How to BUY THE DIP the RIGHT WAY

in today's episode I'm going to share with you some tips and tricks you can Implement in your own trading starting today to help you get better at identifying whether a stock is about to dip and then rally for the next leg higher or if it's about to dump in order to be a consistently profitable Trader you need to have a strategy or a system a set of rules that you follow consistently every single day but there's no doubt that along the way if you can learn a couple of skills to help you better identify what

a stock is about to do it's going to help you a lot so my goal for this episode is that by the end of the episode you're able to identify whether a stock is going to dip or if it's going to dump by understanding which is going to happen you will prevent yourself from overtrading the back side of the move when a stock is trending down and when most Traders are giving back profit and instead you're going to be focusing on trading the front side of the move this is going to be the beginning of

creating a positive feedback loop where your accuracy goes up your profit loss ratio goes up your confidence goes up and you start feeling really good about what you're doing so let's go ahead and jump onto the Whiteboard now as a momentum Trader I like to focus on stocks that are trending but rather than buy at the very top right here I would rather wait for a little pullback the reason I want to wait for a pullback is because if I buy down here on this dip then my Max loss is always the low of the

pullback right down here if my if I'm in right here and my Max loss is right here let's just say that's one my profit Target is to make two times whatever I'm risking so I want to have a profit Target of two to one and it's very easy to achieve a 2:1 profit to loss ratio when you can get an entry with a very tight Max loss and that's the great thing about buying dips you get in on a dip when a stock is pulling back you're in right off of support and if it holds

you've got a great entry and you can ride that next wave high the problem is a lot of beginner Traders look at this chart right here and they can't tell if this is a dip they should buy or if this is about to dump so I'm going to help you gain some confidence to figure out what's about to happen let's go ahead and jump onto the screen share and I'm going to start this class with a little bit of a quiz now I know you probably haven't studied so don't worry it's not going to be

too hard I'm going to show you a case study from today now this morning I had a pretty nice Green Day we're going to recap those trades because a lot of the trades today the profits were produced by buying these dips so what do you think this is going to do is this a dip where I should be a buyer or is this going to dump all right I hear you saying you think it's going to dump wow wrong and not even close you're completely wrong this was a dip a dip that we want to

buy but how do I know how did I know beforehand that that was a dip that I should buy CU I did buy that dip and my profit today is $37,000 so the way I knew that I should buy that dip was because I was looking at a couple of very specific indicators I was looking at the profile of the volume I was looking at the position of the moving averages and I was looking at the position of the macd these indicators give me an edge when I use them consistently now indicators are not going

to be helpful if you don't use them consistently you have to use them every single time on every single trade in order to figure out whether or not they're actually helping you now I'm going to walk you through the indicators that I use how I've got them set up how what exactly what the inputs are that allow me to get these signals because ultimately this is giving me buy and sell signals I see them plain as day right on the chart because my eye has been trained to see them now if you don't see them

yet it's okay it's because you haven't yet learned this language the language right here that we're talking about is the language of technical analysis this is a universal language of the financial markets and my goal is to teach you how to read it and how to fully understand it so this was an example of a dip where we got the nice rally higher a perfect opportunity to buy a strong stock on a pullback and catch that next wave up now this is a stock that uh happens to be a biotech stock they had phase three

clinical trial results this morning that was the news that came out way back here at about 700 a.m. that gave it this big boost of momentum there was a catalyst that was driving the stock higher let me give you another example all right so now let's look at it here what do you think it's going to do now maybe you already kind of have an idea is this going to dip or is this going to dump you say it's going to dip and we should buy it right wow wrong again okay guys seriously let's try

to focus here I want you to get better at this so what happened here you said it was going to dip but it it sold off did you even did you even check the macd let's go back let's check that macd the moving average convergence Divergence indicator right there it was negative that's not a dip that we can buy macd is negative that's a no we got to wait and that was the right move it ended up pulling back down to 1050 all right so these are the topics that we're going to cover in today's

class indicators of likely dip indicators of a likely dump or inverted dump first and then we'll do the dip number three the type of stocks I like to buy dips on and number four I'm going to show you where to buy where I like to buy and where I like to sell for my strategy if you're trying to learn a momentum strategy like mine what I encourage you to do is to start practicing everything I'm going to share with you today in a simulated environment in a simulated environment you won't risk real money that's super

important all right now let's go ahead and jump in to this class here let's do another quiz is this going to be a dip or is this going to be a dump oh now see as I look at this it's a little bit tricky because the macd appears to still be open right but did you check the volume profile we've got higher volume on the selling candles and this is going to be a dump it's going to go lower so in fact it's kind of amazing because as an active Trader when you get really good

at this you're almost able to see into the future of course you could see into the future you know years from now you could do incredibly well in the market I I'm I'm seeing in the future about 10 15 minutes but that's enough for me to do quite well maybe I haven't introduced myself my name is Ross Cameron I'm a full-time Trader I funded my first account with real money in 2001 more than 20 years ago so I've been in and out of the market for a long time I've been through some nice UPS I've

also been through some difficult markets some bare markets and some downs and through all of that I have developed a strategy that I've now traded full-time every s single day for more than a decade and it's a strategy that I will share with you guys a little little kind of pieces of it here through this episode to teach you the whole strategy would take far longer than I have time for in this episode we're going to try to keep this concise and keep it focused on dips or dumps let's do another quiz all right so

