Hey hey: what's up my friends, so in today's training i want to share with you the five things you must look out for before you place a pullback trade and it doesn't matter whether you're trading stocks, forex commodity futures, the concepts that you're about to learn can Be applied the same, so let's get started number one trend right, here's the thing: when you trade pullback, you must have an existing trend. You can't trade. A pullback in a range market doesn't even make sense. Okay, so is there a trend? That's the first question.

You want to ask yourself, and one tip that i have for you - is that when you look for trends right, you want those trends with visible pullback with clear retracement, because this makes it much easier for you to time your entries, so one tip for you is To look for trends right that pull back towards the 50ma or deeper or more okay, so let me just share with you a few examples, so these are type of trends right that i like to trade off. You can see that you know we have a down move lower. We can see the pullback another down, move another pullback, a down move and maybe another potential pullback over here. So you can see that this downtrend, the trending move, the retracement move.

It's all very nice and clear another example. This is a stock example again, trending market market trends, up higher, pulls back trends up higher, pulls back trends, up higher, pull back up and maybe possible another pullback over here to retest this swing low. So you can see that this is the type of trend that i want you to focus on where the app and flow right, it's obvious, and if you pull out the 50ma you'll see that you know it will. You know tend to uh retrace or pull back towards the 50ma or more so this is just a rough general guideline and let me share with you trends right that i avoid is trends like this.

You can see that this trend is quite different over here. If you look at the recent swing up right, you notice that this trend is just pretty much grinding up higher all the way and the pullback is very shallow right. So it's difficult to time your entry on a on a pullback right if your market is trending in such market condition - and these are type of trends that i would avoid so again - focus on trends with a clear, visible, pullback retracement. These are the ones that are much easier to trade, and the 50ma is just a very useful tool that you can use to uh decide whether the trend is worth trading or not.

So that's. The first thing trend number two: the area of value. What is the area of value? This simply means right. Where might potential buying or selling pressure come in? This could be things like support and resistance.

You know like support. Right is an area where potential buying pressure could come in. Resistance is an area where potential selling pressure could come in. This is only one area of value it could be trend line could be moving average et cetera.

This is what i call area of value, so let me just share with you an example. So if you look at this one okay, this is uh euro against the aussie. We have this upward trend line that serves as the area of value that you can see over here. This is an area of value for this market and on this time, frame the daily time frame uh another one.

If you look at this uh stock right zoom, you can see that this one serves as an area of value using the 50ma tested it once almost twice twice four times, and possibly maybe a fifth time over here. So the 50ma here serves as an area of value or if you look at dollar canadian okay over here, i think i didn't. I didn't have any lines here, but i can just draw some simple basic support: resistance that could serve as an area of value. Okay, so you can see over here.

Okay, let me just change this to a black. Usually, my levels are black, as you can see over here right, there's our potential area of value on the chart, so simple, stuff right, so basically ask yourself where my potential buy and selling pressure come in. So this is the second question to ask yourself right to to identify the area of value moving on the third thing: entry trigger and oh by the way, if you are enjoying this training, so far smash the thumbs up button. If you don't, then hit the subscribe button so moving on the entry trigger once you have the trend, once you have the area of value, the question is: what will get you into a trade? When do i enter the trade okay? So this is where you can use uh candlestick patterns right to help you time your entry.

This will be things like reversal. Candlestick patterns like a hammer, shooting star, engulfing pattern or price rejection and stuff like that. So let me share with you some simple basic candlestick patterns right to get familiar with, for example, pound new zealand. You look at this over here right, so this won't be a full-fledged candlestick pattern trading course right.

I have videos on youtube. You can search on that, but you can see that over here we have a bullish, engulfing pattern where this candle has a engulf or cover the prior candle. This tells you that the buyers are, you know momentarily in control, or this one over here right, similar to another bullish. Engulfing pattern, slash hammer right.

We have rejection of lower prices over here before the price closes higher. For the day again, this candle has engulfed the prior day candle over. Here we have, we have what we call the dark cloud cover where the price has uh covered the previous day candle by by at least two third or more okay, then here we have another bullish, engulfing pattern, so yeah. Basically, we are looking for bullish reversal, candlestick patterns to help us time our entry to get into a trade right so later i'll share with you more examples, but basically these are the things that we're looking for to time our entry.

This is another bullish engulfing pattern. Another bullish engulfing pattern: okay, so next one! So once you have your entry trigger, what do you look for the exit if you're wrong, because here's the thing right, you can have all the stars that align together, everything is beautiful, sweet, okay, but you could still be wrong on the trade. So this is why we have stop loss. To kind of you know, contain our losses.

