7 Candlestick Patterns I'M ACTUALLY USING Every Day

0:01 [Music] In today's episode, I'm going to teach you seven candlestick chart patterns that I personally use in my own trading every single day. Now, when it comes to trading, I'm a big advocate of keeping it simple. And this is especially true for beginner traders. My goal for you is that you take one or two of these patterns, the one or two that you like the most, and you become a master of that pattern. So, I want to teach you a couple of the simplest, easiest to understand chart patterns that you can implement in your own trading today to help you start surviving to help you keep your head above water while you're learning additional patterns as you gain more experience. Let's go ahead and jump on a slide deck and get into this class. Seven chart patterns that I use every single day. All right, so let's start high level. For those of you guys that are brand new,

0:51 I'm going to just share with you how to approach reading candlestick charts. Some of you may have already watched my fulllength deep dive episodes that go into all the details, but if you haven't, I'm just going to give you a crash course right here. So, a candlestick chart is a historical record and a visual display of the price action that occurred during a fixed period of time. Now the period of time is based on the setting of the candlestick chart. So day traders like myself who are very active in the market, we tend to rely on short time frames including 10-second, 30-cond, 1 minute and 5 minute charts. So when you choose a time frame, every individual candlestick

1:37 on that chart will represent the price action that occurred during that time increment. So a one minute candlestick chart will have hundreds of one minute candles. So each of those candles represents the price action that occurred during that one minute of time. So when you're actually looking at a candlestick, each candlestick communicates four unique pieces of information and those pieces of information will determine the shape of the candle. Now different candlestick shapes communicate sentiment in the market. So what are these four pieces of information that are used to create a candlestick? So the first is the open. So the open of a green candlestick is the bottom of the body right here. So this is a candlestick and the body is filled in and then the

2:26 upper candle wick here and the lower candle wick are just lines. So the open of this candlestick period and let's just say it's a one minute chart. So this one minute chart began here, ended here, and it opened at this price. The stock would have then dropped down slightly to create the low because this is our second data point, the low of this 60-second period. And then it squeezes all the way up to create the high, which is our third data point. This is the high or the upper candle wick. and then it must have dropped back down and closed right here because this is our fourth data point representing the close. So those are our four data points. Now if I jump onto my whiteboard here, let me just demonstrate how these four data points could create very different looking charts.

3:14 So we have open, close, high, and low. So then we connect the open and the close and we draw a line to the high and the low. But let's just say for instance that we uh open close high and and and and let's just say the low is right here. So now this is the body of the open and the close. That's the low and that is the high. This candlestick is going to communicate something very different than this one just simply based on its shape. Because what we now know is that inside this period of time, whatever the setting would be for the chart, could be a 1 minute, 5 minute, daily, whatever, the price opened, dropped down, squeezed all the way up to this high, and then the sellers

4:01 were able to push it all the way back down. So, in fact, this candlestick communicates weakness. Now, you might not have thought of that initially, but it does. Even though it's still green in color, it communicates weakness because this large upper candle wick. Inversely, let's just say for instance, we had a very long lower candle wick. What does that communicate? That tells us the price opened, sold off, but then buyers rallied it back up. It peaked up here and then dipped back down. This is a much more bullish or strong candle with a bottoming tail because it tells us although the price dropped that buyers rallied it back up. So when we're looking at candlestick charts, the actual shape of each of these candlesticks are communicating different pieces of information.

4:51 So we've got candlesticks like this. We've got candlesticks like this. We've got candlesticks like this. Oops, just more more in the middle. More in the middle like that. So all these different candlesticks communicate sentiment in the market. And so I would actually say that learning how to read candlestick charts is very much like learning a language. If you think about um any other language, well certainly sign language, but also uh learning the alphabet, which is a symbolic language. You learn that these shapes are associated with with certain sounds. And so when we're looking at candlestick charts, we recognize that these shapes are associated with certain emotions. And so if we're watching the price rapidly squeeze up, let's just say for the sake of argument that we've got a chart that looks something like this. We've got a big green candle,

