{"id":49388,"date":"2019-12-11T16:45:16","date_gmt":"2019-12-11T21:45:16","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=49388"},"modified":"2019-12-11T16:45:16","modified_gmt":"2019-12-11T21:45:16","slug":"what-essential-trading-indicator-you-may-need-to-add-to-a-trade-strategy-to-make-it-profitable","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/what-essential-trading-indicator-you-may-need-to-add-to-a-trade-strategy-to-make-it-profitable","title":{"rendered":"What Essential Trading Indicator You May Need to Add to a Trade Strategy (to make it profitable)"},"content":{"rendered":"<p>In this video learn the essential trading indicator you may need to add to a trade strategy to make it profitable. Alan McGrath, veteran Australian equities trader and well-known trading mentor, and Mike Bellafiore team up to teach a developing trader how to make his trade strategy profitable.<br \/>\n<span class=\"collapseomatic \" id=\"id69e9120966800\"  tabindex=\"0\" title=\"&lt;strong&gt;View Video Transcript&lt;\/strong&gt;\"    ><strong>View Video Transcript<\/strong><\/span><div id=\"target-id69e9120966800\" class=\"collapseomatic_content \">in this video learn the essential<br \/>\ntrading indicator that you may need to<br \/>\nadd to a trade strategy to make it<br \/>\nprofitable hi I&#8217;m Mike bellafiore<br \/>\nco-founder of SMB Capital proprietary<br \/>\ntrading firm located in midtown<br \/>\nManhattan and I&#8217;m also the author of the<br \/>\ntrading classic one good trade in the<br \/>\nplaybook<br \/>\nwell in this video alan mcgrath veteran<br \/>\nAustralian equities trader and<br \/>\nwell-known trading mentor and I team to<br \/>\nteach a developing trader how to make<br \/>\nhis trade strategy profitable<br \/>\n[Music]\nthis is a trade that I called a momentum<br \/>\ninside fiber or the mif and I got two<br \/>\nexamples we&#8217;ll see how minute how much<br \/>\ntime we have if I can get to both but<br \/>\nthe first one came with JD comm and this<br \/>\nwas on November 15th of 2019<br \/>\nthere&#8217;s a nice set up that was happening<br \/>\nin JD that day so it&#8217;s a two-year chart<br \/>\nfrom the highs back in January of 2018<br \/>\ndown to the lows over here in late<br \/>\nNovember early December and there was a<br \/>\nbut we were at about a 50% retracement<br \/>\nfrom the highest to the lows at that<br \/>\nparticular point JD had just reported<br \/>\nearnings the day before and we had a key<br \/>\nresistance level here in about 34 68 so<br \/>\nyou can see it coincides with the 50%<br \/>\nretracement as well as where the stock<br \/>\nmoves relatively work and closed the the<br \/>\nprior day<br \/>\nso JD is they operate in an e-commerce<br \/>\ncompany or an e-commerce company and<br \/>\nretail infrastructure service provider<br \/>\nin China with two main segments their<br \/>\nretail business and new businesses<br \/>\nbasically they&#8217;re the Chinese Amazon a<br \/>\nyear earlier they were mired in a CEO<br \/>\nrake scandal but all that looks to him<br \/>\npast and from Steve Spencer&#8217;s pre market<br \/>\ncommentary maybe revenues by five<br \/>\npercent twenty nine percent<br \/>\nyear-over-year growth<br \/>\nnow I&#8217;m gonna freely admit to you Mike<br \/>\nat the outset that I need to get a whole<br \/>\nlot better at being able to read the<br \/>\nnews and and figure out how how to trade<br \/>\nit best like I&#8217;ve seen a lot of the<br \/>\nreviews that you guys that you&#8217;ve done<br \/>\nwith with your junior traders and your<br \/>\nsenior traders and they know so much<br \/>\nmore about what&#8217;s going on fundamentally<br \/>\nand are able to apply it to the trade so<br \/>\nyou know so there&#8217;s a lot of different<br \/>\nways to look at markets and we have a<br \/>\nspecial guest in the room all the way<br \/>\nfrom Australia Alain McGrath who is a<br \/>\nveteran Australian equities trader and<br \/>\nhas mentored tons of traders<br \/>\nsuccessfully there we were just at lunch<br \/>\nand you have a little bit of a different<br \/>\ntake on how you look at markets<br \/>\nterms of looking at news yeah and I knew<br \/>\nyou were gonna throw that one to me<br \/>\nI actually don&#8217;t read the news and I try<br \/>\nto take as much a head in the sand<br \/>\napproach as possible in that I don&#8217;t<br \/>\nwant to have my vision of the price<br \/>\naction impaired in any way by having<br \/>\nsome sort of predisposed