Hey, what's up guys? So everyone's heard the same by the dip and sell the rib? Well, what does that really mean? I Want to take some time today to show you guys the best ways to actually capitalize on buying those dips and selling those ribs. I'm gonna show you guys a few simple criteria to put you in the best possible position to take advantage of these very simple setups. So let's take a few minutes and I'm going to break down how to buy the dips and sell the ribs. Alright guys, let's go ahead and jump into it here.

today. we're gonna talk about how to properly buy the dips and sell the ribs now. I I Definitely like to deploy this strategy when we have major or very significant technical levels nearby and a stock makes a quick extension into one of those levels. It's going to be extremely important that you only trade or try to buy the dip or sell the rip as you're getting a extreme move into a significant level.

So that's really the the first major criterion that you need to have met before you even consider taking one of these trades. when you're buying the buy the dip or selling the rip. One of the other things that you need to keep in mind on this is that these typically are not going to be your homerun types of traits. so don't be reaching for a homerun type of trade when you're trading these types of setups.

The reason I say that is because if you try to do that typically you're not going to see the results that you would like to see which is which is being profitable. So if you understand and acknowledge the type of setup that you're trading and understand what what is able to be produced from it, then you will likely have a the right expectation as to what the outcome will be And that's important in the types of trades that you're taking. If you have an unrealistic expectation for a for a setup that typically will work, you're typically not going to be able to pull any profit out of it. So if you understand acknowledged that a buy the dip, sell the rip scenario is typically going to be a quick trade, more of a cash flow type of trade, you'll be more successful at trading them.

Alright, so I want to do today guys to show you the the highest probability ways to trade these and what to look for in the price action in order to actually act upon these and and get those proper entry points and profit on those quick turnarounds. Alright, so we're gonna take a look at a stock here. SH Ake A Shake Shack We're going to talk about this how it popped into its 200 moving average. Now obviously a 200-day moving average is going to be a significant level, especially if it's the daily moving average and that's what you see right here.

I Have written some code that will allow me to superimpose my daily moving average on my intraday chart. So what happens here is this: yellow line is gonna be my 200-day SMA my simple moving average If I move over to my 5-minute it superimposes the value. the current value of that on my 5-minute if I move to my fast timeframe my 24-second it superimposes the value of that 200-day there as well. so it never changes.

It always keeps the daily value, and this gives me a great awareness as to where the moving averages are. No matter what time frame I'm on, it doesn't change all right. So what you see there again is the 200-day moving average. and when we see a stock that is near a 200-day moving average and it it has some volatility.

Obviously, this one had because of an earnings report and you know those are points in time that you may be able to take advantage of these types of scenarios again by the dip or sell the rip. And on this trade, you'll see that the stock ran up into it. So this would be a situation where you're going to sell the rip. Now one thing to keep in mind here is that when you do take these trades, the next most specific criteria after the first one of that, it needs to be against a very significant level.

a big support level, big resistance level. In this case, it's the 200-day So we have criteria number one, met criteria number two is the extension away from the V you app. Okay, this is really really important because if this is not met, it's unlikely that the trade will actually have a high probability of working out. So what I do is that I do a quick calculation.

If the stock is more than two percent away or extended from the V lap, then that will qualify the trade as potential for being extended right. So it has to make that vertical move that fast vertical move and has to be extended more than two percent away from view app. So quick calculation tells me that when this started, when this thing started moving, the app was around SiC 952 % is up around 71 or so. 3% comes in around 70 150.

So your well outside the 2% parameter so that criteria is met. Criteria number One, which was the significant level is met. See, it's up against the 200 and obviously criteria number three is going to be the type of price action that you have against that level which we're going to talk about Nath Okay, so criteria number three and and there's two different situations that are will occur in Criteria number three. The most typical one that you'll see is a movement through the level where you'll get sort of a blow off top and it's in this scenario of selling the rip or you'll get kind of the blow through the level that'll get a hard pull back and it may try to reattempt to do that.

and what is occurring here is an order vacuum. All right, all the stops are sitting here that get fired which is in this in this situation is clearing them out because people that who might be short are having their stops somewhere around that to hundreds. You're gonna be a see a big a big push or a big test into that level and it'll quickly pull back. That's exactly what you're seeing right here is this order vacuum.

So all the orders get blown out and it quickly drops hard because there's no there's no there's no market there for it to sell back into. That's why you see this quick drop. So what you want to do is you don't want to try to. You don't want to try to short the stock and that's coming in to that level.

