All right, we've got six Traders here and we're all going to talk to you about how we predict and anticipate false breakouts or flushes. Now sometimes our algo flushes, sometimes they're We don't really always know exactly what triggers them, but we see them in the market. It's nothing new, maybe more prevalent in a bear market right now than a year ago when the market was a bit more bullish. But let's talk and go around the table about some of the things that we see that help us.

uh, stay out of potential flushes and avoid getting caught in those those jackknifes where it pops up and then drops down. So who who wants to start this? Um, who wants to kick it off I can take it off? Go ahead. Yeah, yeah, okay, sure. Um, so the first thing I look at is I look at the daily chart.

All right. daily chart is important if you look at the wake up. If there's going to be a lot of uh, if there's you're like I So I learned this from other Trader SO Trading is like, uh, being a detector, right? So you like being a detective so you just have to find traces to uh to to the answer that you're looking for. All right.

So looking at daily chart, you know, uh, the historical performance of the stock and uh, that's the first thing. So you kind of dialed in on the short, uh, the short time, the shorter time frame. then I look at the pre-market action. So if the pre-market action if there's like a spike up and then and literally there's like a dump.

Right after that, it means like there's a big seller coming up. uh, coming after the stock. so it acts like a signal to me saying that, hey, you might be you might need to be a little cautious and then, uh, second is okay. So right at right at the market open I look at how the stock performs right.

If it just dumps right, it means hey, no one really wants to buy this even though you know it held up pretty well in pre-market But out of the out of the uh, the market open, there's probably a big seller that came out that comes after the stock. Yeah, and then uh, and then there's I Also, look at uh, the level two to see how it kind of plays around some level. um, if it's at a critical level and it's not actually breaking. Instead, like there's more sellers that actually, you know come into uh, that step up, uh to the game then I might be a little cautious, just probably just exit out of my position and uh, once I feel like it's safe I can always come back in right there's you.

just who's on the you just lose, take a paper cut instead of taking like, uh, being smoked. Yeah, and uh, that's pretty much it and then other. Otherwise it really comes down to just the trigger intuition of of how I think the stock will behave. Uh, based on my my observation, Interesting.

Yeah. so and and Henry has his one million dollar badge and so the things that I'm hearing from you are more about um, indicators for the sentiment or behavior of the stock. Is the stock going to be choppy? is it has it already shown something weird and I totally relate to that and and do that too if I see a stock. One of the things if I see it's got a history of really nasty false breakouts.

If I've seen it already, done it, that's done it earlier in the day once or twice. I'm like because I don't know why it's happening, but clearly we're seeing these big flush candles and if a stock is shown it can do that, it can do it again. So I try to be cautious so it is important to learn the personality or sort of you know profile of a stock because it can start to give you some insight into. Okay, for whatever reason there's there's someone dumping some really big share size on this.

Now if it has short sale restriction and you're seeing these flushes of 50 000 shares, well, that's not someone who's going short, that's someone who's unwinding a long position because I'm sure it's that restriction. you can't hit the bid. so then you're thinking oh, who is unwinding a really big long position on this? Where's the stock been in the last few months? Is it what's institutional investors look like? What's the percentage of institutional ownership? You start to put those pieces together. That's the personality profile.

but go ahead. no, No. I Just want to say when it comes to trading, you should have to be a little creative. Yeah, think outside the box right? right? for sure.

And so the thing that um, that that I'm thinking about that I think others will give some insight into is in the moments right before it does a false breakout. What? What are we seeing that gives us the indication that maybe I should jump out. And one of the things you mentioned is some sellers reloading on the level too. And that's one like if I'm buying a stock right under five dollars 395, 493 495 Looking for the break of five? it comes up to 98.

it breaks, goes 99, and then all of a sudden it goes from 8 000 shares on the ass to like 28 000. I'm like okay, someone's selling right here. Let's say it buys through that it goes from 28 to 25 to 22 to 15 10, 9, 8, 7, 6, 5, 4, 3, 2, 1. and I see a lot of green on the tape but it's not going.