opinion of how<br \/>\nthe report reads so yeah I choose to say<br \/>\nvery ignorant to the fundamentals of the<br \/>\nmood from other pipefitting I need to<br \/>\nknow is in the price action yeah so you<br \/>\nknow there&#8217;s many ways to skin a cat and<br \/>\nand I take my hat off to the the people<br \/>\nwho do use fundamental knowledge to to<br \/>\nbase their trades on but I certainly<br \/>\nfind it it&#8217;s it&#8217;s an anchor for me<br \/>\nbecause I make my worst trades when I<br \/>\nhave an opinion and the market has a<br \/>\ndifferent opinions so I like to keep<br \/>\nthem keep a blank canvas as much as I<br \/>\ncan and some of the better guys that<br \/>\nprop X did they all file that they all<br \/>\nfollow that thinking or some of them<br \/>\ndive a little bit deeper into the<br \/>\nfundamentals oh absolutely they do yeah<br \/>\nin our morning meetings as always<br \/>\ntraders that that will be analyzing<br \/>\nwhether a result was a beat how it<br \/>\ncompared to market what was expected<br \/>\nunderlying sector strengths and<br \/>\nweaknesses and so on and I&#8217;ll listen to<br \/>\nthat but I try very hard not to form an<br \/>\nopinion on it<br \/>\nThank You bulk because I actually that<br \/>\nactually makes me feel a little bit<br \/>\nbetter it&#8217;s so in some ways but the<br \/>\nquestion that I was asking then at<br \/>\naround you know the the free market<br \/>\nhours that was at such an important<br \/>\ntechnical resistance level is all the<br \/>\ngood news priced in so basically I was<br \/>\ngonna be going off exactly what you just<br \/>\ndescribed if the price action was gonna<br \/>\ntell me that we were gonna extend higher<br \/>\nthen I would go with that trade or if we<br \/>\nwere gonna start to sell-off then I<br \/>\nwould go with that trade as well so here<br \/>\nare my stock stats my checklist that I<br \/>\nwas going through that particular<br \/>\nmorning I had average volume in JD&#8217;s<br \/>\nabout 11 million which is above a<br \/>\nmillion which is check for me free<br \/>\nmarket volume it&#8217;s about 15 percent of<br \/>\nthe average daily volume I just wanted<br \/>\nit about 10<br \/>\n80 are about point eight six is about<br \/>\npoint five gap of four point two percent<br \/>\nlarger than that by three percent on my<br \/>\nchecklist short float four percent so<br \/>\nI&#8217;m saying here the risk of short<br \/>\ncovering rally is low and institutional<br \/>\nownership forty one point three nine<br \/>\npercent Mike this was something I wanted<br \/>\nto ask you about but I think it&#8217;s gonna<br \/>\ntake too much time I you can certainly<br \/>\ncut me off and tell me to move on that&#8217;s<br \/>\nhow you do a video the other day where<br \/>\nyou had a guy he had over a hundred<br \/>\npercent it&#8217;s to still ownership and you<br \/>\nmentioned that that&#8217;s the risk of<br \/>\ninstitutions being short so they could<br \/>\nbe short covering at some point during<br \/>\nthe day but when it&#8217;s so low like this<br \/>\nwill they what does that would indicate<br \/>\nsome type of support that&#8217;s going to be<br \/>\navailable for the stock or would you<br \/>\nwant it to be in the 90s in it somewhere<br \/>\naround there yes so if the institutional<br \/>\nownership is higher as opposed to lower<br \/>\nthat is going to make a difference<br \/>\npotentially in whether or not a stock<br \/>\nthat sold off a bunch gets supported or<br \/>\nwhether or not a stock that has good<br \/>\nnews to support it or in this case<br \/>\nwhether or not a stock that&#8217;s trying to<br \/>\nreclaim where it was in the past starts<br \/>\nto catch a bid from some some more<br \/>\nbig-money traders in your case when<br \/>\nyou&#8217;re trading something like JD I mean<br \/>\nthe biggest mover of JD recently if you<br \/>\nhad asked me you know what&#8217;s the big<br \/>\npicture for what moves JD recently it<br \/>\nwould be the us-china trade war and<br \/>\nthat&#8217;s it&#8217;s a really good proxy for<br \/>\ntrading the us-china trade war it&#8217;s been<br \/>\nyou know one of the go-to stocks that<br \/>\nyou might want for exposure to China<br \/>\nwhen news is good or news news is bad<br \/>\nlong or short yeah you know certainly<br \/>\none of the one of the better movers so<br \/>\nyeah I mean this is it&#8217;s you know<br \/>\ninstitutional ownership that&#8217;s it&#8217;s a<br \/>\nlittle bit