what do you think is going to happen here okay so this is a stock that rallied up nice big rally all the way up here to I can't tell what that price was I lost my price scale it pulls back it rallies back up it pulls back it rallies back up is this going to dip and rip or is it going to dump what do you think it's going to dump why is it going to dump high volume red candle right there see that high volume red candle that's an indicator that's going to dump all

right so let's go and talk talk about these indicators for a dump number one if we have a high volume red candle like you just saw here a high volume red candle indicates people are just selling they're bailing on the position think about supply and demand when you have a lot of sellers they're creating a lot of Supply they're saying I don't want this stock I'm ditching it I'm dumping it I don't want to hold this position they're creating Supply demand is created by the buying volume as the price is going higher so although this

did have some nice buying volume at sort of at the beginning of the move here unfortunately the selling volume on this candle was so strong and so dramatic that it created kind of a lasting sentiment where even as the stock was pulling back people were looking you know and that was the most recent candle they were seeing a high volume red candle even if the macd was going positive right there it wouldn't be worth trusting that setup when you're in the shadow of a big red candle like that so one of the first indicators for

a possible is when you have a high volume red candle and this is especially true when that candle is near the top of the move or in the case of the example that I showed you just before I'll just show you that instead of drawing it out if we look at this example here this also had that high volume red candle these two high volume there's really four of them what this tells me is that yes the stock popped up but the move up was on relatively light volume the move back down was more convincing

in total there was more volume to the cell side so the volume tells a big story there that's going to be a consistent theme of watching the volume so number one high volume red candle number two a large topping tail so let's get on the Whiteboard for this one so when you have a stock that's had a nice rally up it's been moving higher you've got these nice green candles and then all of a sudden up here you have this big topping tail what is that topping tail telling us topping tails are always bearish the

reason they're bearish is because while the price squeezes higher which is good ultimately sellers pull it back down as they pull it back down and then the candle closes they're the ones who win this battle each candle in essence is a battle between supply and demand and buyers and sellers and you've got large green candles the buyers are winning the battle large green candles especially on high volume the buyers are definitely winning the battle but but up here you have this candle that tells a little bit of a different story the buyers were in control

as the candle squeezed up but it couldn't close at that level the sellers pushed it back down they left the topping tail because of course the topping tail is the high of the candle but now it's created this characteristic shooting star a shooting star occurs when you've got a large upper candle wick and a small body in fact what this tells us is that the sentiment has has already started shifting it's already reversing and coming back down and so when the next candle opens and goes lower and you have a confirmed red candle it's not

a surprise that that was about to happen so in fact when I see this candle I can already Envision that this is coming next right being a successful Trader you have to get really good at pattern recognition you'll start to notice when this happens this happens when I have three green candles and then a big shooting star we have a red candle and the more experience you gain the better you'll get at developing your own sense of intuition where you start to see this candle forming and you realize uhoh I know what's coming next it's

going to be a big red candle I better get out of the way I don't want to be holding this as it starts to drop back down so anytime we have a large topping tail that's starting to form I'm going to be concerned about a possible dump so in other words if you have a stock that has this nice rally up and then it has maybe two smaller candles here you might be thinking should I go ahead and buy this dip is this a dip I should buy and I would say first and foremost we

got to be cautious because of this topping tail now it doesn't mean this might not work it could work it could even rally all the way back up but that's not typically what we would see I have a book here let me share let me share this book with you um this is a book by Annie Duke I'll put it on the Whiteboard here so you can see it it's called thinking in bets and in this book she talks about uh the experience of learning to play poker her brother was teaching her and he said

these are the hands that you should play and she said well I don't understand I see other people playing different hands and he said yeah they've got a lot more experience than you they may be able to have confidence trading those hands but for you as a beginner you need to trade the hands that have the highest probability and as a beginner Trader I think sort of the same thing should apply that as a beginner Trader when you see that big topping tail you should probably say now I know that that's going to create a

higher likelihood of a reversal now if you saw this pattern here where you've just got a small green candle at the top that's fine even if it's a mediumsized green candle or even a large green candle that's fine we then get a nice orderly pullback but that topping tail creates a red flag but what would this create now it's a bottoming tail now let's just forget about this topping tail for a second if we just saw this bottoming tail this is bullish sentiment why is it bullish the stock dropped yes but just the way this

is bearish It's bullish because the buyers bought it right back up it came back up higher so this would be bullish whereas the topping tail would be bearish and of course if we saw really high volume red candles right here uh where this was the volume bar on both of these candles that would that would be bearish right we don't want to see high volume on the selling no no no we want to see light volume on the selling so the volume profile and the shape of these individual candles tell a real story so one

of the things that that I can tell you is that because I've been trading for so long I have built up a a pretty deep library or sort of internal database of of all of these nuances and that creates the educated intuition that I have if you want to do a two-e trial I'll put a link in the description you could check it out where you could do a two we trial and you can actually watch over my shoulder while I'm trading it's 20 bucks for two weeks you can check it out if you want

all right so number one high volume red candle number two a large topping tail number three indicators of a dump is when a stock is not obvious what does it mean for a stock to be obvious well if we pull up our scanners here in order for a stock to be obvious it should be one of the top three leading percentage gainers in the entire Market you know something that's kind of interesting that I think people sometimes take for granted or don't recognize is that we are the commodity for big Brokers commission-free Brokers they make