You really want to wait until it gets that blow off movement pushes through and then as it's coming back through is when you start to want to push the sell button and then look for that reversion trade which is going to be back towards the V1. Now another another side note here has to do criteria number two with the extension. The reason you want the extension away from the view app is so you that you have room to trade it back towards me you app for your exit target right? So that means if it's if your way, if you're more than two percent away from the View app, that means you have a two percent window to come right back down. so you don't want to get caught trading tight ranges, you want to give yourself an opportunity for that to pull back in.

And that's why that criteria or part of the reason. Criteria number two is there of having an extension more than two percent away from the View app. Okay, so again, let's run through this again. What happens is is we have a stock that's moving into a significant level.

Criteria Number One Criteria Number Two: How far is extended away from View app? Well, this one's gonna be just about three percent so that is met. And Criteria number Three: What is the price? Action we have? Do we have a blow-off movement and blow off top movement? Yes, Orders get blown out and get that vacuum moved down And that's when you want to start pushing your your key to the short side and your stop goes just outside the Hi, which in this case is gonna be about forty cents or so and then you get that quick reversion back down for another two-and-a-half or three percent and and beyond. This starts to sell all day. but that is how you want to look at selling the Rip.

Now, as I said, there's two scenarios that you'll see when you're coming into the significant levels. and that's the first one is that blow-off movement where you blow out the orders and then you vacuum back down. The second scenario is is you'll get a a run up into the level, You'll get a wick of a candle that touches it, you know, virtually to the penny, or just slightly through it. and then that candle will pull back and that wick will serve as the test and fail.

And that's where you need to get in. Typically that situation only occurs when you have something that's extremely extended and extremely vertical in a very short period of time, which I'll show you example of that in a moment. But I want you to understand the two different scenarios that you'll see because if you try to get in a trade, this type of setup too early, then you will be putting yourself at a quite a bit of risk so you want to wait for the level to be breached, that blow-off to occur, and then the reversion to take place. And that's the point in time where you want to start looking at the short entry stop, goes outside the blow-off sown, and then to revert back to few.

Bob Okay, makes it much easier to see when you're in a faster time frame. I Use a 24-second time frame. Now, you probably are not gonna be able to see this on much longer of a time frame. That's why it's really important to be able to see the price action real time and what is occurring against those levels.

This is essentially the same thing as reading the tape because we're seeing almost a tick by tick chart here as to what the price action is doing. This gives me a very clear indication of what's occurring as we come into a very significant level as we're extended. Okay, so that is going to be the scenario of selling the RIP Okay, where we're coming into a significant level, look for the order blow-off and then we get short. As the as that vacuum of orders comes back down, you can you look for the reversion back to view app and potentially beyond.

Alright, the nice thing about these is typically they have a very defined risk point being that you use the high of the point that push through the level. it's very defined the the. The other part of this is that you know these are gonna be typically quicker trades and again they sometimes will turn into homerun trades but most the time you really want to look for the reversion back to where it came from which again should be at least 2% move. Okay, so that is an example of how to sell the Rip, the criteria to look to set up the trade and then how to enter and where to look to exit once you've been able to get the entry after the test.

Okay, so the next scenario I'm going to show you how to buy the dip. Alright, so let's take a look at that. so take a look at a stock here. AP A particular go daily you got a nice A sending Trendline here, right? A sending support Trendline being respected very well.

This is a stock that made a nice move. to the downside very extended I will take a look at the day that this took place. So let's go ahead and go back to a day where if it's sold off and we'll take a look at the scenario where the dip buying situation comes into play right? So get this to load up and you'll see that this stock took a hard hit on that day and you know there was a definite opportunity to here to buy the dip several times as you came into the level. Okay, so here's that trend line from the daily.

You can see how well-respected that is on both times. Okay, so again, it's important to know how your technicals come into play. This is a trend line all right. This is a well-established trend line which I talked about in one of the other videos that I have made about how to draw the proper and high probability trend lines which I'll link to below in this video as well and this also will come into play with volume Profile Another video I did that will explain the dynamics behind volume and how to read it in order to predict price movement.

So I also link to that below as well. Alright, so let's take a look at this trade so you can see here. Obviously, this stock has made a pretty gigantic move from the time it started to to sell. And you know you could say that the The V web stats somewhere around 22 70s or so by the time this thing started moving.