more on the on the lower side<br \/>\nwant to be factoring that into our<br \/>\ndecisions so you have long term<br \/>\ntechnicals identified okay you got your<br \/>\nshort term<br \/>\ntechnicals identified as well okay yeah<br \/>\nand I&#8217;ll just sort of say because they<br \/>\nknow I&#8217;ll get questions about this so we<br \/>\nlike to put variables together to make<br \/>\ntrades we say this quite often which is<br \/>\nthere&#8217;s lots of different ways to trade<br \/>\nand so for us we&#8217;re gonna know what then<br \/>\nwe&#8217;re gonna want to know what the news<br \/>\nis because one of the difference between<br \/>\nthe US and Australia is that we have<br \/>\nmore algorithms one of the differences<br \/>\nbetween the US and Australia is it&#8217;s<br \/>\nharder for us to read the tape these<br \/>\ndays then it used to be and then it<br \/>\nwould be in the Aussie markets but there<br \/>\nare traders that do not want to know the<br \/>\nnews do not read the news would trade<br \/>\npoorer if they knew the news we teach<br \/>\nyou guys at the start to look at the<br \/>\nnews and put that together when you&#8217;re<br \/>\ntrying to make certain trades we are<br \/>\nlooking for things that are going to be<br \/>\na little bit more directional the news<br \/>\ngives us a way to identify some of those<br \/>\nstocks that are gonna be the Jake charts<br \/>\nup really really strong with the Jake<br \/>\ncharts down really really weak if we&#8217;ve<br \/>\ngot really we&#8217;ve got a really really<br \/>\npositive news catalyst it&#8217;s unexpected<br \/>\nthat can bring in a lot of buying we<br \/>\nhave a really really weak news catalyst<br \/>\nthe downside that can bring a lot of<br \/>\nselling and so no right answer to a lot<br \/>\nof the stuff but but I think a good way<br \/>\nto start for you to be developing your<br \/>\nPlayBook there will be one there&#8217;ll be<br \/>\none of you in the in this room who is<br \/>\njust going to be a flat out scalper and<br \/>\nif you&#8217;re gonna just be a flat out<br \/>\nscalper it&#8217;s fine if you don&#8217;t want to<br \/>\nknow all the news if you&#8217;re gonna be a<br \/>\nswing trader if you&#8217;re gonna be some<br \/>\nsort of hybrid swing trader you&#8217;re gonna<br \/>\nwant to put the news into your variables<br \/>\nwell for the most part so this is the<br \/>\nlong term technical analysis I already<br \/>\nshowed a picture of this on the two<br \/>\nprevious slides just identifying the key<br \/>\nsince level of 3468 right now prior<br \/>\nlong-term support oh oh and just the 50%<br \/>\nretracement from the all-time highs to<br \/>\nthe lows from fifty fifty eight sixty<br \/>\neight down to nineteen twenty one<br \/>\nso next slides got the short-term<br \/>\ntechnical so here was the prior 52-week<br \/>\nhigh support which is now resistance in<br \/>\nthe pre-market and 3409 here&#8217;s that<br \/>\nlong-term resistance level that I had<br \/>\nidentified aftermarket high resistance<br \/>\nat about thirty six and then once the<br \/>\nthe institutions start coming in at<br \/>\nabout seven which is what Steve has been<br \/>\nsaying in trader DNA that&#8217;s a pretty<br \/>\ngood resistance around thirty five<br \/>\nthirty nine thirty five fifty area so<br \/>\nthere&#8217;s my short-term technicals so now<br \/>\nthere&#8217;s my general trade management for<br \/>\nthe momentum inside fiber on a risk<br \/>\nbasis my stop is gonna be my daily stop<br \/>\nfor just getting away from my desk is<br \/>\ngonna be able about one percent of my<br \/>\nequity and my single trade risk right<br \/>\nnow I&#8217;m keeping very low at point one<br \/>\npercent of my equity as I continue to go<br \/>\nthrough the DNA for this particular<br \/>\ntrade my focus is just on the first 60<br \/>\nminutes of trade using five minutes<br \/>\nsharp my setup I got criteria one I need<br \/>\nthe first two bars to close in the same<br \/>\nprice direction relative to the V walk<br \/>\nsecond criteria I want the inside bar<br \/>\nand it doesn&#8217;t have to be the second<br \/>\nfive unit borrow the prints it could be<br \/>\nthe fourth five-minute bar the prints<br \/>\njust need an inside bar that&#8217;s going to<br \/>\nbe less than seventy five percent the<br \/>\nsize of it smuggling bar and my trade<br \/>\nentry I&#8217;m going to initiate it upon<br \/>\nbreaking the inside bar in the direction<br \/>\nthat price