5:41 another big green candle, another big green candle. What's the sentiment here? It's very strong. Now, what about this? What if the first candle was small, the second one was twice as big, the third one was twice as big, the fourth one was even bigger. What sentiment is this telling us? Momentum is gaining strength. Now, what if in this first example, the candles start getting smaller and smaller and smaller. What is that telling us? Well, it seems like the trend is becoming exhausted. The momentum is kind of waning. We're running out of steam. And we could probably predict that what might be coming next is a reversal or a red candle. Now, as a momentum trader, I'm especially interested in the areas where the price changes direction. One of the

6:28 things that you'll learn in the market is that nothing goes just straight up. Even the strongest uh stocks, and it doesn't matter if it's stocks or commodities or forex pairs or even cryptocurrency, even the strongest ones go up in these kind of waves. So, our goal as momentum traders is to find something that's already moving up like this, but we don't want to buy it at the very top up here and end up selling for a loss down here and an hour later we see that the price rallied back up. We'll feel really silly if we do that. So, whenever we're getting in, we have to think about essentially how can I get in something that's strong with as little risk as possible. And the best way to do that is to buy at these lows. buy at these pullbacks down here and down here. So,

7:14 what we're going to be looking for in these areas are, of course, candles squeezing up, moving higher, and then right up here, we'll likely see a candle that's going to communicate the emotion of a reversal dipping down. And then maybe down here, we see one of those candles with a bottoming tail, right? Remember how that bottoming tail communicates bullish sentiment? So, now we see a candle that's giving us an indicator that the price may be reversing. Maybe we take that trade and then we ride the next wave up right here. And we ride that wave up until what? We get a little red candle at the top and it pulls back again. It dips back down and then all of a sudden we get another little bottoming tail here as buyers start to step in and say, you know, this could be my opportunity to buy something with some strength for the next leg higher. And

8:01 so this is how most markets trade. They go up and they dip down and they go up and they dip down. So your goal is to find the lowest risk entries on something like this that is showing strength. So the example that I showed you here was in the case of a green candle. In a on a green candle, the open is at the bottom of the body and the close is at the top. However, on a red candle, the top is the open and the bottom is the close. So we open at the top, we close at the bottom, and then the candle is red. So the color of the candle is important because it tells us whether well it it very clearly tells us whether the price went up or down and which was the open and which was the close. Now before I teach you these seven candlestick chart patterns, I want to touch

8:50 briefly on technical indicators because there are a series of technical indicators that I use on my charts that I check before I take a trade. These technical indicators for me are are sort of part of a checklist that I utilize every single day to help me avoid loss. Now, there's no way you're going to avoid loss entirely, but we want to focus on the highest quality setups. And what I found is that there are certain set of technical indicators that will help you eliminate unnecessary losses. So, I want to show these to you now because then when I teach you these seven candlestick chart patterns, every time you see one that's starting to set up, you're going to remember I've got to

9:35 check my indicators. So, when the chart pattern looks good and your indicators are also positive, then that's when you've got that double confirmation that this is a trade that I want to take. Now, if the chart pattern looks good, but the indicators say no, you could take the trade, but your accuracy is probably going to be lower and you are going to have more losers. Ultimately, as a beginner, you want to try to keep your accuracy as high as possible. You want to know why? Because that creates what I'd call the positive feedback loop. You focus on trading a quality stocks. And let's just say you're trading two different setups right now. Oops. Setups. So, you've got two setups that you're going to trade. the two of the seven that I teach you today, you're going to trade and you're going to only trade those setups and you're only going to trade

10:21 them on stocks that are a quality, which means the stocks meet all one, two, three, four, five pillars of stock selection. Do you already know my five pillars of stock selection? If you do, you're in great shape. if you haven't learned them yet. What I'm going to do is I'm going to put a link I'm going to pin it to the top of the comments of this episode right here and I'll also link it in the description where you can download my full PDF that breaks down my five pillars of stock selection because these chart patterns and these technical indicators will work best when you're trading the right instrument. When you trade the wrong instrument, you're much more likely to get unpredictable results and well therefore loss. So you want to avoid that. All right. So, we want to make sure we're trading Aquality setups. And when you trade Aquality setups,

11:09 what happens to your accuracy? It goes from maybe 50% accuracy up to 65, maybe 70% accuracy. So, your accuracy improves. When your accuracy improves, you eliminate unnecessary losses. So, out of 100 trades, you've got 65 winners, you've got 35 losers. Now, previously, you were 50 and 50. And some of those losers were probably pretty big because you were trading lowquality stocks on bad setups. So now you've eliminated 15 of those unnecessary losses. And in fact, you've turned them into winners. Boom. You know what's going to happen? Your profit to loss ratio is going to go up. So when your profit to loss ratio goes up, you're going to make more money. And when you make more money, you're going to feel more confident. And when you're more confident, you're going to