money the more we trade on the payment for orderflow model so they sell our orderflow to institutions who essentially kind of scalp all of our trades for fractions of a penny but when you multiply that by millions of shares a day they're making billions of dollars a year so the Brokers have an incentive to encourage you to trade because the more you trade the more money they get paid by those big institutional investors or the the institutional firms that are doing the alternative trading systems the ats's it's it's almost like uh a version of a

dark pool so these Brokers are going to encourage active trading by putting hot stocks in front of you and they do this they send out these emails of hot stocks today what's moving today what's moving today and so these stocks are in the top three top four position it's almost like being on the top of a Google search this is what gets all the attention and if we look at the volume the leading percentage Gainer today up 99% currently has over 200 million shares of volume AMG has 182 million shares of volume and the stock

that I traded has 100 million shares of volume now the bulk of the move from the stock that I traded actually occurred during premarket trading right here it began when the news first came out at 7:00 a.m. the stock was at $5 and it squeezed all the way up to 14 so this was a reaction to breaking news now as the day went on it ended up pulling back a bit which is kind of a bummer and other stocks ended up coming into Focus which is why AMG and LC have a bit more volume but

nonetheless it's very important that you're focusing on the obvious stock let's look at this stock j-z xn just as as an example this stock is popping up a little bit right now and it's kind of an unusual time of day is there any fresh new news on it there's not how much volume does it have 400,000 shares so is this an obvious stock well it is up quite a bit but with no clear Catalyst and not a lot of volume it's unlikely to expect that it will be able to sustain these levels and so if

you bought this dip especially with this topping tail forming right here you would probably be in a pretty tough position now the volume profile I'll say is all right I don't you know it's not too bad All Things Considered but now well now it's getting worse it's getting it's get it's getting worse the the more we look at it see this candle right now um this candle has 9 seconds left on it the F minute candle 7 6 5 4 3 2 one is it going to close red or green just barely green but just

barely it almost went red so technically this is a green Candle on the 5 minute chart but you know it was kind of a battle there at the end and this highest volume candle is actually red and so this is not a dip this is a dump all right so now let's go back over to cadl and let's move this back up here so number one uh high volume red candle is a warning sign number two large topping tail number three the stock is not obvious when you're not trading obvious stocks you're going to find

yourself getting caught in a lot of choppy price action where so where the dips don't work now why do these dips work why does this strategy work let's think about this sort of like just what's happening here if we were going to describe this to a you know a kindergartener what's happening is you have the price that has moved up very quickly because people got really excited about it they thought this was awesome this is a lollipop company it's a popsicle company it doesn't matter everyone's super excited about it wanting to buy it buy it

buy it but then kind of reality sets in wow this thing is up a lot it's up 40% on the day does this really make sense and that's an opportunity where some people say you know what I was in from way down here I'm going to start to sell so people start selling they start taking a little profit they're up 40 50% in fact maybe some short sellers begin taking a bet that this is overvalued right now and it's probably going to come back down so there's a burst of enthusiasm in the market and exuberance

and then there's a moment of sort of coming sort of back down to earth and like let's get real is this really something I should be buying and now at this moment as long as the volume profile is strong the buying was stronger than the selling that tells us that as it started to pull back people who could have sold to take profit are choosing to continue to hold if they had sold the red volume bars would have been higher so they're choosing to keep holding and in fact if people are shorting they're not shorting

with enough share size that the volume is becoming disproportionate to the buying volume so the sentiment is still strong in other words this had a chance to do a complete reversal and it's not now the fact that it's not dying by itself is showing strength the the bar is set fairly low sometimes so now all of a sudden you've got low volume on these selling candles and boom the rally starts again and now what buyers are thinking is I'm buying something that is really strong that only pulled back a little bit and has the potential

to go higher and so this becomes the first dip on a strong stock and that's what Traders especially like myself who trade momentum love to trade number four we can't have a stock break below the 90 Ma on the pullback on the dip we really don't want that to happen so that's one of the indicators that I'm using on my chart and the 9 EMA is uh just it's this kind of not perfect but the 9 EMA is the average price over the last nine periods and this is an important psychological level of support when

a stock is above it it's bullish when it's below it it's bearish so when we drop below this critical level that indicates the Bears are in control and buyers have lost control so when we stay above it the Bulls are in control similarly we never want to see that the price dips below vwap now you'll never you'll almost never have an instance where you'll be below vwap and above the 90 ma that's very uncommon they're rarely inverted so by saying it has to be above the 90 ma kind of by default I'm saying it should

also be above vwap but just I'll articulate it um just so it's it's very clear so we want to see that it's above the 90 Ma and it's above the volume weight average price and then number five we don't want to see the macd crossing if the macd crosses to the negative that's indicating a higher likelihood of a dump the macd is the moving average conver Divergence indicator and when you get that crossover that's usually when you're going into a more sustained period of pullback which can happen I mean even look a stock can go

up 300% and then it needs to pull back so sometimes that pullback is just it's bound to happen it's not that big of a deal but uh you know it's just not realistic to expect this dip is going to get bought up and then number six this ties in uh the depth of the market so when we pull up our level two window what we don't want to see see are large sell orders sitting on the offer or pegged orders and I'll talk about those a little bit more in a second but let's jump back