So where is the stop loss and a very simple principle i use when setting stop loss is that you want to set it at a level where it invalidates your trading setup. So let me just give you an example: let's say you are head and shoulders pattern. You want to shot the breakdown of this head and shoulders pattern right. You know, what's in here, you show this pattern.

Okay, this is the neckline. So let's say you went short on the breakdown, so where do you set your stop loss right for this head and shoulders pattern? So the question you should be asking yourself is: hey raynor, at which level on this chart right? Will this head and shoulders pattern get destroyed? So that's the question. Okay. So if you ask me right the hit and shoulders pattern will probably get destroyed right if it reaches this price point over here somewhere here right, because you can see if the price breaks down lower and goes back up clearly, this is no longer a hidden shoulders Pattern clearly, this pattern is destroyed.

This pattern is invalidated, so that's where your stop loss should be. Okay, it doesn't have to be chart patterns. It can be support resistance, trendline moving average. The concept works the same.

So let me give you an example for let's say, support and resistance: okay, so let's have a look at an example for support resistance, so this euro, swiss franc, okay. So here we can plot our support resistance here it says the resistance and here possibly the area of support, so we can see that right now, price is contained between this area of resistance and support. So let's say you got long and support. Maybe you know you're bullish on this market fundamentals looks good your technicals everything lines up.

You buy at support but, as you know, rayner says that you know in trading we are dealing with probabilities. All the stars can align the moon, star, satan, jupiter, whatever all the line, and you can still get a trade wrong. So now the question is: hey raynor, at which level on the chart will support, be invalidated? Will support be destroyed? That's the question. You should be asking yourself, so if you ask me right, you know that support is an area on your chart.

It's an area i mean, although i draw it as a line right. We both agree that it's an area on the chart, something like this is an area we never. The price could now break briefly below support and then reverse up higher. So we want to give our stop-loss some buffer okay.

So how do you kind of like give it a buffer? So what you can do is pull up the atr indicator. Search for atr stands for average to range. I typically go with the 20 period. Atr sma click.

Ok beautiful! I can be a poet okay, so anyway uh we can see that the current atr value right now is about 40 pips right. Let's make my life easier, it's 39.1 peak, but let's make it 40 pips. So what you want to do is to find out what is the low of support? Okay, so the low of support we can, let's, we can either treat it as this level here all right or if you're gon na be more precise. You can even use this level over here, but let's keep things a simple: let's use the low s.

You know one zero, seven, two, two okay, so what you'll take is one zero, seven, two two, this level you minus 40p, so i'm gon na take one zero, seven, two two minus forty pip, and it gives me something like one: zero, six, eight two! So my stop loss is going to be at one zero, six, eight two, which is at this level over here, i'm gon na change this to ping and my coordinate, will be one zero, six, eight two okay, which is 40 pips right, so basically just to walk. You through this level here at this price point you minus 40 pips, which is one atr value which you got it from here, gives you this red line over here. So this is your stop loss. Okay.

So at this point right, you can agree that hey if the price touches this red line - let's say the price collapse on to this red light. This support looks broken right, rainer yep, i agree right i mean if the price reaches that ping red line. Support clearly looks broken to me, okay, so so you can see that this is what we mean by you know, setting your stop-loss at the level right which invalidates your trading setup. So at this point uh we are almost there, but not quite so.

You can see what i mean this. This market still could possibly not become a false breakaway, reverse up higher and you'll. Be thankful that, oh, you know you didn't set your stop loss just make below this lows all right. So this is why we gave our stop loss some buffer and that's how to do it right, 180 below the price structure, so moving on number five right.

How do you exit if you are right? So what if you get the trade correct right? Where do you exit your winner, so this boils down to really right uh, whether you want to be a swing trader or a trend for lower. So for this video we are just going to focus on swing trading, since i believe most of you are into swing trading, so basically for swing trading. You want to have a fixed target profit. You know possibly exiting your trades before the swing high or swing low, depending on your trade direction.

If you want to write a trend, you can just use a tool like a trailing, stop loss. Okay, so with that said right, let's use the concepts that you've just learned, like the five steps number one. Let me just do a quick recap: the trend, the area of value, the entry trigger the exit. If you are wrong and the exit, if you're right, i call this the t formula: let's use this tay formula and look at some training examples and see how it works in real life, we'll cover effects and stocks right.

So you can see that the concepts pretty much work the same so let's get started so and by the way, right. The examples that i'm about to share with you. Yes, they are cherry pick. Obviously they are cherry picked because i want to share with you uh the concepts right that work, how it works, based on historical chat, of course, in trading in real life.