It's not going lower than one now. I know there's an iceberg, there's a big seller hitting hiding back there hidden behind that 100 shares and they're just unloading to people buying it at 98. And so when I see something like that I want to get out because you know with these types of stocks with a false breakout, you don't want to be rushing to the exit with everyone else. If you do, you're going to get slippage on your exit.

You want to be able if you can, to have that intuition and that instinct to bail out early. you know it's the first person out the door is going to be the the one who survives exactly I Feel like what I want to add to that is you? Uh, so if you've been in the market long enough? Yeah, Like you know, uh, the effect of your orders on this particular stock, right? Sure, If you send in this this share size into the stock, it should have done this. Yeah, right. So even if it even when I'm watching when I'm reading the lead level two, right when I'm sending in my order like if something? I I don't have to wait until it comes down to one and it doesn't break to identify that here there's an iceberg.

Ice Break water. uh, sitting on the ask? Sure like instantly I can be like sending an order and this thing feels a little weird to me. Like yes, I get that insane alert saying that hey, there might be a hidden order like a hidden seller on the ass, right? Like, let me just let me just take it easy and I'll step back and then see what the stock wants to do right? Maybe I'm wrong. The SEC and I I have that too.

So sometimes as soon as you get in, if you see 20 000 shares on the ask or even you don't see you see only 100 shares on the ask. But you do a 20 000 share order, you're gonna expect you're probably gonna get four or five cents. A slippage. If you get no slippage and you fill the whole thing right there, then you realize, wait a second.

I just bought from a hidden seller. So in that moment I sometimes hesitate to just bail right out because I of course I don't know how big the seller is and maybe it'll break. but I often feel that the instinct to exit is the right one because there's a wall there and I just don't know how big it is. so then you know I Guess the question is, how strong is the setup? How strong is the stock? Otherwise, does that is that override the fact that there is a seller here? I Don't know because other Traders will notice though.

other Traders will start to see that hidden seller and then that's kind of like you know the there's now now you've got some smoke in the building. but uh, you've also realized that like three of the doors are like nailed shut. It's like wait a second. Hey do you guys see what I see here because something's not looking right? because then all of a sudden you've got the sell side and everyone buying is buying from that seller.

And then if there's no bid support when all those people turn around and sell, you're gonna get that flush. So when you have those hidden sellers, that's that's a really important one. And you really cannot see hidden sellers without using level two. Which is why I do feel level two is important in trading.

Um I Suppose if you really have a great entry off of support purely based on the chart, maybe you wouldn't need to worry about a hidden seller at that spot as much. but that's just not how I trade. Or interesting enough is you Sometimes if you look at the uh, the resistant level on the chart, you can identify where you can. kind of like guess where the hidden cell will be right, at a particular where a particular critical point.

Um, on the chart. right? That's where most likely this the hidden seller will you know, stack their order there to make sure that it doesn't pass this point right? right? Absolutely No. I Mean, and you know what hidden buyers do the same thing, they'll put a huge buy order at V web. Yeah, because that's a that's a psychological support level if they can hold that level with people Well, whether or not they can really hold that level with just one order.

But if they can at least put out bid support and be a buyer at that level, maybe they'll get some shares to that level, which is a good spot to be in. Maybe it breaks and they have to cut it, but if not, then they're in there right at support. So yeah, and in verse with shorting off of like a critical daily pivot something like that I have uh, something throughout? Yeah, um please. Marcelo Marcelia Specifically about you What You were saying that there's some short sellers or or people taking profit that you know mindfully put orders in those critical levels.

But I've also noticed another way to identify false breakouts by use utilizing the level two is depending how strong a breakout is when you get to a breakout level. Yeah, let's say you know, Let's say how your day is five dollars and then we go to five dollars and we only Break by two cents. That's a clear indicator that that's just going to immediately be a bull trap trap. Some you know newbie.

Traders are jumping way too late for the breakout on the other side of the breakout and then you know it's slamming back down all the way down to to law of day. Let's say because at the at the end of the day What? I like to think is what is the other side? What is the trade on the other side, Really thinking what is the emotions on the other, what is happening on the other side of the trader? Usually the other side of my trade is a short seller and if I'm thinking that a short sale is going to be short off of high up day they're probably gonna have their their stop loss at high of day. The stop loss is that they have to cover and cause the position. That means buying right? Yep, so whenever we have a strong breakout, they are very close to stopping out.

