the lower price stocks uh and it makes sense because so many people are buying and selling and uh setting profit targets at areas that they think are psychological I'll put a profit Target at uh you know a half dollar I'll take profit when we come up to six right something like that that's what a lot of Traders think so that's where they're putting their orders so if I see let's see let's go back to the Whiteboard so if I see for instance we're going to write exit indicators all right so exit indicators here um so number one I'm going to say uh large seller on the level two but it could also be a hidden seller so large seller or a hidden seller now large seller is going to be visible on the level two that's when we actually see the big 10,000 share order and you've seen some of them during the recordings today uh a hidden seller is more like what we had there back at 80 where it it came up but it just didn't break and there was a lot of buying but it it couldn't break so I end up taking profit and selling usually when I see a hidden seller or I see um a a large seller if I'm only up a little bit on the trade now if I'm already up a lot then what do I care I'm I'm happy to hold and just let it work but if I've just added to my position like I've just doubled or tripled my position and then the second after we hit a heavy seller and resistance then I'm kind of like I've got my back right up against the ropes because if I hit the bid I'm gonna I might end up selling flat so that's when I'm like maybe I should just try to get out here and I could sell on the offer I could try to get out on the ask I don't have to sell in the bid but that's an indicator for me to potentially exit so seeing a large seller on the level two or a hidden seller that's number one number two is um when the price um movement stalls when it just kind of like stops going up because here's the thing when we're trading momentum if the price stops moving that inherently shows that some indecision is is taking effect people are not buying anymore why what what are people seeing that I'm not seeing what's going on here like the Music Stops that's when I'm like wait a second what's going on so I like to see that we're still seeing a lot of orders going through we're still seeing a lot of buying we're still seeing volume so if volume suddenly stalls out that's an indicator for me to exit and I would say in general these are probably two of the most respected indicators that I use based on reading the tape now based on the chart um candle under candle so a candle under candle is when you actually have a candle that goes red and breaks the low of the previous candle so like right now we're still fine based on candle over candle candle under candle we haven't gotten an exit indicator based on the candles yet if you wait for the candle however that's going to be a bit of a delayed exit because some of these candles are so huge that by the time you have a candle that goes red it's like 50 cents off of the high so in this case you can see for sure I sold way too soon and if at the end of this episode I'll put a link to another episode I recently recorded on one of the indicators I use to help me hold my winners longer I wish I had used it a little bit more today because I I got out of some of these trades way too soon and you know when you sell your winners way too soon you're you're kind of you know you're selling yourself short you're cutting it's it's just it's hard enough as a Trader and then you have a winner and you don't let it really work it's it's just that's not great now I want to highlight the five minute pattern here little pullback little pullback and then we started to pull away and what's important to note here is that when this broke out it kind of came back down it didn't really hold this previous level but when it broke out here and came down it held the high which was of this candle right here so it held that level right there so we came up we held this level and then we pushed higher right here and that made it a really nice five minute breakout So based on candlesticks for sure having a first candle go red candle under candle that's an exit indicator but I would say these are the things I'm looking at most closely if I get into a trade and we don't see big sellers the price is not stalling which means no big Sellers and the price is moving up and we're still seeing candle over candle I'm going to keep holding as long as I can and that's when I'm going to potentially get into uh a position to be in a parabolic trade and we got a couple we've had a couple nice parabolic trades I had one uh just yesterday on Z right yesterday on zap I had a parabolic trade pre-market where I jumped in this thing right in this area it was right in here and next thing you know it's breaking out we get a nice little pullback and it goes to six to 680 to 7 750 780 8 820 8840 then you get the red candle So based on this alone your first candle telling you to sell was this red candle but it was a big one and you would have gotten slippage on your exit so it's important to take a little profit you know it as you have it it's always good to pay yourself and if you can take profit by selling on the offer then you're not feeding the tape with a red order you're not throwing a market order and hitting the bid you're you're selling on the ask you're letting a short sell buy your shares they're covering their position they're buying your shares to cover so selling on the ask into strength is a great way to lock up a little bit of profit without hurting the existing position that you're still holding and then when you finally get that last exit indicator maybe the candle making a new low a big seller on the level two you know then that that's your moment to exit and in terms of When to Walk Away each day I often say number one if I hit my Max loss of course I have to walk away if I've hit my daily goal and then give back half my profit I have to walk away so those are kind of my two things and if I've give across my daily goal and then any time given back half my profit I have to walk away so today's a day where I hit a peak of 18,000 I Dro down to 13,000 or right around there and I'm choosing to walk away before I give back more right I'm kind of moving in the wrong direction so I'm going to say you know what I overstayed my welcome a little bit today I kind of took a break missed a nice move then came back in and got stopped out so all right you know look at the end of the day if you're walking away with a little more in your pocket than you had at the beginning of the day you're doing well and my hope is that learning to dip trade will help you do exactly that now if you want to join me for a two-e trial there's a link that'll be pinned at the top of the comments and in the description if you want to download my collection of PDFs including the micro pullback PDF and the small account strategy PDF those will also be pinned in the comments so I hope you check those out thank you for tuning in this episode I hope you hit that thumbs up subscribe to the channel and I'll see you for the next episode real soon and I'll remind you as always that hey in case you didn't know trading is risky my results aren't typical so manage your risk take it slow and always practice in a simulator before you put real money on the line I'll see you for the next episode real soon