High Probability Breakouts
presented by
Thomas Wood | MicroQuantSM
Divergence Trading Workshop Day One Bond Trading Success
Risk Disclaimer Trading or investing carries a high level of risk, and is not suitable for all persons. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. This content is subject to change at any time without notice, and is provided for the sole purpose of education and assistance in making independent investment decisions. ValueCharts.com has taken reasonable measures to ensure the accuracy of the information contained herein; however, ValueCharts.com does not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or from an inability to access such information or any delay in or failure of the transmission or the receipt of any instruction or notification in connection therewith. Any past performance results are shown for illustration and example only, are hypothetical and as such have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Past performance is not necessarily indicative of future results.
CFTC Rule 4.41 (Hypothetical Disclaimer) U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OROVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN.
How to Listen to This Workshop
Listen as if you are going to need to teach this to someone else when it is over.
Introduction to the Bond Market
Introduction to the Bond Market
• The global bond market has tripled in size over the past 15 years and now exceeds $100 trillion. This makes it larger than the global stock market. • Trading volume in bonds is also larger than that of the stock market with an average of $700 billion traded daily.
Introduction to the Bond Market
• Although bonds are typically viewed as a “safer” investment, prices can be quite volatile and can give great day and swing trading opportunities. • The main bond markets that I follow are the 30 year and 10 year treasury bond futures and the iShs 20+ Year Treasury Bond ETF. (TLT)
Introduction to the Bond Market
• The 30 year bond futures move in 1/32 increments, and are $1000.00/point $31.25/tick. • The 10 year note moves in 1/64 increments (so 133’03.5/32) and is also $1000.00/point but only ~$15/tick.
Introduction to the Bond Market
• All of the bond markets we trade are fairly good trending markets, both intraday and end of day for day trading and swing trading. They are also great for using multi-timeframe analysis to time entries into larger moves with minimal risk.
Identifying High Probability Breakouts
High Probability Breakouts
The first thing you need to learn in order to become proficient in identifying breakouts, is what is considered “good” support or resistance levels. When drawing support, resistance, and trendlines, you want to always be looking at pivot points. The more well defined the pivot is, the better the support/resistance is going to be.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Before we talk about the highest probability breakouts, we need to first revisit the definition of a trend: Higher High + Higher Low = Up Trend
Lower High + Lower Low = Down Trend Anything else is consolidation or reversal
High Probability Breakouts
Remember, immediately after a trend changes there are two things we look for: 1. Line in the sand (trendline across highs/lows) 2. Previous Support/Resistance (for breakout)
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• The highest probability breakouts are going to be in the direction of the underlying trend. Many times they will occur immediately after a false reversal, or after a breakout that runs into a sideways channel shortly after the initial move.
High Probability Breakouts
• You can increase probabilities by waiting for a close above/below the trendline before you enter the position. • Stops are placed below/above the previous bars high or low.
High Probability Breakouts
• It is also important to remember that once support has been broken, it then becomes resistance for 1 test, called a “last kiss.” • Once resistance is broken, it then becomes support for one “last kiss” trade as well.
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• Another great breakout pattern for bonds is head and shoulders and inverted head and shoulders patterns. • Ideally we will have the top/bottom of both the left and right shoulder at roughly the same height. We also want to see the neckline on both sides of the pattern at almost equal price levels.
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• A breakout in the direction of a trend + a last kiss + a bull/bear flag, will be your highest probability breakout trade. • These do not happen all the time, but when they do, they are a great opportunity.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action. • Histograms on a bull flag must remain green and histograms on a bear flag must remain red.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
Trading Correlated Market Analysis
• Bonds also have several positive and negative correlations with other markets that we can reference in order to increase our probabilities of success.
Trading Correlated Market Analysis
• They are Positively correlated to one another, 30 year and 10 year and TLT will all move together. • They are Negatively correlated to the stock market, and here recently, to crude oil.
Trading Correlated Market Analysis
• They are also considered a “risk off” market. Meaning, when the stock market picks up volatility and or starts to sell off, many traders will move assets into the bond and gold markets. So when the market starts tanking, watch for bonds (and gold) to start to climb.
Trading Correlated Market Analysis
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Quiz on Breakout and Trend Setups!
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Questions on Identifying High Probability Breakouts?
