NASDAQ 100 in an up channel. Hey everyone, I hope you enjoy this content. Don’t forget to click that subscribe button and hit that bell to be notified of upcoming videos. Hey everyone, Josh Martinez here with tradersagency.com and welcome to this week’s idea. Today’s date is August the 9th, 2021. Happy Monday everybody. This is our second video of the day. We accidentally screwed up on the first one. We showed the S & P 500. And so we took down that video and we are now showing the NASDAQ 100. So why did we want to show the NASDAQ 100? Because there is a 1000 tick trading opportunity if the research holds true. When trading an E-mini contract, every tick is worth $5, that’s a 5,000 U.S. dollar buying opportunity if we can get the setup. You try to micro contract is still 50 cents a tick, so it’s still 500 U.S. dollars so this is absolutely worth our time.
So we have an up channel whenever the market comes near the bottom of the channel, this is a one hour timeframe, it pushes towards the top of the channel. Now, a couple of things I want to point out, look how clean it is on the bottom of the channel, look how simple and straightforward. Touch the blue level, goes up. Touch the blue level, goes up, goes up, goes up. Right on at or around the bottom blue level. The top level is a little different story. You can see we u-turned above it, we u-turned on it, we u-turned on it, we u-turned on it. So picking or trying to sell against this trend is going to be very, very challenging, so we’re not going to look to do that.
So let’s go back to some of the basics
So in trading, what we’re trying to do here is we’re trying to identify a trend. And oftentimes we’re going to look in the market, we’re going to say, “What are we doing here?” We’re making higher highs and higher lows, higher highs and higher lows, higher highs and higher lows. What we’re trying to accomplish is we’re trying to buy the market in the uptrend. But normally what ends up happening is oftentimes, especially when look at a one hour timeframe, we can lower the risk drastically, but you can also find what’s called a channel. And a channel is whenever the market creates an area where equal lows form an area where equal highs form at an angle. So it’s like two parallel lines that just go back and forth, back and forth like this.
And so what we’re trying to do is we’re trying to find the bottom blue level to buy, buy low and then take a profit at the top. Now, some people, what they do is they’ll trade against the trend. So the trend is going up. What they’ll do is they’ll try to sell the market on the way back down. I don’t do stuff like that. And the reason why is I lost a lot of money along the way doing that. And what I found is whenever you trade against the trend, it’s like driving your car against traffic. You may be a great driver, but it just dramatically increases the risk. You’re probably going to get in an accident along the way. But if you can drive with traffic, you normally have a better chance of getting where you want to go as fast as safely as possible.
And so what I like to do is buy low, profit high, buy low, and then profit high in and over up channel. But what ends up happening is sometimes when we have these channels in the market, we have this area of support. We have an area of resistance. We have to have some rules, some basic rules of how we’re going to trade this. And when the market begins to do stuff like this, and here we are, the question is, where can we get in? If we’re only going to look to buy or the two areas where you can buy, because frankly, this mark you can do one of two things. It can go up or it can go down. It can go down or it can go up.
And we don’t really know what it’s going to do next. But we don’t have to know what it’s going to do next. We just have to say, what is the criteria to find a tray? What is the criteria to enter into the market? When is a scenario good enough to where you are saying, “Okay, I’m going to enter in the market and I’m going to risk my money to try to make some money.” Because if you’re going to throw some money in this market and you’re going to be willing to lose it, you’re going to want to stack the odds in your favor. That’s what really smart people do, what Very intelligent individuals do because that’s called calculated risks.
Otherwise you’re gambling. And I’ll say this. If you’re going to gamble, go to Vegas and gamble in Vegas. Have a great time losing your money because that’s what you do. You go to Vegas, go to the casino. Oftentimes they will comp your room. They’ll pay for your room. You’ll get free drinks. It’s a great time. Lots of laughs and it’s great. But when you lose at trading, you don’t get anything. There’s no laughs, there’s no free drinks, there’s no free rooms. It’s just you lose. So that’s not a lot of fun. So you really want to treat this like a business and treat this and take calculated risks.
So whenever you’re in an up channel, there’s really two areas where we want to look to trade. First area is the natural market falls back down. U-turns, we buy the market. Market heads back up and we take the buy trade here. Stop below the previous low, profits at resistance. Natural buy trade. You buy low, profit high. Now, in this scenario, the other area would be let the market break above, let the market retest, and let it U-turn because what once forms highs or past U-turns where normally be the area of future u-turns, so where the market falls where the market falls, where the market falls, is oftentimes where the market will rally in the future because past resistance going to future support or previous highs becoming future lows, or simply where the market is u-turning past is normally where the market u-turns in the future.
So there’s two areas where we want to look to trade. We want to buy low at known levels of U-turn in an up trend. And whenever we’re in an up channel, the bottom blue level is a known level u-turn, the top level is a known level u-turn and we want to buy low. We want to buy low, profit high, buy low, profit high. That’s the illustration of what we’re trying to accomplish.
Now this, what I just drew out, is what the NASDAQ 100 is doing right now. You have a bottom blue level with market u-turns, u-turns, u-turns, u-turns. You have a top blue level where the market u-turns as well. What we’re looking for is we’re looking for this market to make up it’s mind. If it falls to the bottom blue level, we’ll look to buy the U-turn. We’re not going to guess the u-turn and low prices because it’s low. We’re going to bring in account trend line break [inaudible 00:06:32] information, our favorite entry strategy. But once we get to this low place at a known level U-turn, we’re going to look to buy it. We can place our stops below the previous low, limit out right before the top of resistance.
Now, why we want to limit out right before the top of resistance? Sometimes the market will u-turn before the top of the channel and will fall. And so what we don’t want to do is you don’t want to have a limit right on the blue level, because sometimes the market will come right up against it and then fall down and you never get your exit. So we always like to limit that before. Now, if the mark is able to break above retest, we have a buying opportunity there as well. Both are 1000 take upward movements with an e-mini contract worth $5,000. For the micro it’s worth $500. That’s this week’s idea. This is the NASDAQ 100 behind me. My name is Josh Martinez and we’ll see you next week.
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