Are you a breakout trader?

Are you frustrated like so many other traders that are trying to trade the futures markets by placing buy stops above proir highs or sell stops below prior lows?

The one thing we stress over and over again to all of our traders is THE S&P’S DO NOT WANT TO BREAK OUT! In normal market conditions 75% of the time the market is non-trending on an intra-day basis. Yes throughout the day we might make a new high or low from the prior day, but when day trading we don’t want to fight the fact that the S&P’S don’t want to break out. We actually want to be exiting or trailing our stops tight at decision points like a prior high and low.

Trader’s first start out trading breakouts because it is the easiest trade to learn due to the fact it is very easy to see a prior high or low on your charts, BUT in real world trading the odds are stacked against you trying to catch a breakout trade. Not only are the odds stacked highly against you but your risk is far greater than the reward you may receive if the trade does work out. Did you know that most all highs and lows are re-tested before the trend continues? This is where you enter a trade long off of a prior high and then the price comes back down to re-test the breakout point and you cover your trade thinking “maybe it is not going to break out this time” then the price consolidates at the breakout point then continues higher BUT YOU HAVE ALREADY COVERED YOUR LONG POSITION!!

You must already be in a trade as it approaches the prior high with a prior signal getting you in the trade long. Once in a trade as it approaches the prior high there are things we go over in the course that tells you if we are more likely to break that prior high. You must have a cushion of profit going into the breakout point incase the breakout does NOT occur.

Trading breakouts in our opinion is the easiest way to let you emotions take control of your trading. We call the breakout point the “decision point” and we do not want to be entering a trade at a risking decision point PERIOD!

In this video we will go over the difference in how to read up moves and down moves. There is a big difference when it comes to breaking out going long OR breaking out going short.

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HUGE PROFITS IN CME!

CME is a stock that is not to be taken lightly meaning a wrong move can be very costly as the weekly to intra day swings can be very large. On the other hand having a defined trading appraoch with indicators that give you a edge trading CME can produce huge profits in the stock or trading the options.

In the chart above you can see there were blue bars at the bottom of the chart and the indicator is LOW meaning a big move is going to start. The price was around $180.00) From there the price had a initial spike to $250.00 (Nice gainer) But that wansnt even the true buy signal. The true buy signal came in on the 2nd set of greens where i wrote LONG on the chart. You can see once the bars turned back to green the stop was only one bar (the low of the last red bar) NOT all the way back down below $180.00 like most traders are taught. That stop is simply to big for the reward the stock can produce. Our stop was about $10.00 points with a target of $320.00 or about 100 points! 10:1 risk / reward. The options were trading at $10.00 on the day the buy signal triggered, then making a high around $95 on the option!

Looking at this chart once CME took off to the upside you will notice that the blue bars came in to tell us that the move is over up at $330.00 which is a great place to exit all of the trade and be flat as a correction is going to occur.

The blue bars give us a high odds area for the start and the end of a move no matter if it is on a daily chart of a 5 min chart the indicators are dynamic and work on all timeframes. If you would like to see specific charts or have questions please email us at trade@eminischool.com

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