was moving my stops gonna be<br \/>\nfifty percent the size of the inside bar<br \/>\nright now I&#8217;m shooting for target of for<br \/>\nour and management at this time which<br \/>\nwas about a month ago looking to add I<br \/>\nwasn&#8217;t necessarily at that level yet I<br \/>\njust wanted to get comfortable with this<br \/>\nparticular setup and see how it was<br \/>\ngoing to start working for me and if<br \/>\nstopped out I&#8217;ve looked to re-enter at<br \/>\nthe same level because what I had seen<br \/>\nwhen I was just back testing it it was<br \/>\nonly for about a couple weeks and I was<br \/>\nback testing<br \/>\nat trades like this where if a stop out<br \/>\noccurred re-entering at the exact same<br \/>\nlevel with the exact same stop and the<br \/>\nexact same target actually ended up<br \/>\nproducing some pretty nice results one<br \/>\nof the other things I was going to do is<br \/>\nwhen managing these traders pay close<br \/>\nattention to the flip what I&#8217;m calling<br \/>\nthe flip which is the switch from the<br \/>\nhourly 9:30 bar to the hourly 10:30 bar<br \/>\nand then just in general just to let the<br \/>\ntrade play out Alan and Alan any<br \/>\nthoughts if you want to learn three<br \/>\nreal-world setups that our traders use<br \/>\nincluding the simple setup that we teach<br \/>\nall of our new traders and the setup<br \/>\nthat turned one of our traders into a<br \/>\nseven-figure big money earner check out<br \/>\nthe free webinar that we&#8217;re currently<br \/>\nrunning just go ahead and click the link<br \/>\nthat should be appearing right now at<br \/>\nthe top right hand corner of your screen<br \/>\nthat&#8217;s gonna open up this free<br \/>\nregistration page in the new window so<br \/>\ndon&#8217;t worry you&#8217;re not gonna lose this<br \/>\nvideo you&#8217;re gonna learn more in a<br \/>\ncouple of hours from this trading<br \/>\nworkshop then from years of online<br \/>\neducation not really except for me given<br \/>\nwhere we&#8217;re dealing with a catalyst on<br \/>\nmarket open oh I&#8217;m probably waiting for<br \/>\nthe market to give me the signal to add<br \/>\nrather than a set bar or set pattern to<br \/>\nset up I&#8217;m just waiting for the for a<br \/>\ndiscretionary moment where you know I<br \/>\nfeel where I feel that one sides getting<br \/>\non control in control I might want the<br \/>\nthe confirmation by a break of your your<br \/>\ntwo bars or or whatever your individual<br \/>\nsetup is but I&#8217;m really looking for and<br \/>\nagain it&#8217;s it&#8217;s it&#8217;s different for<br \/>\neveryone but I&#8217;m just really looking for<br \/>\na sign that it&#8217;s the right the right<br \/>\ntime to take that trade I&#8217;m a very<br \/>\ndiscretionary trader though so I can&#8217;t<br \/>\ncomment too much on on you know someone<br \/>\nthat has really solid and I really love<br \/>\nthat I have really solid rules but it&#8217;s<br \/>\ncertainly a different way of looking at<br \/>\nthings than I have and the same as<br \/>\ntargets as well I tend to my target is<br \/>\nis when the markets telling me that<br \/>\nthat the trades getting tired and I<br \/>\nmight start to phase out once that<br \/>\ntrades feeling tired but I wanted to get<br \/>\nto three point eight hour and not take<br \/>\nany off the table because I wanted for<br \/>\nif the markets telling me that&#8217;s enough<br \/>\nso I want to listen I want to have some<br \/>\nguidelines but then I want to be willing<br \/>\nto to amend those guidelines if the<br \/>\nmarkets telling me &#8211; yeah so Alan are<br \/>\nyou talking about getting additional<br \/>\nconfirmation from the overall market or<br \/>\njust from this particular stock that I<br \/>\nwould be focusing on from the from the<br \/>\nparticular stock and probably in this<br \/>\ncase because you&#8217;re dealing with a<br \/>\ncatalyst it involves the China trade<br \/>\ndeal<br \/>\nI&#8217;d be looking what other stocks that<br \/>\nare affected by that deal are doing as<br \/>\nwell yeah thanks thank you so you&#8217;re<br \/>\ngonna look for more confirmation from<br \/>\nthe tape from the level &#8211; from the order<br \/>\nflow yep you&#8217;re gonna want to feel that<br \/>\nthe stock is stronger weak yes from<br \/>\nthough from the level &#8211; from the order<br \/>\nflow a little bit more than the criteria<br \/>\nhere yes but that doesn&#8217;t mean that&#8217;s<br \/>\nright