Learn To Trade Breakout/Flags More Efficiently - Part I

AMEX:SSO   ProShares Ultra S&P500
In my first tutorial, I tried to show how price channels can be used to identify and validate strong trade setups. Additionally, I attempted to show you how to identify better trade setups from what I consider invalid trade setups.

Understanding and maintaining at least a 2:1 Reward-to-risk factor for any trade you consider taking is essential. Secondly, it is essential to understand and use proper allocation levels for trades.

The simple way to understand allocation levels is to focus on the RISK amount. If your trade risks $5 per share and you can't afford to risk $500 on this trade, then you should NOT attempt to trade 100 shares of this stock.

Set your risk level based on how much you intend to risk for the trade - nothing more.

If you can only risk $250, then you would only trade 50 shares.
If you can only risk $125, then you would only trade 25 shares.

Learning to find and identify proper trade setups on Daily and Weekly charts is critical for success in the long run. I firmly believe price tells us everything we need to know about a chart, and indicators reflect price.

As you continue to learn some of the techniques I use in various price chart setups, I hope you can refine your techniques to become better traders.

I will likely create a PART II and PART III version of these types of advanced trade setups.

Hope you enjoy.


The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.