11:56 increase the number of trades you're taking. And you're going to increase your position sizes. Logically, as a beginner, when you start trading, maybe you only feel comfortable risking $10 on each trade. You risk $10 to make $20. And if you have 10 good trades or 15 good trades in a day, maybe you can make $15200 a day. That's $50,000 a year. That's not so bad. However, as you gain experience, if you've been consistently doing 150 200 a day for 6 weeks, for eight weeks, for 3, four months, what are you going to be thinking to yourself? Maybe instead of risking $10 on each trade, I should start risking 15. Maybe I should start risking 20. And eventually, you scale up your risk and your reward goes up with it. Now, you always have to remember with trading, you have to think about risk first because trading is risky. So, if you're focused only on profit

12:47 potential and how much you could make, then I would say borderline that's gambling. You think first about how much I'm risking and then you compare that about how much you stand to gain. So once you know your risk to your reward potential, now you're thinking like a trader. Okay. So when we talk about technical indicators, these are the four that I use in my trading every single day. So we've got volume bars, moving averages, the volume weighted average price, and the moving average convergence divergence indicator. Now, at the end of this episode, in addition to sharing with you some recommended reading, I'm also going to share with you the five exit indicators that I use that help me know when to sell a position so I don't find myself holding too long. So, technical

13:35 indicators when combined with candlestick charts give traders an edge on predicting price action. I suppose at the end of the day, the best traders are attempting to see into the future. Now, maybe we can only see into the future 3 minutes, 5 minutes, 10 minutes. It'll get a little longer as you gain more experience, but the way we're doing that is by looking at the historical price action, looking at those candlestick chart patterns, and looking at the specific candlesticks that are communicating emotion. And when we begin to see that other traders are showing bullish emotion, that they like this stock and a stock that already meets five pillars of stock selection, we've done our checklist, then that's a trade that we want to take. So we're now able to visualize

14:22 what's going to happen into the future, even if it is just a few minutes ahead. So the first indicator that I want to teach you are volume bars. Now, volume bars are very important and what they communicate and show us is the number of shares that were traded during each one of these candlestick periods. So, right here, we're looking at a one minute chart. And so, each one of these candlesticks represents the price action that occurred during one minute of time. So, you can see there's a lot of one minute candlesticks on a one minute chart, especially when you zoom out. And so, down here on the volume pane, this is called a pain inside of our chart. we see the amount of volume that took place during each one of these individual candles. And so if the candle is green, then the volume is green. If a candle is red, the volume

15:09 is red. So this is important because what we want to be able to visualize is whether or not there's more buying in total or if there's more selling in total. So as you look at this chart, would you say there's more buying or there's more selling? I would say there's definitely more buying. There's large green volume bars. So, if we were looking at this chart and we didn't have volume here at all, it would really almost be like, you know, trying to drive with one eye closed, we would be lacking some really critical data points that help us understand in total whether the sentiment is bullish or bearish. So, in this specific instance, we've got momentum to the the long the buy side.

15:56 We've got a lot of strength here and the volume is backing it up, which is exactly what we like to see. Now, this second pane down here is called the MACD. That's the moving average convergence divergence indicator. I'm going to show you a little bit more about that in a moment. But what you'll notice is that this blue line is above the orange line and right here it crosses over. And when we get that crossover, that for me is the time that I stop buying and trading to the upside. And so when you see here, it crosses over right around there. And from that point forward, the price begins to decline. And so that little indicator right there is kind of like a secret weapon to help me stay out of the trade after we've had that crossover and therefore avoid unnecessary losses. So I like seeing increasing buying volume. So seeing this rapid increase in

16:45 buying volume is fantastic. Now this ends up going from $160 to $4.60, which is a huge move in a matter of minutes. This is a one minute chart. So you've got 1 2 3 4 5 6 7 8 nine green candles in a row. We then get a topping tail. And what did we learn about topping tails? Those can be bearish, weak. Price drops. It pops back up. It drops back down. It comes back up again and another bearish topping tail. But wait, we wouldn't have taken that trade. Look at the MACD. The MACD had already crossed into the negative. So, there were some traders that bought into that because they're not using this indicator down here, but not me. So, it pops up and then sellers push it back down and now you have higher volume selling on those candles. Now, what about this? To me, this looks great.

