in this video I'm going to cover
everything that you need to know about
entering a trend reversal trade why it's
so damn dangerous to do all the things
that you should look out for and where
your take profits should be and how you
should Trail your stop losses to get the
most amount of money out of every single
trade
[Music]
welcome back to the channel everybody my
name is Artie and this is the moving
average a show where we discuss
everything day trading to keep you
profitable I'm gonna try to get this all
done in under five minutes so let's jump
into the charts I'm going to show you
exactly what I'm talking about it does
not matter what time frame you are
trading the higher time frame the bigger
the move but overall when price is going
in a specific Direction you want to draw
a trend line and only when the trend
line has three touches is it then valid
the issue with most people when they are
taking Trend reversal trades you guys
know I constantly talk about divergences
if you look at the RSI at this point
right here you can see that the RSI was
extremely overbought at 79 price came
down pulled it back up and at this point
it created a higher high with the RSI at
72. now you can see it a little bit
better 80 right here and on the next
higher high 72. most people would see
the Divergence and enter in a short
position stop loss above the swing high
and essentially what they want to do is
Target that previous swing low the issue
with doing this is that price will not
break this uptrend until that trend line
is broken and retested or just broken
with a lot of momentum it's best to
always wait for a break in a retest but
if you have proper risk management you
can end up losing this trade and still
be fine if you are still fighting for
that Trend reversal trade so as price
went up to create a new higher high
there was no longer a Divergence there
but overall you can still see a
Divergence from this high to this high
right here High Point right here High
Point right here High Point right here
lower still a valid Divergence then
price came up to make an additional
higher high you can see a high and a
higher high high point and a lower high
and additional Divergence price came
down a lot but rejected the trend line
and continued up once price has broken
the trend line you are looking for price
to come back up and test this uptrend
before rejecting and then going down now
when you look at Price like this it
broke that previous uptrend now what
we're waiting for price to do is break
below this area because if you think
about a traditional way to trade this
entering in a long position here like
that so if this is a buy order so if
people get in at this price and they're
assuming the price will go up their stop
loss is right here a stop loss is
essentially a sell order so if price
does choose to come down this area that
means that there are a lot of sellers up
here pushing the price down trying to
get to these sell orders which would
cause the price to Cascade even further
so when thinking about Market structure
bullish Market structure is depicted by
a low a high a higher low a higher high
a higher low and a higher high but if it
fails to create that higher high that
means that market structure is broken
we've broken Market structure right here
because we had a failure to make a
higher high and we have also broken the
uptrend now you can start getting ready
for short positions after rejecting this
area you can preemptively get in here
with a stop loss Above That Swing High
because it failed to make the higher
high but the likelihood of that trade
playing out is lower because it still
has not hit this liquidity Zone a bunch
of sell orders living here
you can see price rejected that same
area meaning that is a level of support
because looking left you can see that
price used it as resistance previously
broke through and used it as support but
again support and resistance are meant
to be broken
and you can see if you got into that
trade too early and didn't wait for the
momentum you can get stuck in a trade
for a very long time once trade has
broken that area and hit the liquidity
that's when price starts moving a lot
quicker
again another break and retest
so essentially if you actually waited
for this liquidity area you could have
had a much smaller stop loss and a
higher risk to reward a 1 to 7.6 versus
a one to six waiting for the better
entries is the better course of action
and because you are swing trading you
are moving your stop loss along the way
so you need to have a clear definitive
swing up and a swing down then move your
stop loss to break even then as price
goes down and swings past its previous
low Point your new stop loss is now
there meaning that it is a 100 risk-free
Trade until price eventually gets to
your take profit area which in swing
trading is going to take a very long
time I'm not a big fan of it I like
scalping because I like to be in and out
of my positions in a very short amount
of time and for those of you that
noticed yes this is on a weekly chart
but this trend line and pattern and
divergences happens on every single time
frame I just wanted to show you the true
potential of a trend reversal trade on a
higher time frame
4055 Pips that's a lot of money the
issue is it's 1
358 days if however you do decide to do
this on a smaller time frame the rules
are exactly the same you're looking for
divergences across these tops as you can
see you're getting divergences here as
price is making higher highs breaking
the trend line waiting for the break and
retest entering a short position and
targeting the swing low 18 pip stop loss
194 pip take profit risk to reward one
to ten it works on every single time
frame this is the 15 minute works on the
one minute it works on the five minute
works on the weekly whatever you want to
do whatever constraints you want to put
yourself in whatever time frame works
best for you do that but the concept is
the same across all time frames if you
want to learn more about this watch this
video right here if you enjoyed this
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have not already thanks so much for
watching we'll see you in the next one