It's not gon na work all the time right, but, of course, to prove my point. I'll pick a chart right that are winners, so you can actually visualize right how it looks like right instead of showing a chart that goes wrong and you kind of you know uh get get confused. Okay, so bear in mind the chats are cherry pick, but in real life trading you will face loss of series of losses. Right, don't be surprised, so this is just a quick disclaimer to those of you who are you know, thinking that it's going to work all the time.

So, let's get started first, one i'll just get rid of the hdr indicator. First, okay! So, let's look at aussie canadian. So if you look at this this market again, what is the first thing that we are looking for? Remember number one, the trend, so what's the overall trend in this market, so let's call it a more on the trend all right. It's towards the upside okay, great number, two area of value right, this area of value.

You can see that i'm looking at this area of value over here, which is an area of support, so let's call it a s for support. I'm going to do something like this right, so you can see okay next one entry trigger do we have an entry trigger. So again, when we talk about entry trigger, is something as simple. As you know, bullish reversal, candlestick pattern.

We just simply have a very nice bullish higher close over here. That's a valid entry trigger, so i'll just call it bc right, bullish, close exit. If we are wrong so where do you think we should set our stop loss right if the market goes against us? So remember, rayner said: set your stop loss right where it invalidates your trading setup, so your trading setup is simply trading at support right in an uptrend. So where might this support area break chances are is probably somewhere about.

Here i would say, your area of support is broken if the price can reach this level. So again you can use the atr technique. I share with you one atr below support right. That would be your stop loss.

Okay. So that's your uh exit, which is your stop loss and how about exit? If you are right, the final e - let's put it here, the final e exit - if you are right, so if, as a swing trader, you can just capture one swing in the market and the question to ask yourself is: where might potential selling pressure come in? So, if you ask me possible areas is over here and over here, so you can have two possible targets right to capture a swing for this market make sense. Okay, this is the tay formula right here with you step by step. Moving on, let's look at the stock netflix all right, i think many of you most of you watch netflix.

So let's have a look at this stock and see how this one uh works out and plays out so trend is up. Area of value is at this area of support, which you can see over here here this area of support entry trigger. We have what i call a false break: let's call it fb. I know what you're thinking right, not that fb right fb false break, so you can see that the price trades below this prior low prior low and then it closed bullishly on the next um on a subsequent candle right.

So basically, it took out the stop loss by traders who set the stop loss below these lows and this lows and make a quick reversal towards the upside. So this is what i call a false break where the price takes out the the lows of support only to reverse up higher, so you can enter on the links candle open. So we have the false break exit. If you are wrong, where is your stop loss? Okay, your stop loss again, it's at a level where your trading setup is invalidated.

You can use your eyeball to say that, oh okay, if the price hits 440 right, i know this area of support doesn't hold. I should get off the trade, but if you want something more objective, you can use the hdr technique that i shared with you earlier and finally exit. If you are right, all right could be at the swing high. So, let's call it sh right swing high right, possibly around here: where can you take profits if the market does swing up higher? So again, this is the ta formula in action.

So, let's look at a couple of more examples before we sum up today's video, so another one over here, so this is just so similar as a netflix example. The only difference is that the the duration right that the price takes to form this range over here. Okay, so again trend uptrend area value. At this area of support entry trigger, we have another fb false break: okay, let's call it fb exit again i mean exit if you're wrong, stop loss can be atr below this.

Most recent swing low so be somewhere about. Here. That's your stop loss and finally, your exit could be at this recent swing high over here. Okay, so, as mentioned earlier for exit is uh.

It's up to you whether you want to capture a swing or trail your stop-loss. If you want to ride the trend and clearly you need to trail your stop-loss and you can trail your stop-loss using you know, price structure, as the market continues to make a series of higher highs higher lows. You can just trail a stop-loss below the recent swing low or you can use a moving average to trail your stop-loss okay. So this is pretty much how this one works and one last example: let's go back to the fx market so again, uh this one.

Eight hour time frame - okay, so you can see over here. What is the trend of this market? Overall trend is towards the downside. This market is in a downtrend downside, okay area of value. I'm seeing over here right this one over here, where previous support could become resistance, so i'll call it r resistance entry trigger okay, we have a bearish engulfing pattern, as you see over here.

Let's call it uh be bearish engulfing pattern exit. If you are wrong again, we go. We set our stop loss right, uh, where it will invalidate our trading setup and this now. This is where things get a little bit tricky.

So you can see that in the real world of trading right, things might not be as clear-cut. So now you have an option. Hey reina. Do i reference my stop-loss on this high or this high over here, because if you set your stop-loss 180 above this high, you might be just smack above this uh this level here, which is an area of resistance.

