I made one of the most over powered tools for my private indicator. The breakout probability tool.
And the results? Well, lets say they are pretty good.
So good, that you can use it to predict the chance of a breakout occurring.
This is a game changer. And to prove that point,
im going to show you how its works, what it is, and how to use it to the best of its ability.
You can use this tool for finding the chance of a breakout occurring, use it for placing perfect
stop losses based on actual math, or even use it on higher timeframes to see the probability of the
chart moving up or down that day. If you cant tell,
im extremely excited about this tool. At the end of the video I ll give some
of my greatest tips for using it. So you can enter great breakout trades just. Like. This.
To start us off lets go deep into the indicator s algorithm and show you how this tool works.
This tool helps you understand the likelihood of the next candles direction, which can be really
useful when creating your trading bias. The breakout probability tool calculates
the probability of a new high or low of the next candle and displays it as a level with a
percentage value. Pretty cool huh?
This tool actually is always actively backtesting behind the scenes. So you re
actually trading off real live probabilities in real time when using this tool.
What the algorithm actually does is calculates all the green and red candles separately
depending on whether the previous candle was green or red. Then it will note if one
of the line values was reached. The first lines, will always be
at the low and high of the candle. The algorithm then calculates how many
candles reached those levels in past history and displays it as a percentage value on each line.
So for example. We see this candle is green, so it ll look at all the past previous green candles.
Then it will calculate what the percentage chance and which level the next candle is likely to hit.
So in the example, we see that a new high has been hit 60.95% of the time and the low was hit
30.50% of the time. Then we also have all these other levels that were hit in the past, but since
they are so low or high from the original point, they have a lower chance of being hit again.
So we see that from this point, the next candle has higher chance of going up,
then down. Based on past chart history. Since the high value has a great chance
of hitting than the lower value, we can predict the next candle will probably go up.
And look what happens, it goes up. I m telling you, game changer.
Now there are a lot of different ways you can use this tool. One of the ways, is to predict
the probability of a breakout. Let me show you an example.
So here have our chart. And as you can see, we have a nice little resistance right here.
The price then comes all the way up to it. Now instead of just guessing whether the
price is going to bounce off or break through this resistance,
we are going to use the breakout probability tool to see which has a higher chance of happening.
It breaking out, or it rejecting. So we go to the settings of the indicator
and enable the tool on our chart. Now that the tool is on our chart,
you can see the next candle has a higher probability of going up then down. Which means,
the next candle has a higher probability of breaking this resistance than rejecting.
So we can predict early that a breakout is about to happen. So we enter are trade
before it even occurs. Look what happens,
a breakout occurs and we make amazing profit. You can also do it the other way around.
Say if you entered down here and price is going up. You re in the profit. But prices is getting
really close to this resistance, and you don t know if you should exit the trade early or
not or wait for it to try to break out. Well if we take out the probability tool.
There is a higher chance of the next candle making a low than a high. Which means price
is likely to reject off this resistance, so it might be a good idea to exit your trade up here.
So that s what we end up doing, and look what happens, price rejects and falls.
So we got out at the perfect point for this trade.
Isnt this tool fking awesome? Another way you can use it
is for setting stop losses. So what you could do is look
at the lower values and set your stop loss based on where the price is most likely not to reach.
So what you would do, is go on a higher timeframe like the 1 hour or daily.
Turn on your probability tool and check the lower red values.
See what the odds are for the next candle If there is a very low probability,
set your stop loss there. So there is less of a chance of it being hit.
The third and final way I like to use this indicator is predicting the direction of the
market for that day. This is probably my
favorite way to use this tool. What you do is go on a higher time frame. I would
recommend checking the daily or weekly. Turn on the probability tool and look at the percentages.
Here, you can see on the daily chart. The next candle has a higher probability of moving upwards.
Which means today, is likely to be a green day and you can expect the chart to head upwards.
So what you do, is then go on a lower time frame and do all your normal technical analysis,
but now you know in the back of your head that this day is more likely to be a green
day and you can use that with your trading bias when performing trades on a lower time frame.
Like I said, this is an absolute game changer and you really have to use it
for yourself to see how powerful it is. If you want to try it out, its one of the
many tools on my private indicator. I ll leave a link in my description
or you can just go to my website tradinglab.ai This is just one of the MANY tools included with
the indicator. If you want to learn more about my indicator and all the other amazing tools
included with it. Check out this video. Thanks for watching and ill see you guys, next time.