Multi-Timeframe Setups: Maximizing Reward Risk Ratio
Multi-Timeframe Analysis
• No matter what timeframe we are analyzing, you use the same setups and trade them the “same way” as you would any other timeframe. • If you find a setup appearing on several timeframes at the same time, this is going to give you a much higher probability of success with your trade.
Multi-Timeframe Analysis
• Additionally, make sure you always pay attention to what the longer timeframes are doing. If you have a longer timeframe setup occurring at the same time as your intraday setup, instead of going for a 10 tick gain (~$300/contract) start looking to allow that trade to move much further. This is the best way to increase your long-term reward risk ratio, every once in a while you will get a good trade that can run for 10-15/1 reward risk.
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Questions on MultiTimeframe Analysis
BONUS: Scalping Bonds for Quick Profits
Scalping Bonds for Quick Profits
• 30 Year and 10 Year Notes offer great scalping opportunities if you play your cards right. • When we are scalping we are typically going for 1-3 ticks of profits very quickly.
Scalping Bonds for Quick Profits
• Unlike other trading strategies, when we are scalping, we are normally going for a 1/1 reward/risk ratio or even slightly less. So the way we make money is by being correct the majority of the time.
Scalping Bonds for Quick Profits
• This scalping strategy follows the MQ Momentum histograms as they change from bullish to bearish. • The strategy lags by one price bar, so you need to wait for the histogram to close red or close green before placing your order. You are entering on the 2nd histogram bar.
Scalping Bonds for Quick Profits
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
5 Min Chart 4 Tick Risk 2 Tick Target
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
5 Min Chart 4 Tick Risk 2 Tick Target
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
Questions on Scalping Bonds
Naked Trading Mentorship
• Two Week Intensive Naked Trading Mentorship Price: $1,500.00 When: August 1-12
Thomas Wood | MicroQuantSM
Divergence Trading Workshop Day One Bond Trading Success
Risk Disclaimer Trading or investing carries a high level of risk, and is not suitable for all persons. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. This content is subject to change at any time without notice, and is provided for the sole purpose of education and assistance in making independent investment decisions. ValueCharts.com has taken reasonable measures to ensure the accuracy of the information contained herein; however, ValueCharts.com does not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or from an inability to access such information or any delay in or failure of the transmission or the receipt of any instruction or notification in connection therewith. Any past performance results are shown for illustration and example only, are hypothetical and as such have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Past performance is not necessarily indicative of future results.
CFTC Rule 4.41 (Hypothetical Disclaimer) U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OROVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL, OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED WITHIN THIS SITE, SUPPORT AND TEXTS. OUR COURSE(S), PRODUCTS AND SERVICES SHOULD BE USED AS LEARNING AIDS ONLY AND SHOULD NOT BE USED TO INVEST REAL MONEY. IF YOU DECIDE TO INVEST REAL MONEY, ALL TRADING DECISIONS SHOULD BE YOUR OWN.
How to Listen to This Workshop
Listen as if you are going to need to teach this to someone else when it is over.
Introduction to the Bond Market
Introduction to the Bond Market
• The global bond market has tripled in size over the past 15 years and now exceeds $100 trillion. This makes it larger than the global stock market. • Trading volume in bonds is also larger than that of the stock market with an average of $700 billion traded daily.
Introduction to the Bond Market
• Although bonds are typically viewed as a “safer” investment, prices can be quite volatile and can give great day and swing trading opportunities. • The main bond markets that I follow are the 30 year and 10 year treasury bond futures and the iShs 20+ Year Treasury Bond ETF. (TLT)
Introduction to the Bond Market
• The 30 year bond futures move in 1/32 increments, and are $1000.00/point $31.25/tick. • The 10 year note moves in 1/64 increments (so 133’03.5/32) and is also $1000.00/point but only ~$15/tick.
Introduction to the Bond Market
• All of the bond markets we trade are fairly good trending markets, both intraday and end of day for day trading and swing trading. They are also great for using multi-timeframe analysis to time entries into larger moves with minimal risk.
Identifying High Probability Breakouts
High Probability Breakouts
The first thing you need to learn in order to become proficient in identifying breakouts, is what is considered “good” support or resistance levels. When drawing support, resistance, and trendlines, you want to always be looking at pivot points. The more well defined the pivot is, the better the support/resistance is going to be.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Additionally, the more times a support or resistance level has been hit, the “stronger” that support or resistance level is going to be and the faster the move we expect from the break.