or wrong that&#8217;s just how our tribe<br \/>\nyep<br \/>\nknow exactly what you&#8217;re saying has<br \/>\nactually been playing out for the past<br \/>\nthree weeks as I now I I&#8217;m not a tape<br \/>\nreader at all right now but what I&#8217;m<br \/>\nfinding just by watching the stock trade<br \/>\nis I&#8217;m getting more information by<br \/>\nwatching it then sticking to my you know<br \/>\nset rules that I have in place there<br \/>\nwere two trades today that I could have<br \/>\ntaken off at about a two hour or a two<br \/>\nand a half hour but I didn&#8217;t because I<br \/>\nwas sticking to this for our target and<br \/>\nended up losing on them so thank you<br \/>\nvery much I appreciate that<br \/>\nalright so on to the specific trade<br \/>\nmanagement for this guy initially opened<br \/>\nthe first 5-minute bar here opens below<br \/>\nV WAP as does the second one and it just<br \/>\nso happened that the second one did go<br \/>\ninside of the first one so we also saw<br \/>\nthere indicated to me a potential trend<br \/>\ndown day second bar went in sighs I&#8217;m<br \/>\nsorry<br \/>\ninside the size of it was 32 cents<br \/>\nmother bar was 81 cents so that my trade<br \/>\ncriteria was met and then I shorted at<br \/>\nthe<br \/>\nbreak first inside bar the second<br \/>\n5-minute bar once it got below there<br \/>\nthat&#8217;s when I got in my target was down<br \/>\nhere at $33.99 with my stop up here at<br \/>\n34 84 so as the trade started to play<br \/>\nout I got a nice big candle down on the<br \/>\nfourth 5-minute bar and a little bit<br \/>\nmore extension on the fifth and this<br \/>\nsupport here there was a prior 52 week<br \/>\nhigh at 3409 looked like he was starting<br \/>\nto hold<br \/>\n3406 was low on that one so I&#8217;m starting<br \/>\nto get a bit of a retracement coming<br \/>\nback up here and then there was a<br \/>\nconsolidation these three small 5-minute<br \/>\nbars actually ended up being an inside<br \/>\n15-minute bar and they are below V walk<br \/>\nand I certainly could have added at this<br \/>\npoint but I think as I mix it to you<br \/>\nMike in my email when I initially<br \/>\nemailed you about this I was just<br \/>\nnervous about having a positive example<br \/>\nto show you and also I&#8217;m not I wasn&#8217;t at<br \/>\nthe time good at adding and reading the<br \/>\naction of what was going on but in<br \/>\nhindsight this is what I saw here at<br \/>\nthis point with these three<br \/>\nconsolidation bars because and there was<br \/>\nanother nice breakdown it did put in a<br \/>\nbit of a higher low compared to the 3406<br \/>\nbut it didn&#8217;t put in a higher high which<br \/>\ngave me a little bit of confirmation<br \/>\nthat maybe my target was going to be hit<br \/>\nso then the 3406 support was broken all<br \/>\nright so tell me why you get short so<br \/>\nthree short at 34 67 below long-term<br \/>\nresistance what is the specific reason<br \/>\nwhy you are short the reason why because<br \/>\nit met my trade criteria the price<br \/>\nactually met my trade criteria I go back<br \/>\nto that and explain that to me again<br \/>\nso my trade criteria set up so I wanted<br \/>\nthe first two bars to close in the same<br \/>\ndirection price direction relative to V<br \/>\nwell so the first bar second bar they<br \/>\nboth closed below<br \/>\nD WA and then my second trade criteria<br \/>\nis I wanted an inside bar less than 75%<br \/>\nthe size of the mother bar which is what<br \/>\nI had here with the the second bar $0.32<br \/>\nthe mother bar was 81 cents for this<br \/>\nto actually work what are you gonna need<br \/>\nto add to this criteria trade cannot<br \/>\nwork is presently constructed what do<br \/>\nyou need to add to this you need a<br \/>\nvolume indicator for this Oh what are<br \/>\nyou looking for with regard to volume<br \/>\nwell you want in I mean you want to you<br \/>\nwant increasing volume you want to know<br \/>\ngo back to your trade slide so you want<br \/>\nto know that these two bars that are<br \/>\nclosing in the same direction are<br \/>\nmeaningful and for you to know that<br \/>\nthese bars are meaningful you need to<br \/>\nconfirm that with elevated volume and so<br \/>\nthere&#8217;s lots of different ways you can<br \/>\ncome up with you&#8217;re seeing additional<br \/>\nvolume with these first two bars but<br \/>\nyou&#8217;re gonna need to add that yeah and<br \/>\nso in short what I