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Entry Rules Review for Breaker Pattern Day Trading
Lets Review Our Entry Rules Cheat Sheet:
Breaker
-Be more than 5 ticks away from the big round number (75.00, 1.2000, 56.000)
-Must see a breakout first, above/below the RED LINE
-Swing Low for short trade, swing high for a long trade
-6-ticks from the swing-high/low to the next level of support/resistance
? Uses your trade management as a guide
? Scalper = 4/8/Runner
• 6 ticks = 4 + 2 slippage = 6ticks
? Day Trader (13-range)
• 8/16
• 10-tick rule (8 +2)
o Steep slope to the trigger line
? Avoid trading a breaker pattern when we see a flat trigger line
? You don’t need to worry about the slope on a 2-step pattern
• b/c it’s a trend reversal
• use the trigger line as support/resistance for a 2-step
o Momentum must be pointed down for a short, or up for a long
? Be careful around overbought, or oversold momentum
o Size of the orders (larger the better)
o Speed of the orders coming into the market
? Pace of tape indicator
? Faster the better to confirm your entry.
Exit Rules:
– Green or Yellow POT = use my mechanical trade management
Pink line on Trade Man Chart
– RED Pot I use a discretionary
o Red POT = slow speed
o MACD against my position
? Long = macd below the zero line
? Short = macd above the zero
o Momentum curls against my trade