High Probability Breakouts
Before we talk about the highest probability breakouts, we need to first revisit the definition of a trend: Higher High + Higher Low = Up Trend
Lower High + Lower Low = Down Trend Anything else is consolidation or reversal
High Probability Breakouts
Remember, immediately after a trend changes there are two things we look for: 1. Line in the sand (trendline across highs/lows) 2. Previous Support/Resistance (for breakout)
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• The highest probability breakouts are going to be in the direction of the underlying trend. Many times they will occur immediately after a false reversal, or after a breakout that runs into a sideways channel shortly after the initial move.
High Probability Breakouts
• You can increase probabilities by waiting for a close above/below the trendline before you enter the position. • Stops are placed below/above the previous bars high or low.
High Probability Breakouts
• It is also important to remember that once support has been broken, it then becomes resistance for 1 test, called a “last kiss.” • Once resistance is broken, it then becomes support for one “last kiss” trade as well.
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• Another great breakout pattern for bonds is head and shoulders and inverted head and shoulders patterns. • Ideally we will have the top/bottom of both the left and right shoulder at roughly the same height. We also want to see the neckline on both sides of the pattern at almost equal price levels.
High Probability Breakouts
High Probability Breakouts
High Probability Breakouts
• A breakout in the direction of a trend + a last kiss + a bull/bear flag, will be your highest probability breakout trade. • These do not happen all the time, but when they do, they are a great opportunity.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action. • Histograms on a bull flag must remain green and histograms on a bear flag must remain red.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
High Probability Breakouts
• Bull and bear flags are seen by looking at a combination of momentum histograms and price action.
Trading Correlated Market Analysis
• Bonds also have several positive and negative correlations with other markets that we can reference in order to increase our probabilities of success.
Trading Correlated Market Analysis
• They are Positively correlated to one another, 30 year and 10 year and TLT will all move together. • They are Negatively correlated to the stock market, and here recently, to crude oil.
Trading Correlated Market Analysis
• They are also considered a “risk off” market. Meaning, when the stock market picks up volatility and or starts to sell off, many traders will move assets into the bond and gold markets. So when the market starts tanking, watch for bonds (and gold) to start to climb.
Trading Correlated Market Analysis
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Quiz on Breakout and Trend Setups!
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Trading Breakouts Quiz
• The way we use this information is when you are placing bond trades, also check out what the stock market is doing. If the ES is breaking out to the downside at the same time bonds are breaking out to the upside, you have a higher probability trade on your hands.
Questions on Identifying High Probability Breakouts?
Multi-Timeframe Setups: Maximizing Reward Risk Ratio
Multi-Timeframe Analysis
• No matter what timeframe we are analyzing, you use the same setups and trade them the “same way” as you would any other timeframe. • If you find a setup appearing on several timeframes at the same time, this is going to give you a much higher probability of success with your trade.
Multi-Timeframe Analysis
• Additionally, make sure you always pay attention to what the longer timeframes are doing. If you have a longer timeframe setup occurring at the same time as your intraday setup, instead of going for a 10 tick gain (~$300/contract) start looking to allow that trade to move much further. This is the best way to increase your long-term reward risk ratio, every once in a while you will get a good trade that can run for 10-15/1 reward risk.
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Multi-Timeframe Analysis
Questions on MultiTimeframe Analysis
BONUS: Scalping Bonds for Quick Profits
Scalping Bonds for Quick Profits
• 30 Year and 10 Year Notes offer great scalping opportunities if you play your cards right. • When we are scalping we are typically going for 1-3 ticks of profits very quickly.
Scalping Bonds for Quick Profits
• Unlike other trading strategies, when we are scalping, we are normally going for a 1/1 reward/risk ratio or even slightly less. So the way we make money is by being correct the majority of the time.
Scalping Bonds for Quick Profits
• This scalping strategy follows the MQ Momentum histograms as they change from bullish to bearish. • The strategy lags by one price bar, so you need to wait for the histogram to close red or close green before placing your order. You are entering on the 2nd histogram bar.
Scalping Bonds for Quick Profits
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
5 Min Chart 4 Tick Risk 2 Tick Target
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
5 Min Chart 4 Tick Risk 2 Tick Target
• Once the histogram has closed bullish, you enter with a limit order to buy at the open of the next price bar. (You need to use limit
Questions on Scalping Bonds
Naked Trading Mentorship
• Two Week Intensive Naked Trading Mentorship Price: $1,500.00 When: August 1-12