mean by that is those<br \/>\ntwo bars need to be meaningful and they<br \/>\nonly are meaningful if there is<br \/>\nadditional volume in those two bars as<br \/>\ncompared to other types of moves you<br \/>\ncould just have two bars that are in<br \/>\nthis case red with very very light<br \/>\nvolume and would mean anything right<br \/>\nthat&#8217;s what you&#8217;re trying to say Jake<br \/>\nyes yes we&#8217;re all trying to say that all<br \/>\nright good thank you all right so where<br \/>\nI left off was number seven year where<br \/>\nthe 3406 support was broken came within<br \/>\nthree cents of my target at $33.99 and<br \/>\nso I like I mentioned before it&#8217;s just<br \/>\nwanted to have a positive positive<br \/>\nexample so I actually moved my stop to<br \/>\nthe top of the one-minute bar sweet I<br \/>\nswitched to a one-minute chart on this<br \/>\nand ended up getting stopped out at 34<br \/>\nsixteen roughly for a three-hour game<br \/>\nbut what ended up happening the way much<br \/>\nthe trade ended up playing out was there<br \/>\nwas a nice move below that 3406 that<br \/>\nended up<br \/>\na hammer down here in the bottom and<br \/>\nthat&#8217;s a point where I could have<br \/>\ncovered some right there and then I got<br \/>\nfor number nine here I could have<br \/>\nreentered either on this shooting star<br \/>\nor this shooting star I&#8217;m here and then<br \/>\nas the trade continued to play out as we<br \/>\nwent into the afternoon I&#8217;ve heard you<br \/>\nmentioned before Mike on other other<br \/>\nvideos where you say look for the real<br \/>\nmove well here was the here was the real<br \/>\nmove where we got a nice push down here<br \/>\nin price<br \/>\nnot necessarily in volume but now that<br \/>\nyou guys are mentioning it here&#8217;s a bit<br \/>\nof elevated volume as you got a nice<br \/>\nnice collapsing in price here and this<br \/>\nwould have been a real nice spot to to<br \/>\nclose the entire trade out it&#8217;s the jig<br \/>\nchart and so when we see jake charts<br \/>\nlike that jake charts our directional<br \/>\nclean smooth and you know when we go<br \/>\nback and review these charts we want to<br \/>\ntry and figure out you know why that was<br \/>\nyou know why was it so clean why were<br \/>\nyou so right to be trading this I didn&#8217;t<br \/>\nhear that yet from your presentation and<br \/>\nmaybe you sort of did this you know why<br \/>\ndo you think this trade works so nicely<br \/>\nwell there what&#8217;s the additional<br \/>\ncatalyst coming from the overall market<br \/>\nwhere we had the China News where the<br \/>\ntrade deal was in jeopardy but then the<br \/>\nother thing that I can postulate that at<br \/>\nthis time I don&#8217;t have confirmation<br \/>\nright now but that that the the news<br \/>\nwere for a JD was priced in and it<br \/>\nactually had a good technical level<br \/>\nwe&#8217;re selling could occur you know what<br \/>\nyou can&#8217;t do is walk away from a day<br \/>\nlike this and say well the first two<br \/>\nbars closed negatively therefore the<br \/>\ntrade worked that isn&#8217;t the takeaway<br \/>\nfrom this trade all right a better trade<br \/>\nis we&#8217;ve got a news catalyst we&#8217;ve got a<br \/>\nnegative news catalyst for this<br \/>\nparticular product we&#8217;ve got a<br \/>\nparticular strategy that works well with<br \/>\nelevated volume on this particular trade<br \/>\nand price is confirming<br \/>\nthat this is really working does that<br \/>\nmake sense so the trade is so-so a good<br \/>\ntrade is a news catalyst with to canoe<br \/>\nwith to clear red bars in the same<br \/>\ndirection below view up on elevated<br \/>\nvolume does that make sense yes it does<br \/>\nokay that is that&#8217;s a better trade<br \/>\nthat&#8217;s something for you to study for<br \/>\nyou to for you to measure for you to<br \/>\nback test maybe it work for you maybe it<br \/>\nwon&#8217;t but that is that is a trade worth<br \/>\nstudy over all dinners as I continue to<br \/>\ngo through DNA right now I&#8217;m setting my<br \/>\nrules to be rather concrete so you&#8217;re<br \/>\nsuggesting than to get AI have more<br \/>\ndiscretion you know I like I like you<br \/>\nhaving concrete rules I think that&#8217;s a<br \/>\ngood place to start<br \/>\nI think Alan&#8217;s point is excellent which<br \/>\nis as you get more experienced you&#8217;re<br \/>\ngoing to make a decision as to whether<br \/>\nor