November 10, 2011
- in Uncategorized by schooloftrade
Double-Tops and Bottoms Day Trading Strategy
Double-tops and Double-bottoms may be the highest percentage ‘price structure’ we use as traders. It doesn’t matter what type of trader; scalper, intraday, position or swing trading, we LOVE it when we see double-tops or double-bottoms because they are so consistently profitable. I have a simple day trading strategy that allows me to identify these patterns and then profit from them with low-risk trades.
The first thing you need to learn is the technical structure of this pattern. The key is to have 2 very distinct highs or lows, and there needs to be time between the 2 highs or lows. Ideally this should look like the letter ‘M’ for a double-top, or a letter ‘W’ for a double-bottom. Notice in the illustration below that these are correct.
The double-bottom tells us that sellers tried twice, and failed twice. This 2nd failure is a big clue, and if price moves higher after the 2nd bottom we know we have the pattern setting up for us. The same is true for the double-top, in that case the buyers failed twice, and if price drops off the highs we know to look for ways to profit from this pattern.
How do you trade using a double-top or double-bottom? We have a very specific strategy that we teach our members (Advanced price structures) which tells us exactly how to use them for profitable trades.
Once you find a double-top or double-bottom our strategy is to use our Fibonacci tool to measure the distance of the 2nd test, and it will give us a projection to where the price is likely to go, and then reverse. My goal is to use this ‘projection’ as either a profit target, or when price gets to the ‘reversal-zone’ we than look to buy or sell depending on the direction. We teach all of our members every day in our live trade room, and any can use this to make some easy profits.
Come see me tomorrow in our live trade room for more lessons on our Double-Top and Double-Bottom trading strategy.
Double-Top Double Bottom Strategy for E-Mini ES Futures