17:35 High volume buying increasing as it goes higher and then culminating with this little topping tail up here and a higher volume red candle. That higher volume red candle for me is an early exit indicator. Even before the MACD goes negative, it tells me sellers are starting to come in on this position. Now, what about this? This doesn't look so good here. We've got more selling volume than we have buying volume. There's basically two candles of buying volume and then a lot of selling. The MACD crosses very quickly and it just sells off. There's no trade on that stock. Here we go once again. Higher volume selling. MACD crosses over, this is not going to work. There's just too much selling. So volume is a critical indicator you need to use. When you look at the volume,

18:21 you can understand the strength or the weakness in the stock. The next indicator are moving averages. Moving averages display the average price of a stock over a set period of time. The period of time becomes the name of the moving average. So, the 9 EMA, the 20 EMA, or the 200 EMA, the 200 EMA is based on the average price over the last 200 candles. But wait a second. Let's think about this for a moment. So, on the whiteboard here, let's think about the last 200 candles. So, let's just say for instance, we have um a stock that's gone up very quickly here. And we'll just say it dipped back down, squeezed back up, dipped back down. D Let's just say it continued to move higher. So, if we go back from this point 200 candles, what's the average price? Well,

19:13 if this is a one minute chart, then the average price over these last 200 candles will usually trail quite a ways below the current price because the average is 200 back. It's it's an average of the 200 candles way back there. But what if, for instance, we're looking at a daily chart. If this is a daily chart and all of this price action occurred inside the day, then the daily chart would look a little different. The daily chart might maybe over the course of the last, you know, several months been mostly selling off and then today it bounces up quickly. That one day over the last 200 days of of price action, which is nearly a year, this one day isn't going to really move this moving average all that much. So, something that's really interesting is that moving

20:00 averages will be different depending on the time frame you're looking at it on. So, a 200 moving average on your daily chart is the average over the last 200 days. The 200 moving average on the one minute chart is the 200 average over the last uh 200 minutes. So, those are going to be very different prices. So, what moving averages do we use and on what time frames? I use the 9, the 20, and the 200 on all time frames to keep it simple. So on the one minute chart, the 9 and the 20 are generally wellrespected levels of support. On the daily chart, the 9 and the 20, if the price is moving up, it's always way above it. But the 200, well, the 200 is actually very interesting because

20:46 the 200 moving average is a very wellrespected level of support and resistance. So to set up your moving averages, any charting platform that you're using, you can go in, you can add a moving average, and then you choose the length of the moving average, which will be your 9, 20, or 200. And then you choose that it's going to be based on the close. And I use EMAs, which are exponential moving averages. So here's the daily chart on this stock. This is GameStop. And on this chart right here, the 200 moving average has been a very wellestablished level of resistance. So each time the price comes up to it, it sells off. It comes back up, it sells off. So why is that? The 200 is considered it's it's a strong sign of strength when the price is above it. And

21:33 it's a strong sign of weakness when the price is below it. So there are traders and large investors in the market that are going to be shorting this stock to try to keep it below that 200 EMA. Now, there are buyers that are going to buy it and try to get it to break, but clearly in total, the short sellers, as they tend to be, are stronger. Now, here's another example. In this case, the price broke the 200 and came right back down and is now unable to get back up above it. So, what does that topping tail indicate? unfortunately indicates weakness because although the price went up, sellers pulled it right back down and then we closed below our resistance level. Here's another example. Price squeezes up, runs right into resistance at that 200. Again,

22:22 this is on the daily chart and it sells off from that point. Here's another example. The price rallies up to the 200. It cannot break it and it sells off. So, if you were trading and you were not using the 200 moving average, you might be curious at why did this stop going up here, right? Why did these stop where they stopped? Or in this case, why did this hold support at this level? Why didn't it go lower, right? All of a sudden, you snap on that 200 moving average and it's like the picture becomes clear. Now, it's very clear to understand why these are stopping where they're stopping or why they're bouncing where they're bouncing. Here's another example. Running into the 200, coming up towards the 200, and running into it again. So, if you were not

