hey everyone thanks for checking out this video my name is Travis rose I'm
the creator of the master the market education you can find link below in the
description in this video we're going to be talking about how to dip buy stocks
the right way now there are plenty of different strategies out there to buy
the dip of stocks but unfortunately many new traders are taught to dip by stocks
in a way that causes much larger risk and in a way that often is much less
accurate than the strategy that we're going to be talking about here in this
video so first and foremost let's talk about what is a dip a dip is just a
pullback in the market of an uptrending stock so we know stocks don't just go
straight up or straight down when they're moving up they have pull backs
and they have dips along the way and when they're moving down they have
bounces along the way as well so these dips are actually going to allow us as
traders or investors to get into a bullish stock without chasing all the
way up at its highs and again unfortunately many people don't know the
proper way to dip buy a stock so if we take this example here we could see the
stock symbol si VA here as a very strong move up in the morning and we're looking
at an intraday chart here this is the one day one-minute chart so that means
that each of these candles represents one minute price action over the entire
day but we see that there's a big spike up and anybody looking to buy into a dip
on this stock would probably be looking to buy somewhere in that boxed area
where the stock is pulling back and we do see that it balances a little bit
from that area but it's a pretty weak bounce and it continues down lower
throughout the rest a day so once you learn the strategy we're going to be
talking about in the rest of the video you'll see that this is actually not a
good dip buy opportunity because there's not the specific pattern that we're
looking for that would tell us that there is a good setup to buy the dip so
in other words this would be a stock that if you were trying to dip buy you
would probably end up avoiding entirely because really once it has that first
spike up in that first pullback there's really no good dip buy opportunities and
what we want to see when we're looking to dip buy a stock is four main points
and these four main points are going to give us the entire pattern itself so
those four main points are a B C and D the a of this ABCD pattern is going to
be the initial high and this is going happen after there is some kind of spike
or some kind of upward move showing us that this is a bullish stock in the
first place and that it's potentially worth buying the dip and buying into
that upward momentum so once it hits that initial high and starts to pull
back that point at the high is going to be our point a of our ABCD pattern the
next point is going to be point B and this is going to be the low point of
that pullback so from B it's going to bounce back up a little bit and then at
Point C we're going to see a higher low so we want C to be slightly above point
B and ideally from there if the pattern is going to break out and continue
upwards what we'll see is the breakout at point D which is of course a move
over the previous high of point a so what that is going to look like here if
we take this diagram at the bottom you can see again we have our spike up we
have our initial high at Point a we have our low at point B it bounces a little
bit and then we get a higher low at Point C and then it breaks out over
point a which gives us point D and the way that we want to trade this pattern
is we look to dip buy the stock at Point C and the reason for this is because we
can then use that level of point B as our risk level to cut losses if the
stock fails to break out to new highs and this is very important because
cutting losses is of course rule number one when it comes to trading stocks you
don't want to be stuck in a stock holding a large loss and it's almost
always better to simply cut your losses quickly and move on or look for a better
opportunity to buy at lower prices so because we know that there is no pattern
that's going to work 100% of the time even if you see this ABCD pattern
forming there will be times that it of course fails to break out and continue
higher so in that case what we want to do again is cut our losses below that
low point of point B so if we take this diagram for example you can see that it
looks to be a perfect ABCD pattern Forman with our first three points the a
B and the C so in this case we would probably look to dip buy the stock at
Point C expecting that it goes up and breaks out over the point a and
expecting a further move to the upside but
because this isn't going to work every single time I want to make sure that
you're prepared to take losses just as much as you are to take profits as well
so right there on the red X when the stock breaks below that low point of
point B again that's where we would cut our losses and we would look to
potentially by adding new support level later on throughout the day or we would
simply move on from the trade and look for a better set up you have to keep in
mind that once the stock does break below that point B it's no longer a
bullish signal and that could be the start of a Down trending stock so if you
are planning on we buying later it's important that you wait for a clear
level of support to form or for the stock to bounce back up and start
breaking over some key levels of resistance
you now I have an example here on this page
of the ABCD pattern and again we're looking at the one day 1 minute chart
so this is going to show us the entire day of price action but each of these
candles is again just representing one minute of price action so I'm going to
go ahead and play this this is a little video you can see early on in the day
the stock spikes up so here's our first move up here showing us that there are
some upward momentum in this stock we then get our peak up here at Point a and
that's gonna be the morning high from there the stock pulls back down it's a
low down here 35 cents giving us our point B and that is right before it
starts to bounce a bit and what we want to do is again let it bounce and then
let it come back down and ideally form a higher low which will give us our point
C and that's exactly what we see here so we have our B point down here at 35
bounces up pulls back down a little bit and forms a new higher low giving us
Point C so in this case we would be looking to buy probably about 36 cents
per share for our Point C and we would be risking down here to 35 cents so it's
a very small risk in this case and ideally that's how this set up is always
going to be you're gonna have a very clear level of risk you don't know
exactly when you should cut your losses if the trade happens to go against you
and when the stock does break out and the entire ABCD pattern forms there's
many times a huge profit potential with this pattern and anyway what we see here
is once it bounces from that C point we do end up getting a breakout above a
which of course gives us our D confirming the entire ABCD pattern and
from there it moves all the way up to I believe about 44 cents per share
you
yeah and then it starts to pull back down a little bit but if we zoom out
here you can see the entire day just to show you the entire pattern
and in this example this is a great example because it shows you that if
we're dipped buying the stock adds 36 cents which again is point C our risk
level again is only going to be down to 35 cents at point B and our profit
potential in this case was all the way up to about 44 cents because that's the
high that it hit after it broke out at point D so in this example we would only
be risking 1 cent per share which is about 2.8 percent with a profit
potential of 8 cents per share which is 22 point 4 percent so with a $1,000
investment you'd be risking about $28 to make up to two hundred and twenty four
dollars and that's the reason why this is such an effective way to dip buy
stocks because many times there is a much much smaller risk than there is
potential reward and again this can be a very highly accurate way to dip buy a
stock so I highly recommend when you're doing your analysis and you're doing
your trading keep an eye out for the ABCD pattern and look for a potential
dip buy with it but if you liked this video and you found it helpful make sure
to give the video a like and subscribe to the channel so you don't miss out on
future videos also if you want to take your education a step further make sure
to visit the first link down below in the description to visit my web site
master the market you can find education for day trading swing trading and even
long-term investing you'll find more strategies like the one we discussed
here in this video you can also read some of the reviews of what other
students are saying and read some of the frequently asked questions if you are
interested in getting signed up yourself but anyway again I hope this was helpful
thanks for watching and I'll see you in the next video