into a quiz all right so what's this going to do is this going to dip or is this going to dump now this one's a little bit tricky because as I look at this right here the macd it's almost crossing over and yet the volume profile not bad the price kind kind of hanging out right at that 90 ma but a little bit of a topping tail so what do you say is it going to dip or is it going to dump well it's a little bit of a trick it didn't exactly dump but it

didn't exactly rip either the problem was clear macd was crossing over a little bit of a topping tail it did bounce back up but these made it a little difficult for this to Rally Way Way Back higher so you know this is kind of the the ch and one thing that I'll say is that if you're looking at a chart and you're asking yourself you know is this going to dip or is it going to dump and you really can't tell if you can't tell which it's going to do the right thing is to not

take the trade because you're not sure you you really want to feel confident that you know what this is going to do and and in fact it it kind of boggles my mind sometimes how many Traders trade from a point of um uh uncertainty you really need some conviction behind your trades you want to you want to look at it and be like I I know what this thing's going to do this thing is going to rip you want to have that level of confidence if you don't have that level of confidence then it's kind

of like you know you should not take the trade that that's the way I think of it but it's easier for me to say that because I've been doing this for a long time but you want to feel when you're looking at that pattern that you've got a really good chance of making money like you've got to really have some confidence that's going to come as you gain more experience so let's see so that this was um so this was Tara um T this was a stock that uh was however really good and oh I

now I can't remember if I have an example of it but but let's look at it let's look at it right here now it's easy to say because you know it's I can't give you the quiz because you already know the answer but let's just dissect that moment right there now the stock it squeezed up what was the position of the macd it was open what was the position what was the volume volume was strong so nice volume little pullback and then that's a great spot for a dip and a rally higher even right here

is a small dip for a rally higher those we can work with those are micro pullbacks but I can work with that now let's look at this this is R KDA so what's going to happen here are we going to dip or are we going to dump now you should know the answer you got to know it at this point just look at the macd is it positive or negative it's negative what's it going to do it's going to dump it's not going to work it's going to sell off all right so so now we're

starting to get it now we're starting to click this is good let's look at another example what's this going to do Oh see now this is a little tricky what's tricky about it is the macd technically is still open but the volume profile doesn't look so good and we have a topping tail in fact this retraced more than 50% of the move that's something that I could go ahead and add um to this so let's see um I'm going to add that to number seven retraces more oops more than 50% of the move so when

a stock retraces more than 50% of the move unfortunately what often ends up happening is you get this uh you get this dump so let's see so we'll pull this back up here so is it going to dip or is it going to dump and you can see right there it's going to dump it retraced more than half the move so that speaks to sentiment if it's not able to hold even half of the move then it's it's it's not something you can trade now I think it's also worth noting that just because you have

a giant red candle doesn't mean that's a spot to buy yes a red candle is certainly a dip but the confirmation to buy is when it bases and then starts to curl the version of a dip trade where you're buying something that's still selling is a bit more complex that's something I would reserve for more experienced Traders because that's where you have to have the in the the intuition that this is selling off and I think it's going to bounce at this level but it is still actively selling they also call that trying to catch

a falling knife it can it can be dangerous you get practice you get experience you'll start to get a feel for the placees stocks might be likely to bounce especially when that rubber band gets really stretched out it's going to snap back and you're get a nice spring but that's a little bit more complex what we're talking about here is is it going to dip and then rally and we buy that dip for the rally or is it just going to dump and so it's kind of that moment of truth of of what's going to

happen right in the spot so now let's jump on to indicators for a dip okay so we already talked about the indicators for a dump high volume red candle so we want light volume red candles that's the inverse so now you kind of already get the idea large topping Tails we don't want topping tails in fact we' prefer to see bottoming Tails stock is not obvious stock should be one of the top three leading gainers preferably now I will say there are exceptions to this and there'll be exceptions to anything else you know just like

anything else there's some exceptions you want to focus not as much on the exceptions though but on what generally is going to be working so there are times where a stock might hit the scanner like this stock be and let's just say it hits the scanner and there was news that just came out with in the last two minutes okay so in that case then you know M maybe maybe this is something that we should pay attention to it's not one of the leading gainers yet but it has a really good chance of becoming a

leading Gainer if it keeps up so that would be an exception right around breaking news um number four breaks below the 90 ma right so we want to see it hold the 90 ma don't break it hold hold at it um we're going to add number we got number five macd needs to still be positive number seven we said um breaking um below 50% of the move so we want to say holding 50% of the move um by the way we had a uh I recently participated in a um a typing test and I was

I'm proud to say that I was the winner uh fastest typer also um had very low accuracy and I said this was a speed test it was not an accuracy test if you want me to be accurate you should have said something in the beginning so nonetheless um I I say that for two reasons number one um because I I try to tell everyone about this success that I just had with this typing test I'm proud of myself number two I actually do think that um being a little faster on the keyboard will help you

and so if you practice improving your typing skills it will help you in trading why you've got to type things up pretty quickly right let's jump onto the Whiteboard all of a sudden boom stock pops up you got to type in the ticker you want to press shift one shift two jump in and out of the stock you got to have fast fingers in fact on a busy day of trading you know what I do afterwards I soak my hand in ice no I don't do that but maybe I should because these are these these

are very valuable uh I hand model is what I is what I could be I need insurance on my hands okay let's stay focused um so for real guys back to the screen share all right so indicators for a dip um if we have large sellers on the level two or pegged orders a pegged order is an interesting order type where a seller puts out an order and it's not exactly a market order but it sits at it can be a pegged order at the ask so it'll sit at the ask price and as the