23:08 using the 200, you might inadvertently end up buying right here, and that would probably be a losing trade because you'd be buying right into resistance. And so, that's why these indicators can help you avoid unnecessary losses. That's the goal here. Once again, resistance at the 200. So now on our intraday charts, which is any chart that's based on minutes, so 1 minute, 5 minute, and certainly second charts like a 10-second or a 30-cond chart. On these time frames, the 200 moving average is always quite quite a ways away as it is down here. I use purple for my 200 moving average. So the price is so far above it that you can kind of ignore it on your intraday time frames. However, the 9 EMA, which I have in gray, and the 20 EMA, which is in the

23:58 sort of blue green color, these are actually very wellrespected intraday indicators. So, when the price squeezes up and then it pulls back, they tend to bounce off the 9 moving average. The 9 EMA is a level of support. And if it breaks the 9 EMA, then we typically find support at the 20. And if it breaks the 20, then we're usually going to sell off quite a bit more. So, these are areas that we expect and look for support. Once again, you've got this price squeezing up, bouncing off the 90 EMA, squeezing up, bouncing off the 90 EMA. So, when we're thinking about those lowrisk entries, right, the waves going higher, what if we noticed, and this would be very common to see, that as it's moving higher like this, that lo and behold, it keeps catching support at the 9 EMA.

24:51 Well, then when we see it come down towards the 90 EMA and then we also see that candle with a little bottoming tail. Right now, we've got multiple levels of confirmation helping us feel confident to take this trade for the next leg up. So, we're combining all of these data points to help us form a bias or hypothesis of what we think is going to happen. So now here on this example, once again, you've got the price rallying up, the pullback down to the 90 EMA, and then the rally back higher. We love seeing that. The rally to the 90 EMA, the dip or the rally up, the pullback to the nine, down to the 20, and then back up, dip to the nine, back up, breaks the nine, goes to the 20,

25:39 holds the 20, breaks the 20, and goes down to this next indicator right here. That next that next indicator I'm going to teach you about in just a second. So the 9 EMA and the 20 EMA on intraday charts are very important. You need to have them turned on. So this orange indicator down here is called our volume weighted average price or VWAP for short is the acronym. So the VWAP is a volume weighted average price. And like a moving average, it reflects the average price of a stock. But what's unique about the VWAP is that it's not just the average price over the course of the day. It weights in the volume that occurs at these different prices. So although this went up very high here and the 9 EMA came up with it, because there wasn't a ton of volume that took place at

26:30 this price compared to all the volume that took place earlier in the day, the volume weighted average price moves up but not as quickly. So the volume weighted average price represents the true equilibrium point. It is the average price on the day including all of the volume that traded hands. So if the price is above the volume weight average, it is bullish. If the price is below, it is bearish. So if the price is below, we know it's bearish and likely short sellers will will take large positions hoping that this continues to fade lower. Whereas if the price is above and holding above, long biased traders will take large positions looking for that to continue to trend

27:16 higher. So, an area to pay really close attention to is when the price breaks from above to below because people will sell or when the price breaks from below to above because that's when shorts will cover. Now, the volume weighted average price doesn't have any settings. It's standard. So, VWAP is the same on all charts, all time frames because the average price of a stock including volume doesn't matter between the 1 minute, the 5m minute, or a 15-minute chart, for example. It's going to be the same. However, the volume weight average price is only an intraday indicator. So, it begins calculating at 4:00 a.m. when the market begins trading, even in pre-market, and it ends at 8:00 p.m. And then the next day, the VWAP resets at exactly 4:00 a.m. So, it's an intraday

28:07 indicator only, but it works on all intraday charts. And it's the price is the same no matter which time frame you're using. So here we have an example of the volume weight average price. And this is an example of a stock that stayed above the VWAP. We then broke below it here. We tried to come back up to it right there. And you can see that it was unable to break above it. The price sells off. It drops. And then suddenly it whips back up. And right here, you know what happens? Shorts are forced to cover. They get out of their position. The way a short covers a position is a negative position. and they cover by buying. So now you've got a surge of buying and you have long biased traders who are also buying because now the momentum has shifted, control has shifted from the