So the price actions we see at that level really is going to determine whether they still stop out and cover or if they just hold the position because they know that it's going to reverse off of that level and even add to that level depending how strong or weak the the breakout is. So for example, if we break five by 10 cents 15 cents immediately if I was a short seller, I would merely be covering my position because that is too strong of a breakout and I would have fear. You know, getting caught up getting caught on a huge push yeah, that's Along by Australia I see that weakness on the level two and I would probably add for for you know for another leg for another push for to 550 or something like that. Totally, that's an error.

One scenario two is we break by two cents we attempt to fold five. sure, cells haven't covered, they're just watching on the price action and he's like is this gonna be a false breakout? is he not and then he starts to reverse. Then they don't cover. There's no buying balling up top and all we see is more selling.

and then you get that immediate. That immediate. You know, immediate flush right? Reverse of bird trap. Yep, beginner Traders Bail out Panic Sell sure things.

let's get more aggressive and then they add to it Exactly Now you've got the rejection off of a critical level which can often on a momentum stock that can be high a day, right? So that rejection? then it's not just because you would think oh well, they'll just cover when it drops down, but inversely they could just add more. Exactly keep their stop at the top and now you're good unless it comes back up and breaks through that high right? And then you have a second attempt at that level which we saw in one of them today. and then yeah because I thought most of you guys here in the chat room or or taking a look at this video are probably long biased Traders You get thinking as the other way around you along the dip and your stop loss is going to be somewhere at support. If you see a stock come down you have two choices.

either add against my support or if I see or if I clearly see that this level doesn't hold I bail out. When you bail out you sell. You probably could create a flush because a lot of people is going to be are going to be selling with you stopping out and all that. But if you see that the level just comes back down does a little bit of a double double bottom.

that's even a better opportunity for you to add to your position against support and then right the way back up. Exact same thing is happening is happening on the on the opposite side when we are. you know trying to go along against high of Day short sales are in in that stock hoping for a double top? we do. If we do the get the double top that you're gonna, they're just gonna get even more aggressive Palling more short and then you know, create that huge flush of a you know of a horse breakout or something like that.

Yeah, so you know, Always thinking about the psychology and where's the head of of this of the person on the other side of the trade always helps. Yeah I like that. I can add a little bit. Sure when I think of those big nasty whip false breakouts like that's what I'm thinking right now I think of them in like three primary areas like we have like pre-market right at 9 30 when the bell rings and then after the market at Market opens.

so pre-market From my experience, what I've usually seen is stocks that I'm interested in that look Prime for a huge breakout maybe like skipping dollars a share, but volume is very very very light. There are three things that two things I like to look for in each instance. um, multi-time Frame Alignment and the volume. So say for example, pre-market you see a breakout and the volume is very light.

If you do not see more volume coming in at the breakout, odds are it's going to be a false breakout and you're going to see a bid drop and you're going to see the stock come right back down to your potential entry price or lower. So I always make to like to make sure I see volume coming in, especially pre-market at the bell at 9 30 You know that we're always. We're always prone to seeing those big whips. Um, you know, 9 30, 9, 31 a.m And for those types of um, those types of whips I like to manage them by just taking a very very quick profit.

So if you're anticipating a level of like maybe three dollars and fifty cents breaking um for a gap and go trade, let the let the stock move up a little bit and trim most of it off and leave just a little bit left. So that way if it does continue to keep going, you have a little bit of your skin left in the game. If it flushes, maybe you get out on the flush, but you're already got some profit and you can even get outbreak. Even the big one for me is when you're trading after the Market opens and we see you know we see them Time and Time and Again those big flush whips.

Um, but I always Resort Back to looking at multi-time Frame Alignment and the volume. So if we've had a nice Gap and go trade and you're looking primed for another breakout or another leg up, if the stock really is extended, just know you are more likely at for false breakout. And that's not to say that the stock can't continue. but again, with volume, if you see the volume coming in, then it's more likely to take that second leg up.