ask drops the price automatically moves so if you have a pegged order that's like a 50,000 share order and then someone undercuts it the order automatically moves automatically moves automatically moves and this has the effect of putting downward pressure to push the stock down so when you see a stock that has pegged sell orders that tells me someone's really trying to get out and they're a little more sophisticated in their strategy they're using to exit that makes me worried about institutional Traders selling and they can have huge positions and if they're unloading that could be

a problem and then when we have just big sellers on the level two it's so sort of similar it doesn't matter if it's an Insider selling or if it's a short sell or taking a position someone feels that the right move is to unload and it's a big position so that's also um bearish uh so large orders is a problem and then of course we already talked about breaking 50% of the move and when in doubt check the FIV minute chart so one of the things that I can say is that um it's very common

that we'll have a stock that makes a really big move on the one minute chart and we can look at cadl from this morning so huge move on the one minute which is awesome we're trading those one minute pullbacks but then we get to a point where uh you know you got the macd cross over here but you look at the FIV minute chart and it's like let's look at this five minute chart for right here so back this up all of a sudden look at this 5minute candle right up here um and actually this

is an example where volume weight average price is above the 90 Ma on the 5 minute um so you actually have that Inver that's inverted there which is uncommon but um um it's not great when we see that so you have a giant shooting star right sometimes Traders get so fixated on the one minute chart that they kind of lose sight of the bigger picture and the FIV minute chart is important a lot of Traders use it and if you don't have a clean five-minute chart there's a lot of people who won't take the trade

at all so when you have a clean five-minute chart you're going to have that more PE many that many more people buying on the one minute chart when it starts to break out so usually when you have multi-timeframe alignment where the one minute and the 5 minute are both sort of supporting and and giving you the same signals that's when kind of the magic happens and we see some really nice moves um and it's also fine to have really strong moves on the front side when the five minutes just going more and more extended that's

a parabolic move but once you get that first macd crossover that's the point to take a step back for me all right so now um so let's talk a little bit more let's look at this example all right so what's going to happen here we've got a stock that's rallying up volume profile solid green big volume green bars macd is open there's nothing about this that I'm worried about this looks good it's holding the 9 EMA so what's going to happen awesome rally beautiful love it one minute chart super clean all right let's look at

this snti what's going to happen here so this one lighter volume pops up higher volume selling candle there highing higher volume selling candle there macd is still open we have a couple of topping Tails I would approach this with caution but my bias is to the buy side that this is a dip that's going to rally and it's not just because I know the answers of the quiz before I gave it to you it's because that's what the chart's telling me but I do know the answers of all these quizzes all right next one snti

okay so this one this is a little bit tricky right here so now the macd is actually slightly negative the macd is negative but high volume green candles High volume green candles high volume green candles and we know that it worked before right if we've taken a trade on something we've already got a cushion I maybe willing to take the risk what I look at here is more risk from the topping tails and more risk from the vwap or from the macd being negative but the volume profile is strong and this is a stock that

is a 2.8 million share float it's in the right sector right sector that's currently hot and it's the leading percentage Gainer on the day the macd is negative what do we do well you could say no and that would be okay you wouldn't be wrong to say I better be careful it's always better to be safe than sorry but the macd did cross over and as soon as it crossed positive that was sort of your final issue so you could have bought right here on this micro pullback which would have been on the 10-second chart

once you got one minute confirmation that would have been okay and if you took a smaller position here that would have been okay too smaller position a little less risk if you're not sure or of course if you're really not sure you don't take the trade at all what about here now this should be more clear we've broken below the 90 ma we've got a stronger selloff macd has gone negative the volume profile is not bad but unfortunately this is not positioned to buy and this ends up going up a little bit but then ultimately

selling off so it doesn't hold up what about this one this tells me everything about this looks good you've got a St a St a stock that's strong strong rally it pulled back the volume was higher on the buying candles it did sell off down to the 20 but now it rallied back up and right here is doing a micro pullback macd is positive volume is great this is a buy and we get a nice rally there from five up to seven but again if you aren't sure it's always better just to wait so right

now if we look at AMG this stock uh just started squeezing up and is on the scanners right now and actually just gave a nearly Picture Perfect dip trade so let's kind of dissect this for just one second all right so you're sitting here and you see the stock AMG hit your high of day momentum scanner so the high of day momentum scanner what's that doing it's searching the entire market right now for stocks that are squeezing up that also meet the five pillars of stock selection that I utilize in my trading so this tool

has really been customized for Traders like myself I designed the tool I had development team build it out for me and so all the traders in our community are using this software to find these stocks in real time SOG hits the scanner now I'm going to make this uh just a little bit bigger I'm going to minimize the menu bar so when it hits the scanner it actually hits a couple scanners at the same time it's hitting the squeeze alert up 10% in 10 minute scanner the low float High relative volume scanner the former Momo

scanner and the squeeze alert 52- we High scanner all right so when a stock is hitting multiple scanners at the same time that for me uh reaffirms that this is something I really want to pull up and and take a look at now if if you look at my um p&l from today I already traded AMG earlier today I traded it right around $2 and it ended up squeezing up to a high of 220 and it peaked at 219 and I that was where I traded it and I only got out with a small profit