28:52 bears to the bulls and you get this squeeze from $4 all the way up to over $9 a share up over 100% in 3 minutes. That is a violent shift in trend. Now here's another example. So here the price squeezes up very quickly and on pretty high volume. And so the high volume actually pulls the volume weight average price above the 9 EMA because the 9 EMA is factoring in the last nine candles going back here. We only had three candles going up basically. So the other six are way back here when the price was much lower. So the volume weight average price goes up quickly because the volume came in quickly. So see how the volume is high. So the VWAP goes above the 90 EMA. The 90 EMA is this gray line, but it doesn't factor in volume. So, it's including

29:42 these candles right here, even though they had no volume. So, the VWAP is faster. The 90 MA in this case is slower. The price drops below the volume weight average price. It goes sideways here. It comes back down. It tries to break above it and it cannot. And it fails. Wait a second. What was that indicator we were talking about before? Volume. High volume selling. That's a red flag. And our MACD is negative as of right here. So based on those two indicators, volume and the MACD, this is not a trade that I would take. However, we go back to the previous example right here, and you'll see we had a strong volume profile, primarily buying. And then the MACD crosses over right here as the

30:28 price swings up. High volume coming back in. So even if you didn't, you probably wouldn't have gotten in below. But once it popped above, you got a little micro pullback right here, which is one of the setups that you're going to learn about today. So here's another example. Right there, we get the rally up and the pullback is right to the volume weighted average price. In fact, in this case, the volume weighted average price and the 90 EMA are almost at the same spot, which gives you double support, right? So this is giving you even more confirmation. You've got the 90 MA. You've got the VWAP. You've got a bottoming tail. You've got a strong volume profile. The MACD is open. None of our indicators are telling us not to take this trade. And the stock meets all five pillars of stock selection. Yes, I should definitely be taking this setup. And look what happens. It goes from 380 all the way up to nearly $5 a share. That's a fantastic trade. So

31:18 now the next indicator, moving average convergence divergence indicator. It's the acronym is MACD. So what is this doing? Well, we've already talked a bit about moving averages. So, when the price starts moving up quickly, what happens to our moving averages? The 9 starts moving up, but the 20, it doesn't move up as quickly because it's still averaging in all these candles back here when the price was sideways. And certainly the 200 is barely moving up at all because it's still including all these candles 200 candles back. So when the moving averages diverge, when the nine moves away quickly, that tells us that the price is moving. And so this is an oscillating indicator. It goes up and then it comes down. So when it's going up, that's when stocks are on the

32:05 front side of their move and they're moving quickly. But when the moving averages begin converging, that tells us the price is slowing down. And when the price begins slowing down, we have to reduce our expectations that we're going to catch another nice wave higher. So the waves continue progressing higher and higher and higher until those moving averages begin to converge. And then that is our indicator that the trend is shifting. So now you've already seen some examples of the MACD. I'll show you a few more. So here we have well these are the settings that I use for the MACD first. So 12, 26, and 9. So, these are the standard MACD settings that pretty much everyone uses, and I think that that's important. You want to make sure you're seeing the same signal that other people are seeing because this is a very clear buy and sell signal. So, if

32:55 you change the settings, you'll get the signal at different times and you may get it more frequently and that could totally throw off how accurate this signal is going to be. So, don't do that. Don't mess with that. This is tried and true. Keep the settings as they are. So those are our MACD settings. So here we have the price squeezing up, pulling back, MACD goes negative, flips back to positive, flips back to negative, flips back to positive, stays positive, then goes negative. So the way I look at this is when the MACD is negative, I'm not trading. MACD is negative, I'm not trading. MACD is negative, I'm not trading. So if I only trade when it's positive, I'm catching this big wave up. I'm catching the first wave up and I'm catching this wave right here, but I'm not trading it when it's going sideways and I'm not trading it when it starts getting

33:42 really choppy and that keeps me out of some of these big rejections. To me, it's better to be safe than sorry. My goal is not to take a thousand trades a day. In fact, if I could hit my goal with just one trade each day, or maybe two, wouldn't that be much better? So, I think precision is really important in the market. I see a lot of beginner traders who are chronically overtrading. They get in, they get out. They get in, they get out. And I know with commission-free trading, it's easy to take a 100 trades or 200 trades a day and not pay any fees on it. But at the end of the day, the only person who's really making money on that are the brokers with their payment for order flow structure that they've got set up with these big institutional trading firms that are buying