So even when you're in those tight little consolidations, if you see like a declining volume profile, especially on the five minute chart, you're more likely to see like a pop and a fade. If you see like a slight ramp up of volume during the consolidation, then you're more likely to have at least a more resolved breakout. So I always look for multi-time Frame Alignment and the volume profile and those are two kind of you know rules of thumb that I use. but of course it always depends on everything else.

Whether there's a hidden seller right at that level, you're already in the trade. Sure, you know there's all of those factors. but like big level picture. Yeah, if you anticipate getting into a trade, at least look at those two factors.

Yeah, yeah, very good. Yeah I Agree with that. Um, generally what I've noticed is that we'll have uh, when we're gonna have a false breakout, we'll first have a nice move up and then we'll have a pullback and then we're looking for either first candle to make a new high which oftentimes will pop up on medium green volume bigger than the previous red candles and then what either happens is we see this flush back down where it ends up closing as a high volume red candle which then the the pattern's broken or it resolves and go back goes back to the high. If it's going to resolve and go back to the high, it will almost always have higher volume than the first green candle of that move because more Traders have seen the opportunity and are buying that pullback and any short sellers who shorted on the way up are cover because it's like okay, this thing is strong, it's going higher so the false breakouts tend to be when when you have lighter volume and so I look at the volume of that candle pretty closely.

That's definitely one. Uh, looking at the hidden looking for hidden sellers is another one and I feel like recently I don't know I've seen some stocks where they just start to have this feeling of getting really crowded right before the breakout spot where where in the past sometimes that was like a coiling pattern where they would coil up and support was coming closer and closer and closer and then it would just start to like pull away and that's almost like an obvious spot to be a buyer too. Yeah it is. And I think that I don't know if it's like a liquidity trap or some type of Market maker Algo where we see that we see it break and then what we'll often see is this big dump of order of share sell so it breaks and then it dumps and either there's enough retail Traders out there that are gonna bid it up so when it dumps they're they're absorbing those that cell and then it goes higher or it jackknifes so it pops up and then it reverses and then of course if it if it reverses then that usually marks the high right there.

and now you've got this chart where you have a high volume Red Camel. it's reversal. So I've been a little bit more cautious on high volume consolidation, especially when it's been on a one minute time frame because that that for me is seen more recently. It's almost so obvious that it's like that's where the the Algo trap is.

they just are setting this trap for Traders to fall into I don't know I mean it just you know I I don't I'm not on the other side of the you know of that trade to know how market makers or different institutions operate with their high frequency trading algorithms and things like that. But and I think that's what you just said speaks well to what Henry just said is as well, like knowing the personality of the stock. So if it did it once, it's more likely than not going to do it again. But also, if we're in a time in the market where these patterns just aren't resolving the way we a lawn buyers Trader would want them to maybe be a little more cautious around those breakout points.

Yeah, yeah, yeah, well, that and that's something that we talked about at one of the at the last uh trading Summit that I hosted. Manoli was talking a lot about the theme, right? What's the theme right now you know. And and we had the theme earlier this year of recent reverse splits and then we had the theme of recent IPOs. Then we had the theme of Chinese IPOs which was like the first two on steroids and so you know, but previously we've had.

in. thinking back, we had themes of anything related to Covid-19 during an Ebola outbreak in 2014 or when he was 15. We had anything related to biohazard suits during the shooting in Ferguson and I don't remember what year that was. There was a digital Ally and taser.

the for the body cameras. That was a theme that security, oil industry and then there's energy. We had the Big Energy theme earlier this year. So and sometimes the theme is uh, sector.

Sometimes it's price, sometimes. um, it's It's like a technical setup like a SPAC or a reverse split. Uh, then we had meme stocks. The meme theme.

so I think it's important to keep an eye on that and I don't know to what extent you know an Algo responds to stocks that are sort of in the theme if they risk off and just kind of let those stocks go crazy and don't try to do stuff. or if those stocks just go crazy because they're the theme and Retail Traders are just swarming them and are getting so excited that they just overpower it and it just goes crazy. It's one of these things that's always hard to know. is it this or is it that? but uh.

but but when you're lacking a theme when you're in between themes, uh, or when a theme is sort of fading, that can be a time where you start to have traps as Traders got comfortable thinking this thing was going to keep working. like recent reverse splits or something like that. and what we've seen on those recent reverse splits as they pop up and they come right back down. and you know it's the obviously there's so many complexities of the market in terms of Market participants including you know Algos that we don't fully understand so and even the people that understand it that understand theirs the very best don't understand necessarily exactly how the competition is running the ones that they have.

