This Simple Break & Retest Strategy Is Actually Profitable — Transcript

Full transcript

1. 0:00If price breaks the high, but
2. 0:01immediately reverses, it is a liquidity
3. 0:04sweep. If price breaks and explodes in
4. 0:06one direction, that's a real break of
5. 0:08structure. The big move tells you
6. 0:10everything. It tells you the direction.
7. 0:12Now, you wait for the retracement. Only
8. 0:14then do you look for an entry.
9. 0:15>> Oh man, I love the simplicity. It can't
10. 0:17get more simple than that. And sometimes
11. 0:19in trading, simplicity works over any
12. 0:22complicated strategy. So, I took this
13. 0:24simple concept, went over to Lux Algo
14. 0:26Quant, and actually built an indicator
15. 0:28that identifies these setups in a unique
16. 0:30way. It looks for breaks, but leaving a
17. 0:33gap behind to show that significance.
18. 0:35And really, the only time you would
19. 0:36trade it is when price comes back to
20. 0:39that gap and shows a reaction. As you
21. 0:40can see here, [music]
22. 0:41it broke this high, showed a reaction
23. 0:43off that gap, and then ran to another
24. 0:45high. The dotted lines are untapped
25. 0:47highs or lows. The gray lines and boxes
26. 0:49have to do with how much time has passed
27. 0:51since that low was created. I like
28. 0:53looking for ones that were broken pretty
29. 0:55quickly, and so I have that set to a max
30. 0:57of 50 bars. Okay, let's see how this
31. 0:59indicator works. So, we have these
32. 1:00highs, and we're looking for that break.
33. 1:02Okay, we got a most recent break of a
34. 1:03high. We have a gap plotted as well. So,
35. 1:06we get that signal. We're waiting for a
36. 1:07retrace to the gap and reaction. As you
37. 1:09can see, price is starting to react off
38. 1:11that gap. We need confirmation. We got
39. 1:14it right there. So, I'm going to take a
40. 1:15long off that. Put either stop below the
41. 1:17low or below that candle's gap there.
42. 1:20And usually, what I like to do is target
43. 1:22the new high there, and then we'll see
44. 1:23if we get a continuation. And bang,
45. 1:26perfect continuation back through that
46. 1:27high. And I mean, just watch. We break
47. 1:29through, set a signal, there's a gap, we
48. 1:31get a reaction off the gap. Do we get a
49. 1:33continuation to the high? We do. Again,
50. 1:35it's all about reaction. If you don't
51. 1:37get reaction, you don't trade. [music]
52. 1:39Let's see if we get another setup here.
53. 1:41We break through, we've broken previous
54. 1:43highs and more recent highs. It clearly
55. 1:45is a significant level. We get a nice
56. 1:47reaction off of that gap again. I'm
57. 1:49going to take a long off of there, stop
58. 1:51below this low here. I'm going to go for
59. 1:52a two to one because, you know me, I
60. 1:54love my two to one trades. Let's see if
61. 1:55it plays out. Bang, right through the
62. 1:57take profit. In the settings, you can
63. 1:59adjust the max amount of bars that you
64. 2:01want for signals to occur. If I go to
65. 2:03200 here, you'll see some of the signals
66. 2:04pop up there. In my opinion, I like the
67. 2:06most recent highs and lows for signals,
68. 2:08so I'm going to leave that at default at
69. 2:0950. You can change the volatility for
70. 2:11that gap as well for a signal to occur,
71. 2:13as well as those pivot levels. I like
72. 2:15all of these at default. They've shown
73. 2:17some nice setups. Again, if you don't
74. 2:19get reaction, do not trade. Price
75. 2:21doesn't care about [music] that level.
76. 2:22If you want to get instant access to
77. 2:24this indicator on your chart right now,
78. 2:26just comment the word react and I'll
79. 2:27send you a link.