34:27 all of your order flow. So there's not really any point in trading unless you've got a high level of conviction that you're going to buy and be able to sell at a higher price and that you can do that in a relatively short period of time. So you want to use your indicators to give you that extra edge to keep you in a strong setup and to help you avoid trading lower quality moves. So once again here you've got that nice squeeze up. MACD goes negative. We're no longer interested. MACD goes positive. We trade it from here to here. MACD goes negative. We're no longer interested. Red light, green light. It's that simple. But only when you're trading the right stocks. That's what's so important. You put the MACD on Apple or Tesla, you're just going to see false signals. It's not going to work. So now you've got your MACD plus moving averages. The MACD is positive. Moving

35:19 average pullbacks with little bottoming tails. Volume profile. Everything is aligning. MACD is positive. Nice volume profile. Moving averages showing support at the 20, then at the nine. Well, the it was negative here, but right here it curls back to positive as it breaks back off the 20 through the nine and back up. And a little dip right there. This is a setup I'll trade every single day. Now, you've got your MACD, your moving averages, and your volume weight average price. Everything is aligning. And when everything is aligning, that's when I step up to the plate and I get aggressive. And this is how I'm trading every single day. And I'll just throw um just for the sake of it. So I'm going to back um back out of this and I'm going to show you just for a moment. This is a day um just from a couple weeks ago. So this is a stock where we had everything

36:09 lining up. MACD positive, nice volume profile. We're above the volume weight average price. Everything's looking good. I'm sitting right now up over $109,000 on the day. And over the course of just the next 10 or 15 minutes, I continue trading it. And why am I trading it? Because the MACD is positive, right? So the MACD is positive. We've got great volume. I'm buying dips and riding this momentum. Sitting at 147,000 within just a couple of minutes. Next thing you know, I'm up 155 back to 160 as this thing rallies up to 180. I mean, these are incredible days. So for me, I don't risk $10 on my trades anymore. Maybe I did when I was a beginner, but at this point I feel confident taking more risk. That confidence comes from experience. Now, for those of you guys

36:58 who are perhaps tuning in to this channel for the first time ever, I should have already introduced myself. My name is Ross Cameron. I'm a full-time trader and I funded my first account in 2001, more than 20 years ago. I'm probably best known for turning an account with less than $600 into more than 12.5 million in verified and independently audited trading profits. Now, that was as of December of this past year. As of today, right now, I'm already up over 3.3 million on the year, which means now my account, which was at 12.5 million, is now at 15.8 million. So, I share this with you not because I want you to assume that my results are typical, but because I want you to know that I've been doing this for a long time. So, for those of you guys who are brand new, I hope you hit the thumbs up. Certainly, even those of you guys coming back to the channel to watch

37:45 this episode. And I do hope you are all subscribed to the channel so you can continue watching these deep dive full training episodes just like this. All right, so now let's go ahead jump back onto the slide deck and we've got to get into talking about these patterns. We've now laid a really solid foundation. You understand the anatomy of candlesticks. You understand these four critical technical indicators that I use in my trading every single day. And now let's look at these candlestick chart patterns. So number one, the first pattern that I absolutely love is called the candle over candle pattern. How does this work? So you've got one candle right here which is green.

38:31 The next candle continues and that right there is a pattern. Now notice something. It's very subtle, but notice how there's a little topping tail, a little upper candle wick on this candle and a slight little lower candle wick on this candle. Okay, so let's actually zoom in on that. So let's say we've got these two candles right here. This is candle one, and this here was candle two. And let's say this is a one minute chart. So that's two minutes of time. Okay. Well, can we zoom into this? Can we see better what's happening in this little moment? So let's break it down into 30 second candles. So we've got um a candle. Oh, maybe we'll even break it down a little bit further than that. So we'll do 10-second candles. One, two, three, four, five. That was the top.