So I mean it is very complex and really all we can do is try to draw insights. Like you said, be a detective. What are the insights that we can draw from the price? action? This stock. What's its Behavior been like so far today.

What's the theme of the market? Uh, you know. Is it showing that it's trustworthy? If it isn't going to trade aggressively When it's not, that's when I say I probably won't trade this stock at all because I can't manage my risk when a stock has shown me and we had one uh, earlier this week. or maybe it was last week where it went from I bought it at 497 for the break of five I was there was already 180 000 share seller at 508 and it did get bought up I was like good it broke. it goes to 5 15 I was like okay I'm gonna take my profit and then it dropped to 445 and was pinned at the halt down someone.

it looked like someone Market ordered a 200 000 share order and just blew through the tape and everything was red and just what swept the book and after that I was just like you know what? I already wasn't sure about this because of that big seller I thought that was odd. Now I'm certain that I don't want to touch this again and you know it did end up going higher. but I just felt like I couldn't touch it and I can't manage my risk when a stock is showing me has the potential to flush 75 cents a share because where where's the safe entry? I mean maybe really really at support but even that broke support so you know I I so I don't know. Do you anyone else want to share some tips on avoiding false breakouts? You got one or Nick yeah actually Timmy go first.

um I mean I agree with pretty much everything everyone else has said. The only one I would add is which maybe doesn't come up quite as much with just a lot of the stocks not really making sustained moves over a long period of time, but I just used to always see it was like that fourth tap that we would get the big false breakouts and I'm just like yeah, you see it, It's like oh, it's not going, it's not going, it's not going enough Towers one breaks for two cents like Marcelo was saying. that's a huge drop and it's just like you know I got caught in a false breakout literally today and and it was came back down and you end up stopping out. You know, pretty much right at the low and that ends up being support and it's just how it is right now.

you know it double bottomed right at that low and then came up and the third. The third attempt is when it actually went through that level. so you know that's something that I got to pay attention to. Same with what Henry was saying with the overall stock and other stocks like we had earlier this week with Ensc, you know, just false breakout pretty much full circle and once you see that pre-market it doesn't really make you feel very good about the next thing that pops up.

So in the past, the that tap, tap, tap, and then break I mean that used to be like a classic flat top breakout pattern ascending, support. We would tap, tap, tap, and break and I used to think of it as like we're there's, there's clearly a seller, some resistance there. Maybe it's a daily level or whatever it is, so we're kind of like eating into that Cellar boom boom boom And then when we break, it's like okay, we're off and now I Really just see that as being inherently weak that we have that resistance there. and we tap it once.

We can't break it. That's not great. A second time, still can't break it. Wow.

It's a lot of resistance. A third time. Wow. This thing is hard to break.

A fourth time, we break by two cents. Uh oh, that's all. Another seller's lined up there three cents higher. Everyone that accumulated for that breakout.

there's just like I'm done I'm done. And then that's when you get the combination simultaneously of short saying the fact that it only broke out by two cents. Back to what Marcel was saying. that's the confirmation to hit this thing short and Longs bail at the same time.

Now you have double side. So uh I hope this has been helpful for you guys in identifying some false breakouts. Nick did you have anything you wanted to add on this? It depends on how long you want to talk about it. Well, um, uh, sure.

two minutes. Um, this subject is is I Think What you'll notice about everyone here is that they have a direct connection with the information generated by the market and they're not kind of filtering anything through someone else's viewpoint and that's how they're able to see what's going on. Um, so like Henry's for example, isn't thinking like so much of like what Ross is thinking as much as he's thinking what the chart is doing. Um, and I'm thinking the same way.

um I would say study, study, the take the worst situations that you find in the market, screenshot them and look what's before him. like kind of just like scroll back look what happens to set that up and to make it vulnerable and prone because they don't just happen out of nowhere. I'll tell you that much. um I look at charts and stuff every day like this.

