Alright. So I’m going to take a little bit of time to explain why this chart jumps out at me from the angle of a price action trader perspective. So as you can see over here, this was actually a general uptrend channel that has really started to form. And this downtrend resistance, a very clear downtrend resistance, it has somehow been overcome very recently. And on this particular day, if you can see my mouse, you can actually see this very strong breakout. And what happens is you will see there’s trading volume spiking as well. Okay.
You see on normal days it’s not actually spiking, but on this particular day it actually spike up. So actually this is the kind of, if you actually scroll through all your charts or flip through your charts, what you’re trying to do as a distributionary price action trader is to look for such occasions where it just simply jumps out at you and tell you, hey, something interesting is brewing here. You want to take a look and see whether it makes sense for you to trade or not.
Alright. So this is the part where I will actually stop and do a deeper analysis on the chart itself. I might even want to look up some news on this particular stock to see if there’s any good news about this stock recently. Or maybe potentially upcoming good news about this particular stock and stuff like that. And if all the confluence factors tells me that this particular stock has a good reward to the risk ratio and a very good clear place where I can put my stop loss, then I might actually decide to take this trade.
So this is basically how in my past 15 years of trading journey, what I preferred to do. So that’s the reason why where some people say price action trading is very time consuming, I think the main reason is because they have not found a workflow like I did in terms of being able to quickly flip through all these charts to find trading opportunities. And if you practice long enough, you realize that you can actually flip through 100, 150 charts very quickly.
Interested to receive mentorship opportunities like this with Philip?
Find out more at traderwave.com/innercircle
Latest posts by Philip Teo (see all)
- The things that a new retail intraday trader should take note of - February 24, 2020
- The things that a new intraday trader needs to take note of - February 22, 2020
- The pros and cons moving from discretionary trading to algorithmic trading - February 20, 2020