What's up everyone? Alright, so during this episode I'm gonna break down for you one of the tricks that I use to help predict breakouts. Now this trick is based on using level 2 and seeing both big buyers and big sellers in terms of understanding where you've got points of resistance and where if you break that point, you're likely to see a really big breakout. Learning to read level 2 is like learning to read a second language. It's the language of the financial markets.

It takes time to become fluent I'm fluent in technical analysis and reading level 2 and I want to share with you some of the tips and tricks that I use our daily basis that it's easy to take for granted because at this point they kind of come. So naturally it's like seeing 2 plus 2 and you naturally know that. that's for that. For me, it's reading.

Level 2 has become that second nature and so to help slow down and get you to the place where it becomes second nature, we're gonna examine a trade that it took today that ended up being about a thousand dollars of profit on a perfect breakout using this little trick. Now if you guys want to learn more about the tips and tricks that I use for reading level 2 and also for technical analysis I Watched your register for day trading 101. It's a free webinar. the link is right down there below and everyone who registers and attends will get a free copy of my best-selling book.

And you'll learn a little bit more about the setups as I trade because it kind of goes hand-in-hand both with the reason that level 2 is important and the current chart pattern and that'll make more sense as we get into this video. So let's get into it and when we come back when we come to the end, I'll give you another reminder to register for it. They trade 101. All right, let's do it Alright, so let's start breaking down this example of one of the little tricks that I use to help predict breakouts.

Now we're gonna look at this stock I Npx. It's up 35% at the time that I'm watching it right here and as you can see this is the chart on the right-hand side of the screen. So what we have here is a stock that is has already made a pretty big move. It was already up 35% it then pulled back and it started to squeeze.

Ease back up to what you can see here is a little bit of a resistance point. Now, when it came up to this level earlier this morning it it was like well this time right here, whatever that is 950 or so it actually hit $4.95 And that's when we first saw this big seller. This big seller is about 20 22 thousand shares as the stock came back up right here on this candle we saw again that same 22,000 share seller and now it has come back up a third time to that level. So on the one-minute chart, we have clear technical resistance at this level of four, Four Ninety Five, and I'll show you the the chart as it is right now in a moment.

But so basically what we have is this sort of cup formation where the stock squeezes up, pulls back, pops up, pulls back, comes up double top resistance at ninety five, and then it pulls back for a second, go sideways and then right here as it's coming in. I'm gonna look for it to break this level. So how do I predict the breakout well on this stock I see the seller right here and $4.95 and what? I know about these stocks and this is part of learning the language of reading. Level two is that when you have a big seller as we have here at 495 a lot of times, if you're shorting the stock, where would you set your stop if you're short, you probably say well, I'll just hold this as long as 495 doesn't break because this is resistance.

Not only is it technical resistance on the chart because it's a double top, it's also resistance in the form of a really large seller. So when I see that large seller as a short seller I would say my stop, it's gonna be about 495 as a buyer I'm gonna think that if that breaks if we see this go from 495 and all of a sudden it breaks 496, it's going to be breaking through this critical resistance level and so sometimes when you have a big seller that's kind of holding things up, a lot of traders will wait for that seller to clear out before getting in. You don't usually want to buy at ninety three right before a twenty two thousand shares seller cuz you know it's like, well, I'm buying right below resistance I'd rather see that resistance level starting to get knocked down and so I'm gonna play this video I'm gonna pause it a couple times. This is live trading so I'm watching right here and I've got my hand.

My mouse is on the Buy button. With an order at four dollars and ninety six cents for three thousand shares, this is a limit order. so I'm stipulating how much I'm willing to pay I would not do this type of trade with a market order because when it snaps through this level when it breaks, it's gonna break really fast and if my market order was slow to execute I can get end up I could end up getting filled at the top of the breakout which could be significantly higher than where I want to be getting in. Okay, so let's watch this 22 and see how it's starting to come down.

Let's just back that up for one second, All right. So I'll back this up here so the stock is squeezing up. We're seeing lots of green on at I'm in sales 22:21 The green is right here. This green is every individual order as it's going through more green.