Yeah and there are some very very clear things that happen over and over and over again and it'll depend on like your indicators that you use your EMAs or your smas or whatever um and the time frame that you're on. But there are very clear indicators and you kind of have to find those for yourself on the charts that you're looking at um and like it's It's a very personalized thing because everyone has a different way that they look at the market so you really have to go and check that out for yourself. but there are patterns and there are trend lines almost like um I'll give you one that like is is too complex for me to use but if you if you draw you can almost draw webs and Trends from like different points at candles and like there's a reaction at every point in when it touches that. um and you'll see that and the only thing that's complex enough to do that is a computer which market makers and I have a theory that they're just like placing orders out at these at these different points and these every every different Trend area that you can draw and so like I'll draw it out on my charts and it's just like a web of like these yeah these Chopsticks basically but there's reactions at every Point yeah I've done I've done the exact same thing drawing connecting two Candlestick tops earlier in the day.

Yeah, and that's the thing that's crazy. Sometimes someone will be like hey, look and they're like I got dip trade at like 443 and you're like where did you get that and they had like two trend lines, two candles connected from like free market and then like way later in the day of spring. How did you like Sometimes those are the most powerful too I mean because they're just so obscure, but you know it's yeah in terms of where there's orders sitting on the book, those pivots are especially. Is it I think are especially powerful? Yeah, you know, so recent kind of extremes of the moves.

Yeah and so that's where we end up. seeing those orders sort of on the book is like proc and then when you have that flush it's like you then look back and you're like whoa, Okay, that was a double bottom when it just happened to be on this one and maybe they had an order a little higher, another candle wick and that one got taken out. but then the one a little further down was big enough that that that helped. Hey I think I think I've also noticed too that in order for a stock to go higher, yeah, probably about 80 89 of the time it has to break below the range.

First, it has to do the break below the range. It's like almost like it's checking. Like the market makers or whoever shorts It's really strong? Yeah, Is this is this going to be able to go down? Or is this like, is anyone going to start selling into this and get shaken out right? And if not, and if it just starts like curling back up again, that's when it's like the green light for like, market makers to move out of the way. Yeah, Um, and they're like, well, we can't We can't hedge our risk against this right now because it's like it's probably pretty strong if you don't want to sell out.

Everyone's got a strong hand. Yeah, so that there's little things like that, you gotta really, really pay attention and study and have a lot of time. And knowing the level two is very important. Um, yeah.

I think when I think when you get into trying to take long-term positions, that's when all of that starts to become more and more relevant. Because you're trying not to get chopped out, you're trying to hold for a bit removed. It's like there's what Is this real? Is this move real? So like whether it's down against you or up in your favor. Is this a real move, right? Like like what and what indicators can you use to to tell you if that's a real move? Yeah, you got to find that for yourself.

Everyone uses something different. Yeah, I use a 20 SMA just because it doesn't move as much when I'm reviewing and I can look back and it's more stable where EMA will adjust each candle in anticipation or like in reaction and it'll move and it won't be the same before the trade. It's after the trade, right? right? You have to look or something that works so you can review it. Yeah, and the thing with technical indicators is that you have to use them consistently.

So right? right? You know if you have a technical indicator but you only use it, you know 10 of the time, whatever percentage of time it's working it, you're missing a lot. So I I try. You know One of the things that I try to do is I try to focus on things like the volume profile which is just to look at the actual volume the Candlestick patterns I try to keep it fairly straightforward with that and you know of course we've got volume, weighted average price, and our moving averages. There are some Traders out there that get you know pretty deep into the complexities of different indicators.

You know what if you're that Trader and it works for you then then stick with it at times I will add another indicator when I'm feeling like I need like a little extra confirmation of like kind of this is a red light. Don't trade. This one's in this range, but when I'm in a strong market and I'm really like in the sort of Flow State I'm not using those I'm just the volume, the volume will negate a lot. Yeah, and that's the thing the volume will.

and so when you've got those high volume bars, this is going to new highs. that's going to be I mean that's the biggest sign of conviction for me at this point. even if that volume is generated by market maker. Algos The fact is I feel like you don't have to worry about that as much because they're So when you think about the role of a market maker, they're sitting both on the bid and they ask.