it dipped back down it then kind of rallied back up and through the rest of the day it pulled back but what ended up happening here going into the close is that suddenly it got another burst of momentum so right here it's now back in play it was in play here was sort of in play here and then it's been out of play this whole stretch if we looked at the macd our moving average convergence Divergence indicator you would see that we had the first leg here where the macd was open went negative and then

it opened up again for another stretch right through here and then through this area broke below volume weight average price we gave back too much to the move wasn't that strong and then for whatever reason it kind of perked back up after hours so one of the catalysts for this type of move can be it's not that it has fresh it already had news earlier it's not that it's got extra news right now but there are Traders out there who were likely swing trading this to the short side thinking that it was going to just

slowly unwind and go lower and that would have made sense when it was under volume weight average price right here stayed below it right here stayed below it suddenly into the close sentiment shifts all of a sudden it's back in the hands of the Bulls it's above vwap it rips right here and in this leg would you have chased it so here's the problem as a momentum Trader if you saw this right here this is where it's hitting our scanner going from two to 210 220 230 240 250 and this is where a lot of

beginners are going to say I'm just going to jump in right here and you know what in a really hot Market you might be able to get away with that but it's risky to jump in something that's that extended it's always better to wait for a little bit of a day so it starts to dip right here this is now the moment where we've got to do our kind of go through our tips and tricks how do we analyze is this something we should buy what's the volume profile high volume buying excellent low volume on

the red candle relatively compared to all the volum the volume that we had in the buying moving up to this first red candle so we had 2 4 6 8 10 12 13 green candles in a row one red candle it pulls back it dips a little bit further another red candle what what's the position of the macd it's still positive where's the position of our 9 EMA 9 EMA we right here so this is the spot right in here it's now basing out so what I do is I draw a line at the low

of the pullback and I say that's the low 225 okay so that's my stop it comes down it holds 225 you see how it holds that level firm Line in the Sand people are buying off of 225 and we're looking for a move higher so 225 is the entry and then there you go look at that rip back up so now you've got this nice move up now the only thing that's a little tricky here is that the macd did come pretty close to to Crossing and what can sometimes happen it's this is not super

ideal this is now after hours trading after hours trading can be lighter volume so it's not the best time for most momentum Traders but in any case still ended up being a nice dip trade so it pulls back here it did go kind of sideways for a second so rather than kind of having this more like V form it sort of pulls back goes sideways and then rips up so there it goes all the way up to 272 pulls back again position to macd still positive light volume and then this dip gets bought up again

and you can continue trading these dips until you get a point where finally the macd crosses over you have that higher volume red candle and you have really that clear confirmation that we're pulling back and this is also where well let's double check 5-minute chart what's the position of the 5minute chart okay we're still looking fine we have a couple of little topping Tails not huge not crazy dramatic but a little bit there I would also look at this chart just to identify nearby resistance we had resistance probably at the half dollar hit that level

pulled back got above it now we're above it we might retest it on a f minute pull back and then if it bases out rally higher but as it's getting later in the uh in the day we start to lose likelihood of having that momentum we also can pretty convincingly say the volume right now is a lot lighter than it was earlier and this is an interesting Divergence when a stock moves to new Highs but on light volume usually when this happens it's because Traders have just sort of stopped trading it and so volume sort

of tapered it declined high volume on this red rejection right here but volume kind of declined Traders sort of gave up on it including sellers so then all of a sudden it starts to rip and it didn't take that many buyers to create an imbalance between supply and demand because just less people were trading it in general at this point so that's where you sort of have that shift you get the break of vwap there's fewer people focusing on it and all of a sudden the buyers have a little bit of an edge as the

sellers are gone it starts ripping back up and anyone who is holding this as a swing trade for a short is now got the pressure on as this thing is back at the highs so we're now up 170% on the day and sometimes this is a stock that could carry over into the next day and we may end up taking more trades on it tomorrow if it continues to hold up but if we do the trades tomorrow just like the trades today on cadl the best trades will be buying the dips when it's on the

front side of the move and the macd is positive right so I just want to kind of jump like pause just for a second just to show you this because this is a nice you know real time example of that uh of that price action and it really a clean dip cadl this one the price action really Consolidated very beginning of the move and then pulled back and this is something that sometimes happens with biotech stocks where initially you'll have a big reaction to the news and then more sophisticated people in the industry say well

wait a second I know what this actually means for the industry and what this means for this company and I don't know if this is going to keep going higher and it'll start to unwind or you have a stock like we had um back in um October November that has that kind of move and it just keeps going higher this stock went from $2 a share to to nearly $80 and it's still holding at 40 so it's it's like this one's still not dying and it's kind of kind of crazy okay so a little bit

of a tangent there let's get back on topic now the type of stocks that I like to buy dips on the stock should be obvious it should be moving quickly and it should be attractive to retail Traders these are my five pillars of stock selection and I will say that my um my criteria for stock selection can vary slightly based on current market conditions in fact today if we look at the trades on cadl let's pull up cadl because this is a stock that I traded up $37,000 on the day 369900 of it on cadl

this one actually had a slightly higher float of 17 million shares it's a little higher than the profile of the stocks that I've been really dialed in on lately so this is the profile number one has to have five times relative volume that means the volume today is five times higher than its daily average so let's look at the volume yesterday on cadl we'll just check our daily chart so yesterday's volume was 700,000 shares today's 100 million wow that is crazy that's over a 100 times higher volume today okay so check definitely meets that criteria