not you are more of a field trader or<br \/>\nwhether or not you need to be more of a<br \/>\nsystematic trader and so good to start<br \/>\nwith organization and then be cognizant<br \/>\nof how you want to attack markets there<br \/>\ngonna be some people like shark for<br \/>\ninstance shark is a field trader shark<br \/>\ndoes not want to be a systematic trader<br \/>\nthat takes him away from his particular<br \/>\ncognitive strengths okay Austin would be<br \/>\nmore in the systematic organized thinker<br \/>\ntype of way and so he&#8217;s not gonna be<br \/>\ntotally systematic but he&#8217;s gonna want<br \/>\nmore structure behind his trades where<br \/>\nthat just wouldn&#8217;t work for shark both<br \/>\nof them have excellent success looking<br \/>\nat markets a little bit differently<br \/>\nthere&#8217;s a whole heap of space in-between<br \/>\nthose as well you know and and that&#8217;s<br \/>\nwhere it&#8217;s important to find where you<br \/>\nfit and for me if you go back to your<br \/>\nfive minute chart was it betrayed if<br \/>\nyou&#8217;re in that trade and you&#8217;re looking<br \/>\nfor four reasons to stay in it there&#8217;s a<br \/>\ncouple there and and one almost right at<br \/>\nthe beginning you know when it dumped<br \/>\nand it almost got to you<br \/>\ntarget if that had powered straight back<br \/>\nthrough the vo up and stopped you out<br \/>\nyou were so close to your target and<br \/>\nyou&#8217;re taking them off and it turns into<br \/>\na loser like you said so that&#8217;s that&#8217;s<br \/>\nwhere I&#8217;m questioning my target was<br \/>\nthere which meant I I had a feeling that<br \/>\ncould be a level that&#8217;s bounced it might<br \/>\nbounce from its bounce from just above<br \/>\nthere so should I take some off at least<br \/>\nyour highlighters there it is exactly it<br \/>\nfor me the first point that suggests I<br \/>\nam on the right side of this trade<br \/>\nbecause it failed it to be wipe almost<br \/>\nperfectly so is that a spot in future<br \/>\nthat I can add to this short especially<br \/>\nif I&#8217;ve taken some off near the bottom<br \/>\nis this a point I can add because it&#8217;s a<br \/>\nlittle bit of confirmation with low risk<br \/>\nif if I if I add a little bit as it<br \/>\nfails it to be what I can always cover<br \/>\nthat if it breaks back above it but<br \/>\nthere&#8217;s there&#8217;s one point for me and the<br \/>\nother point is you&#8217;ve got you your two<br \/>\narrows there that your support at 3406<br \/>\nand the next one that makes you higher<br \/>\nlow when it when it bounces at point 8 9<br \/>\non your slide so if you go across as it<br \/>\nas it bounces where that big arrow is at<br \/>\nat dot point 8 &amp; 9 on your you know that<br \/>\nlevel where it bounces to is basically<br \/>\nat where that previous support was so<br \/>\nthe previous support on the 5-minute<br \/>\nthat yellow line that&#8217;s held held a<br \/>\ncouple of times early has now provided<br \/>\nresistance so it&#8217;s another little bit of<br \/>\nconfirmation that you&#8217;re on the right<br \/>\nside of this trade support off previous<br \/>\nsupport office often becomes resistance<br \/>\nit&#8217;s become resistance almost again to<br \/>\nthe dot and there&#8217;s another little bit<br \/>\nof you know you collecting little pieces<br \/>\nof information that tell you you&#8217;re<br \/>\nstill on the right side of that trade<br \/>\none of the things Mike that I really<br \/>\nliked and thank you<br \/>\nthat I&#8217;m gonna incorporate now in my my<br \/>\njournal daily is the question that you<br \/>\njust asked me which is why did this<br \/>\ntrade work that&#8217;s the question I&#8217;ve been<br \/>\nasking myself when I go to do my journal<br \/>\nat the end of the day so that&#8217;s<br \/>\nbrilliant thank you yeah particularly<br \/>\nwhen the stocks are really clean really<br \/>\nclean and strong really clean and weak<br \/>\nthose are trades really really worth<br \/>\nstudying right good<br \/>\nso on my review here watching us and be<br \/>\ntraders go through this exercise online<br \/>\nand and YouTube has been eye-opening<br \/>\nobviously doing it with you guys is even<br \/>\nmore eye-opening and for have Alan here<br \/>\nas well adding additional commentary is<br \/>\nphenomenal<br \/>\nso for me to actually go through this<br \/>\nthe first time has been incredibly<br \/>\nimpactful i&#8217;m unwinding