They're making the market and they get compensated by the spread. So a good Market maker will buy and sell the same number of shares each day and profit from the spread all day long. So and they can think about, think about their motivation and and what makes them money. it's the amount of Trades taken in a day.

Yeah, so they're more likely to keep it range bound and keep sellers trying to sell into it and buyers trying to buy into it. Sure, and and this will keep a action going all day whereas something just going straight up right? That's that's 100 true. But they also have to be careful because they got a hedge it right? They've got a hedge it. So if they put a big cell on the ask and a big wall of 180 000 shares for instance, and that just gets bought up in a snap.

now, they could be imbalanced in their risk and they could be effectively short, right? You know, a hundred thousand shares or whatever it is, then it starts skipping up. Five Points Ten points. They could be down a million dollars on that trade. which obviously shows why these market makers are going to use incredibly sophisticated Algos to help them manage their risk, but at the same time that that can create.

um, as we've seen just this sometimes. uh, choppiness in the charts as you're seeing these sort of like almost almost like little like bait and switch like attempts to stop people out the flush to see if it stops people out. Yeah, the pop to see if it stops people out. I I Play these really low volume stuff a lot.

Um, and that's probably why I Don't mention a bunch, but it's like stuff where like there's almost no volume going through and I can actually see orders one by one going through the level two of like size and stuff and I have a filter on it. So I don't see like one share orders or anything like that. Yeah, and it's like every time I hit, hit the ask and buy orders off the ass immediately like the market maker pulls pulls the bid. Yeah, just to test me to see if it's like if I'm for real and so like I just go in expecting to be like down 10 cents like almost immediately.

Um, pretty much no matter what's like, that's the programming of that that that's the programming of the album because they have to make money like like and their money is when someone buys all the ass and sells on the bid. And if they can get a better price by scaring you out I mean I would do it Yeah, uh yeah right. I'm sure I'd take it, but it's pretty complex and you probably should pay attention to it like there's a lot to understand and a lot to. especially if you're trading on a shorter time frame.

Where a lot of this stuff comes into play on the longer time frames, it won't. So I I think for um, for folks tuning in it, it could be easy to feel a little, uh, overwhelmed with the complexity, the intricacies of the market. But but I think they I think they should be right? Like you should be aware that there's so much to know. Yeah yeah, like yeah.

and then like, piece by piece, you got to work through and see how how to apply it into your day-to-day trade. Yeah, and I think that um, you know one of the things that is important is being able to have a good sense of the right type of stocks to trade because in any given day, there'll be some stocks that you'll find trade much more cleanly more predictably, and others that are much, much choppier. So now you've got to figure out how do I filter out the stocks that have a higher likelihood of giving these false breakouts of being choppy and I should avoid them and focus in on the ones that have the higher level being you know, more predictable and so you know. I Of course, use my scanners that I've developed for searching for the right stocks to trade.

Even when I have my scanners, they'll give me a list of 10 stocks I then have to manually look through them and try to gauge the profile of that stock and the behavior and personality of it. and the ones that I see have done false breakouts I'll say nope I'm not going to trade that one anymore, that one's off the list. another one that I might not think is going to be clean ends up having great price action and so I focus in on that. So at the end of the day, um, you know it's it's super super helpful to tune into these episodes, But what's even probably more helpful is in real time being able to be part of a community and listen to traders who are watching all this stuff happen.

Because it's it's a lot that's going on in real time. And of course, there's a lot of people out there that I'm sure have traded with some degree of success without having to go as deep as we've just gone right now. But I think in more difficult markets eventually, everyone's gonna have to start looking a little more closely at how to identify false breakouts, how to avoid them because they create unnecessarily large losses which reduces your profit to loss ratio. It reduces your accuracy and all that can reduce your confidence.

All right. So thanks for tuning in this episode and we'll be back at it for the next one real soon. Hey I want to thank you for watching this episode I Hope you really enjoyed it. This channel has crossed over 1 million subscribers as thanks to viewers like you.

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