Now it's 14 thousand shares and this is where I'm gonna press the Buy button I Just bought and I click the Buy button twice and then I press it a third time and then I press it a fourth time. So I actually tried to buy 12,000 shares of this stock I wanted to get in at 495 because I believed that at 495 broke, we would get a quick break over five and a squeeze up. maybe five, Ten Five Fifteen, Maybe Five Twenty-five So let's back this up again. Alright, so we're right here: I've got my hand on the Bible in the orders at Ninety Six Green.

Lots of Green, lots of buyers reading the time and sales, and the level two. They go hand in hand. so this is of course the level two on the left and this is the time and sales on the right. In fact, with Lightspeed they're built into the same window so we've got 94 and I know that sellers gonna be there at 95 and now I want to see that seller get taken down so I want to see it go 22, 21, 20, 19, 18, 17, 16, 15 and it starts to show that it's getting knocked down.

I'm gonna press the Buy button now. if I was short, I would also press the Buy button and it would be to cover my position because I'd be thinking uh-oh looks like this thing is gonna rip. Long trainers and short sellers are both pressing the Buy button at the same moment and look what happens? Look at that. just like that.

We got the breakout now. I've already sold 3,000 shares. Just like that. as quickly as you can type, you can be buying or selling shares.

So here we go. Let's do it again. There's the order coming in. there's the breakout I break it breaks through five and I haven't put out the order to to to sell yet I'm gonna do that in one second as it breaks through five.

So right here I just put out an order. it's gonna be at the bid 513 I sold half and I sold another half of 511 I sold a little bit more and now it's gonna come back down. It's gonna probably test this ninety-five spot. It's often that they break through.

come back and test a level before ripping higher. Now this stock will end up ripping higher. We'll see if it pops back up here. I Still have 850 shares at 95 97, there's 502, 505, 508, 510.

Now let's look at the chart on this. This ended up breaking five right here. It's full screen this so a broke that level. It was right here that it broke.

So is on this candle that you just saw me buy. It pops up to five seventeen, It then dropped back down. It hit 493. a pop back up, Drop back down, pop back up, drop back down.

Choppy Choppy comes back down to the nine moving average this gray line and then right here it comes back up and it's gonna blast through Five Ten Five Fifteen and rip all the way up here to 544. Then it's gonna do a one-minute pull back and squeeze up to a high of 589. So those trades are all fine. They're not as much of a study on reading level 2.

This was really the study on level 2 That seller that was sitting there at 495. so we'll watch that one more time. So 495 you see the seller there. We go 22 anytime.

I See a seller like this. Doesn't matter if it's 70 thousand shares, if it's 50,000 if it's thirty thousand, twenty thousand less than twenty thousand I don't usually put as much emphasis on. Certainly, five hundred shares or a thousand is irrelevant, but fifteen thousand and up starts to become more significant. Above a hundred thousand is a huge seller.

so I'll I'll just wait on that. I won't be buying when it goes from a hundred to ninety eight I'll be buying more when it's gone from 100 to 90 80, 70, 60, 50, 40 and then right when it's about at thirty, that's when I would jump in because I want to get in right before it snaps through a level because sometimes they'll start to get eaten up when. which is what we would say. buyers are eating up that block of seller and and then there's not enough buyers and then it falls back down and then you got to wait.

and it comes back up. And the risk there is that you've just bought it at the high, you've bought it a really high level. All right. So let's watch this there we go.

Sixteen, fourteen thirteen, and just like that, rips through five all the way up to five seventeen. That might be a market order, so covering a short position or buying long and just there in a period of moments thanks to reading level 2, you were able to capitalize on that breakout. My approach on these is generally to take profit through the breakout. Sometimes I'll hold the whole thing.

it depends on how much it moves. That was a pretty nice move up to 17. I was in with 6000 shares I wanted to take some profit off the table of course I'd be willing to add back, but it did end up retracing a little bit too much here. Back down below 5, which is not perfect I mean it recovered, but it wasn't picture-perfect Alright so again, those you guys that are watching this, if you have any questions, please leave them right down below in the comment section.

And if you want to learn more about reading Level 2 Risk Management chart, stock selection, and these chart patterns. but first pull back and things like that, make sure you register to my next live webinar. You'll see the link right down there, probably right over there to register right there. Something like that.

Alright, enjoy and I'll see you guys soon! Bye everyone! Hey, it's me again. The most popular video on day training on YouTube was made by me. You can check it out below if you haven't already and as always, if you have questions, leave them in the comments. I Personally respond to every question that's posted on my channel.