Well, you know a 10% move would be $2.00 on this right? So essentially 20 seventies is down here. You're starting at 22 70s up here, so you're your 10% which is obviously several times the parameter that we're looking for as a minimum criteria to look to buy the dip on a trade against support. Okay, so number one: Remember, we have a stock that has a significant support level. In this case, since we're buying the dip, all right criteria.

Number two: Have we moved enough? Have we been extended enough in a short period of time? Well, yeah, we're well beyond the 2% We're approaching 10% and Beyond here. So this thing, if it lines up with a big support level, then this gives a really good opportunity to buy the dip. Okay, what you can see here is what happens once you come into a significant level. Now, one thing to pay attention to here.

for those of you that watch the volume profile, check out the rampant volume as you start to as you continue to sell. And once you hit that trendline, look where the volume is. The volume is at the highest point of the day. The highest point of that sell-off As you're coming into the support level, that's going to tell me that it's basically some capitulation taking place here.

You're just selling is at the absolute highest it's been. But we're coming into a trendline and we're not going any lower or coming in to support, not going any lower. Okay, so as you start to analyze this, you'll see that you test the level. And here's scenario number two in the price action I was talking about.

You get that hard test and that wick and then it turns around right away. All right, that's scenario number two. Instead of it pushing through and blowing out all the orders, this is the other side of the coin where you just come in and test that right away and it bounces really quickly. your long and your stop goes just outside the low.

Okay, so that's scenario number two. As to how you'll typically see these situations, you can see what happened again right over here. It did the exact same thing. Are we two percent or more away from view App: Yes.

Do we have a significant support level? Yes. Do we have the price action to tell us as it's gonna balance and respect that level? Yes. All right. So buy, buy, Buy.

and you want to sell in the reversion? Buy, Buy. Buy down here. Sell on the reversion. Okay, it's very straightforward stuff and actually pretty simple when you know what you're looking for.

If you are not familiar with technicals, you're not familiar with volume and you're just trying to buy and sell at random points that could be highs or lows you're gonna find. You're gonna find buying the dip and selling the rip is gonna be very difficult. But what I'm showing you here today are the keys to making this stuff very simple and straightforward and leaving it to only these types of vertical moves that have this this extreme movement to it against significant support or resistance levels If you leave it to those situations, very high probability trading and you know, definitely some good trading opportunities from that. All right.

So let's run through this one more time. Vertical move, Volume is increasing and we have a vertical move. It's moving well beyond our criteria number two, which is more than two percent away from view, app or beyond 10% And then criteria number three: Does it test and show you that the level is valid? Well, this one. Yes, we get that.

That hard bottoming wick. we turn around right away. You're starting to buy this thing. put your stop just outside the low you sell on the reversion back to your V web.

Okay, so a really nice example of the the price action here that you want to look for when buying the dip again. This is scenario number two and the price action as opposed to scenario number one where you're getting the blow off. This one tests it turns around right away. Same thing over here: Hard Move down right into the level that bottom wick.

You turn around right away. Your long stop outside. A low sell on the reversion to view app. Okay, so definitely a pretty good example.

A couple good examples of how you want to look to buy the ribs and sell the dips. Look at this example right here. This just happens to be on the same chart, so let's just take a look at this. If you look at this move, you've obviously got a hard and vertical move.

To the upside is the first criteria met. Do you have a significant level of support resistance? Well, this is going to be our 20-day moving average from the daily chart. So yes, this is significant. Criteria number Two: Are we more than two percent away from V Wow Yes, we're well outside of that.

I Made a vertical move right. So criteria number three: Does the price action show you that there's some sort of resistance? They're hard moving to the level hard. Vacuum down. you get a lower high pivot right here.

Remember I said when the price comes in to the level, you want to look for your entry. This is the entry right here, your your short and then you you cover as you come back to the V web. Ok so again, you can buy these dips and sell these rips all day long if you're looking at the right criteria. If you're not, it's gonna make it very, very difficult.

So follow those simple criteria in order to properly buy the dips and sell the rips and you can watch those profits roll in with this simple approach. So I hope that was helpful for you guys. Any questions or comments, just leaving happy to help clarify anything that you may need and I definitely will be able to answer every comment that's you guys put. So hope this helps and we'll see you on the next one! Hey everyone, thanks for watching the videos! I'll continue to make sure that all of the watch lists as well as the recaps are available to all of you.

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