what was the next one number two is already up 30% on the day so when I took my first trade on cadl I actually broke the I wasn't really quick to break the ice on it because the float was higher I wasn't sure I said with that higher float I'm I'm not sure if this is going to work U however once it started to pull away right here and right here I bought this dip right here I bought that dip and I bought the next dip that formed right through here and those ended up producing

some really nice trades so I got focused on the dips once it started to pull away my first trade was right here uh just just around $9 a share a little over $9 and then my second trade which was a really nice trade was um right here on this breakout this is a 10-second chart which every 10-second chart basically it just is a zoom in of a one minute chart but it gives you a little bit more clarity I was I'll say a little nervous on this trade right here because we did have this higher

volume rejection um this red candle but what I said was that it needs to tap the 90 Ma I think it should find support at the 90 Ma and once it finds support there then I think it's going to be we're going to be in better shape for a rally up and that's when we got the move to 1250 and then that pull back higher so uh so anyway so when it first start when it first hit my scanner when it was at like $5 it was already up 15 20% so I think this was

already up almost 100% by the time I traded it and that's not too much I don't have such a thing as too much I'm not investing to hold this for months and months I'm looking for a 15 20 minute long trade maybe at the most I'm happy with a two-minute long trade if it gives me a nice trade in that short of time so for short duration I'm buying high and selling higher number three there should be a news event that's moving the stock higher that was the case with cadl phase three um trial results

number four the price ideally between 3 and 20 um that seems to be working better right now and number five the float or the supply the number of shares available at trade should be less than five this one was 17 so it's a little higher which gave me reason to be cautious but when it started to pull away I was like all right well clearly this thing is moving so what I'm also going to do for you guys I'm going to put a link in the description um where you guys can check out let's see

I've got a um it's going to be on this slide here and then we'll jump back so um you can get instant access to my um micro pullback strategy PDF and uh my small account strategy worksheet my pre-trading checklist a live trading archive that I recorded for you guys and a special video on about um how to uh how to hold your winners longer why Traders hold loser losing trades too long and how to do the opposite which is to hold your winners longer so I want you guys to check that out and in that

I will also have my stock selection uh criteria so you can learn more about stock selection okay so so when a stock so the type of stocks like to buy dipson the stock should be obvious it should be moving quickly it should be attractive to retail traders in other words it meets this profile right here for being the right type of stock to trade at that point it's on my scanner I'm seeing it hitting the scanner and I'm looking to buy the micro pullback and this is the this takes the form of a dip this

is a small very quick dip and then we look for that rip higher that's what I'm looking for in this setup right here so what we can see is you've got the the beginning of the move the pullback this candle becomes your trigger candle so what that means is that the high is the entry and the low is the stop the way this works is that we we look at this candle as any of these candles could be the trigger candle what has to happen is after the pullback you need the first candle to move

higher so right here we're going lower we're going lower we're going lower we're trending down for that Trend to reverse this candle at some point a candle needs to make a new high and so we keep watching the high of the candle and the low so let's say the high is 510 and the low is 490 so if this breaks 490 then it's just continuing to go lower if this breaks 510 we've got our first candle making new high so we're buying right there the second it breaks 510 maybe we get filled at 511 or

512 what's our Max loss on this trade it's down at the low of 490 so now we're risking 490 now we're risking 20 cents 22 cents a share how much do we need to make on this trade to justify the risk and reward so we've got one part risk and we want to have two parts reward so that means we get the pop up we get the pullback we're in down here we've got 20 cents of of risk on the trade we now need 40 cents of profit potential so that's going to be our goal

now now one of the things I love about dip trades is that when you're buying on these pullbacks you can get really tight stops often times much much tighter than 20 cents 10 cents stop 12 cent stop and then if you can make even just 20 cents you've got your 2 to1 profit loss ratio you only need to make half as much as a Trader who's buying higher in order to have an even better profit loss ratio and the better your profit loss ratio the easier it is to be successful because you don't need high

accuracy this is the relationship with profit loss ratio and accuracy if you're right uh if your average winners and your average losers are the same you need to be right 50% of the time in order to break even right $100 winners $100 losers 50% your break even if your average winners are 200 and your average losers are 100 you actually only need to be right 33% of the time in order to break even but if your average losers are uh 200 and your average winners are only 100 you need to be right 66% of the

time just to break even and this is pretty dramatic difference right so a Trader who's buying dips can be in this area whereas a Trader who's buying the high of day entry is going to be up in this area both could be profitable but you can be profitable here with 40% accuracy 40 50% accuracy down here you're going to have to be right 60 maybe 70% of time in order to make money so you're going to be better off you're going to set the bar Lower if you could focus right in here now what this

means is number one you've got to make sure you're trading the right stocks so you've got to have stock selection dialed in stocks that meet the five criteria stocks are obvious attractive to retail Traders and are moving quickly but then you also need to make sure you're getting the right entry and to get the right entry you've got to understand the language of technical analysis you've got to get so good at it and this is where the more you practice the more you trade the better you'll get it's just one of these things that you've

just got to stick with that you've got to practice you've got to build your own educated intuition so I love the micro pullback because for me it's one of the fastest ways that I can get in a strong stock so if we look back at a lot of these examples and we look at um cadl today that first entry we had to look at this on a 10-second time frame because that dip was so brief it only dipped for a moment before rallying back up but I knew based on the profile the volume on the