so many bad<br \/>\nhabits that i developed over the years<br \/>\nit&#8217;s given me opportunity to think about<br \/>\nexecuting trains very differently than<br \/>\nin the past taking my focus away from<br \/>\njust quote-unquote making money now or<br \/>\ntrading like BNL which is a huge problem<br \/>\nthat I&#8217;ve had in the past so I got a lot<br \/>\nmore to learn I&#8217;m not even have just<br \/>\nfinished module 5 and DNA and I<br \/>\nanticipate incorporating level 2 data<br \/>\ninto my analysis as I get further into<br \/>\nit about a month ago an additional trade<br \/>\nidea that could have come out of this<br \/>\nwas JD had the potential for a good<br \/>\nsecond date play if that 52-week high<br \/>\nresistance held and it could have moved<br \/>\ndown to 32 and the next day yet next<br \/>\ncouple days it actually did have a nice<br \/>\nmove down past 32 I hadn&#8217;t taken the<br \/>\ntrade but that was a potential that was<br \/>\nthere alright great appreciate you<br \/>\nsharing that with us dr. MTV thank you<br \/>\noh thank you Mike and arrestor you guys<br \/>\nsound everybody appreciated a special<br \/>\nthank-you from smb2 veteran trader and<br \/>\nmentor alan mcgrath for helping us teach<br \/>\nthis developing trader and SMB DNA<br \/>\nstudent now it&#8217;s your turn which<br \/>\neffective trading technique discussed in<br \/>\nthis video are you going to implement<br \/>\ninto your trading are you going to pay<br \/>\nclose attention to volume when designing<br \/>\na trade strategy or are you going to<br \/>\nincorporate reading the tape like Alan<br \/>\nand SMB does with your trading let us<br \/>\nknow by leaving a comment below right<br \/>\nnow<br \/>\n<\/div>\n<p><a href=\"https:\/\/broadcast.smbtraining.com\/smbwebinar1\/?utm_source=Blog\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-48075\" src=\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup.jpg\" alt=\"\" width=\"800\" height=\"380\" srcset=\"\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup.jpg 800w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup-300x143.jpg 300w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup-768x365.jpg 768w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup-610x290.jpg 610w, \/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/03\/smbwebinarsignup-100x48.jpg 100w\" sizes=\"auto, (max-width: 800px) 100vw, 800px\" \/><\/a><\/p>\n<p>* no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this video learn the essential trading indicator you may need to add to a trade strategy to make it profitable. Alan McGrath, veteran Australian equities trader and well-known trading mentor, and Mike Bellafiore team up to teach a developing trader how to make his trade strategy profitable. * no relevant positions<\/p>\n","protected":false},"author":290,"featured_media":49390,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[4189],"tags":[],"class_list":["post-49388","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-free-daily-trading-video","post_format-post-format-video"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Essential Trading Indicator You May Need to Add to a Trade Strategy (to make it profitable) | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/what-essential-trading-indicator-you-may-need-to-add-to-a-trade-strategy-to-make-it-profitable\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Essential Trading Indicator You May Need to Add to a Trade Strategy (to make it profitable) | SMB Training\" \/>\n<meta property=\"og:description\" content=\"In this video learn the essential trading indicator you may need to add to a trade strategy to make it profitable. Alan McGrath, veteran Australian equities trader and well-known trading mentor, and Mike Bellafiore team up to teach a developing trader how to make his trade strategy profitable. * no relevant positions\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smbtraining.com\/blog\/what-essential-trading-indicator-you-may-need-to-add-to-a-trade-strategy-to-make-it-profitable\" \/>\n<meta property=\"og:site_name\" content=\"SMB Training Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/smbcap\/\" \/>\n<meta property=\"article:published_time\" content=\"2019-12-11T21:45:16+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2019\/12\/trading-indicator.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"smbcapital\" \/>\n<meta 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