So this really depends on how conservative you want to be. So if you are really conservative, you want to really protect your stop-loss right and prevent it from getting stop-hunted. You will reference this highs over here right and set your stop. Loss 180 are above this heist, so you'll, probably some be somewhere about here.

Is your stop loss? Okay, you can see that the stop loss is going to be pretty wide right, but that's the price you have to pay right so that you can avoid know the price spiking up through the highs spiking up to resistance. Only to stop you up for a loss. Okay, so that's the price you have to pay and finally right exit, if you are correct right, so there's your stop loss exit if you're wrong now exit. If you are right so over here, exit if you're right, this one is a stop loss.

Okay - and i would say possibly at this swing low - could be your exit if you are right, so let's call it sl swing low, okay, so again, this is how the tay formula works. Hopefully this example gives you right a good idea to how you can trade pullback and, of course this isn't the examples. I've picked are mainly support resistance, because these are my favorite type of area of value to trade off, but again it's not the only one. You can use trend line, you can use moving average.

You have to go and validate the concepts that i've shared with you right and see what works best for you. So this is where your forward testing your back testing comes into play. Don't take what reynolds says at face value. I may not be right.

Gon na, do the work fair enough. Okay, so with that said, let me share with you a bonus tip right for those of you who trade stocks. I know a number of you who trade stocks or whether you're trading, the u.s stock markets or the indian stock markets. What you want to do is to focus on buying the strongest stocks.

So, for example, let's say you are looking at two possible stocks: stock, a and stock b, and they have very similar trading setups. So, for example, earlier i shared with you the setup on netflix and sum, or their setup is pretty similar and you're undecided man right now, which one should i choose man should i go with the stock a or stock b, so one tip that i have for You is to focus right on buying the strongest stock out there, so what you can do is simply go with the stock right that has increased the most in price over the last six to 12 months. Why is that right? Because academy research has proven - and my own back test thing has proven right - that stocks right that has increased the most right over the last six to 12 months are the ones that are likely to outperform the market. So one thing you can do is: let's say: let me just go back to the charts, let's say: you're, looking at sumr, okay on the daily timeframe at this point, you're thinking uh.

Should i buy this stock? You compare it with netflix what you can pull. What you can do is pull out a tool called the rate of change. It measures the percentage change in price over a given period right, go to the weekly time frame. Okay.

So this point the weekly is about here and find out right how how much the price has increased right over the last 50 weeks over here i changed to 50.. Okay. So at this point you can see that okay, let's let's go at it most extreme right. So at this point let's say: let's assume right.

For example, there's a valid set up on s-u-m-r you're looking to buy, and you can see that over the last 50 weeks. This stock price has increased 663 percent. How do you know that rainer well, because it's shown over here 663? So it's pretty strong stock and if you compare that to netflix, let's say netflix, you have another valid trading setup and you realize oh, this stock has increased. Only 85, so what you want to do is go with the stock right that has the highest roc value over the last 50 weeks.

So, if you think about it, 50 weeks is about over the last 12 months right the the increase in price over the last 12 months. So that is the stock that you want to go. So if you trade stock right, this is a very useful filter right for you to identify a high probability trading setup and, of course, avoid those those stock right which are very weak all those stocks, the roc value, is even even lower than the index itself. Like s b 500, if, let's say s, p 500, the roc value is let's say: 20 20 and the stock that you're looking to buy is uh, let's say 15, then i would say you know you might want to avoid buying that stock right focus on stocks.

Right which are strong all right - these are the ones that are likely to outperform the market. So quick recap to what we have learned today: number one right: when you trade pullback, first and foremost, the trend. Next one is: the area of value, could be support. Resistance trend line, etc.

Then an entry trigger could be a false break fb. I know what you're thinking, hammer, shooting star, etc. Next one is your exit: if you're wrong, which simply means it's our stop-loss, where on the chart right, will your trading setup be invalidated? And finally, right exit, if you're right and in total, i call this the tay formula, t-a-e-e-t formula, okay. So anyway, if you want to learn more about, you know: price action trading.

You really enjoyed today's training, then what you can do is go down to this site over here called price action trading secrets. This is a 140 page color trading book physical trading book right that i will ship out to you: okay, where you'll discover uh professional price action trading strategies that you can use to trade, the uh fx market stock markets. We talk about reversal trading, breakout trading risk management, so you never block another trading account trade management position, sizing and all the fun stuff like this right. So if you are really interested in price action trading, just go down to the the link put it below this video and you know, grab a copy of price action trading secrets.

So with that said, i wish you good luck and good trading. I will talk to you soon.