one minute chart and the candlesticks that this was something I should pay attention to and then this pullback right here again I mean it just rips right through that level so when you have something that's really strong especially when it's strong because of breaking news these often won't give you a lot of time to sit sit around and twiddle your thumbs you if you want to trade it you've got to get in fairly quickly and that's where the micro pullback is a key strategy it's buying the dip the dip is the micro pullback it's buying

that micro dip before the next leg higher and so that's where I I really think the more you practice the more you watch these charts as long as you're trading the right stocks the ones that are obvious this is going to start to click learning a language of financial analysis technical analysis the financial markets it's not unlike learning a spoken language you've got to immerse yourself in the culture of other people speaking the language you've got to hear it you've got to see it written everything and with trading being in a community of other people

that are speaking the language listening to these episodes right here that I upload every single day this is going to help you in that journey to gain this financial literacy I mean that's really what it's about it's about learning the language so the micro pullbacks uh again so I've got a a PDF that you guys can um you can download this micro pullback strategy PDF you can download you can print it out it's going to show you the different variations of the micro pullback and how they look between a 10-second 1 minute 5 minute chart

they can look different so you got to be identify them in real time this is an example here of a nice micro pullback so here we've got this stock that kind of rallies up dips for just a second micro pullback rallies higher dips a little bit more sustained another push higher so like that's that setup that we look for every single day and when you have an off stock that's got a 600,000 share float that's got breaking news that's when we see stocks go from $2 to $3 $4 in a matter of 15 minutes it's

kind of kind of crazy how fast these can move so now you've taken your entry right and this was kind of to walk you through where I'm buying these stocks I let the dip form right so we get the squeeze higher we get the move up we then get that pullback we get those two candles first candle makes a new high that's my entry right there on the micro pullback that's where I'm buying so that's my Buy on the dip now where do I sell where's the exit indicator how do I know when and where

to get out so what's kind of interesting here is that your exit indicators also kind of overlap with um with what would tell us not to take the trade in the first place if we have a high volume red candle a high volume red candle is an exit indicator that's telling us people are bailing on this they don't like it anymore they're not confident so we got to get out and then a topping tail large topping tail that's an exit indicator stocks no longer obvious something else is taking its place this is something that could

be super frustrating with trading you could be trading a and all focused and dialed in on it and then another stock comes out with breaking news and everyone switches to trade that stock instead and you're like are you kidding me right now what happened to this one everyone gave up on it and so you got to be able to follow the momentum around the market it can move quickly so if the stock is no longer obvious time to jump out breaks the 90 ma macd crossover large seller pegged orders those are exit indicators building success

as a Trader is a combination of discipline and strategy you've got to have discipline you've got to have the patience the discipline to follow the rules and you've got to have the strategy when these come together that's when things get really exciting what I want to help you help you help help you achieve is a positive feedback loop the first element of managing risk in my opinion is trading a quality stocks when you trade the right stocks stocks that meet the five criteria of stock selection stocks are obvious stocks that ret Traders like stocks are

moving quickly with news by trading the right type of stocks you're going to find that the dips are more forgiving when you're trading the front side of the move front side of the move when the macd is positive that's when a lot of those dips are going to keep getting bought up keep getting bought up once the macd crosses over that's the time to take a step back so managing your risk can be done through stock selection making sure you're trading the right stocks and trading them in the right places by increasing the focus on

accuracy trading highest quality stocks and the highest quality setups you know what follows you increase your accuracy and now your profit loss ratio gets better because what you've done by increasing accuracy is eliminate some of the outlier losses that were drawing down your average your profit loss ratio because your profit loss ratio is all your average winners and all your average losers so when you've got poor accuracy you expose yourself to unnecessary big losses that hurts your profit loss ratio so higher accuracy leads to improved profit loss ratio which leads to improved consistency and what

does that do that creates a better track record which builds self-confidence which helps you increase profitability this is getting into a positive feedback loop that's what I want to see now you know what happens to a lot of beginner Traders a lot of beginner Traders are on the exact opposite they're in a negative feedback loop or a downward spiral and begins back here with poor accuracy they don't have good accuracy so they don't have good consistency they don't have a good profit loss ratio they don't have a track record they don't have profitability they don't

have confidence and in fact as desperation and pressure gets higher their accuracy goes down even more and they start taking more and more trades that are terrible quality and they start spiraling so if you're in that position this is what I want you to do stop right now first of all stop the bleeding switch to a Sim that's number one number two focus on accuracy focus on highest quality stocks accuracy first you're going to notice a difference you're going to trade less but you're going to be trading the right types of stocks so the next

steps to keep learning well you saw the link download the dip trade gifts so there's a bunch of gifts free PDFs that you guys can download you get instant access to them as part of this dip trading class and if you want to take the leap and watch over my shoulder while I'm trading every single day we've got twoe trial link is p up pinned to the top of the comments and Linked In the description and I want to thank you guys for tuning in and I hope you're already subscribed to the channel but if

not you can hit that subscribe button I'll remind you guys as always look trading is risky my results aren't typical I've been doing this for a long time so what I want you to do is to start slow build experience in the simulator and only once you've proven profitability in the simulator transition to real money I have a trading plan that you can follow that I give to students at Warrior trading so hope to see you guys over in the community and I want to thank you as always for tuning in this episode and I'll

see you for the next one real soon