39:24 And then six. Right. So 1 2 3 4 5 six. Six candles that are 10 seconds each is 60 seconds. That's one minute. So this right here is what that candle looked like. How do we know? The low, the low, the open, the open. They were both at the same price. The high, which is the top of the candle wick, and then the close, which is the body right here. Now then, what happens on this candle? Well, we know it dipped down a little bit. So it dipped down just for a moment. Maybe like this. one, two candles and then 3 4 5 6. And why would we suspect that? Because we know that there's a low point low point, the open uh which was uh we opened right about here, right? We opened at the top there and

40:15 we sold off and then we've got the close because we closed at the top. So now what I see when I see this candle over candle pattern, what I know is that the price squeezed up, dipped down, and pushed higher. And I know that because of these topping tails. So in real time, in real time, what I do with this setup is I'm actually watching to buy right here the next candle to make a new high. Now, this candle overcandle pattern can be traded a number of different ways. We could actually have previously had and let's just say for the sake of argument we had um I'm going to erase this. Sorry. So let's just say for the sake of argument we had had a um red candle here, a red candle here, and a

41:04 red candle here. And that back here we had started with one huge big green candle. So we had a big green candle and then it pulled back. This candle popped up and this candle continues higher. So all of a sudden we're getting that candle over candle formation. So this is that changing of directions. And the candle over candle formation could even look a little bit different. Let me just do it on the back side. So let's say for instance we have the price that squeezes up like sorry we have the price that squeezes up like this. Moving higher moving higher. Then we dip down. We dip down. We have a green candle here. And then the next candle goes over. Candle over candle. So the candle over candle pattern can be in the context of the price squeezing up rapidly or it can be in the context

41:54 of the price changing directions. The place that I get the most excited is when it's at the the point of changing directions, which is the first candle to make a new high. So this is a very simple two candle pattern. It's just two candles. One candle and the next candle moves higher. Now, if you take this trade right here, what what would be your max loss? Where would you get out? So, if we're back on the screen share, if you took this trade right here, your max loss would be the bottom of this candle. So, if you're getting in right here, which is essentially buying as this candle makes a new high, your max loss is down here, and your profit target would be this continues to extend higher. The reason you would have that hypothesis that it would continue higher is because you would look

42:41 at increasing volume. Increasing volume. Now, as long as the stock met all five pillars of stock selection, this is something that I would consider trading. So, let me get give you back this live uh trading example back over here. So, if we look at this here, let's see. So, what are we going to do? We're going to look at this um we're going to look at this kind of right in this area. So, so look at actually right here. And I want you to just look at these this little area. So this little area right here, if you're zoomed in, you had a candle and the next candle pushed and made a new high. And that's what we like to see. So these candles are progressively pushing and breaking the high of the previous candle. So that's showing that we've got this upward momentum. So we pop up and then we pop up. Let's see just a little further. Then we dip back down. We pull back. And then right there,

43:32 do you see that? You see how we popped up right there? So that was a candle over candle formation red candle. The next one is candle over candle green. So the first candle can be green, the first candle can be red. But when you've got overall trend, you've got overall momentum, you're above your VWAP, you're above your MACD is is positive as it is right here. You've got this nice volume profile, then this is a place where I'm taking a trade. And so right there, I bought that position and I'm looking for this to continue higher. Now, it ends up pushing a little bit higher here. It sort of tops out up there and then it's going to dip for a moment and then push a little bit higher. So, right there is that second pattern that we were talking about of that candle over candle. So, we're looking for the first candle to be the base. This is sort

44:18 of our control candle. It's our max loss if the price drops and the high is our trigger for it to continue higher. So, we use this candle to establish risk. Max loss entry profit target needs to be up here. So the profit target is based on whatever I'm risking times two. So I use 2:1 profit to loss ratios when I'm trading. So here in this case just for example you see how the price had hit this level three times. Once twice three times we kept hitting this level here and then finally we broke. Now, I would have been cautious to buy right here just before it broke because it's already failed three times to go higher. It tried once, twice, three times and failed to go

45:08 higher. So, when it finally does break and that's on higher volume, right, we've got higher volume here coming in as it comes up for that break. What do I do? So in that instance right there, we've got the price which has been sort of generally it had popped up and then we sort of pulled back here sort of going sideways a little bit back and forth and kind of right underneath this resistance level which we replaced uh we placed at 33. Right? So we've got this resistance level at 33. So I'm nervous to buy right here because the last three times it came up there didn't work. So I say I'm not going to buy there. I'm going to wait for it to break. Let's see if it can actually break and hold. It does break. So now it breaks. It holds. This candle is my control. So as long as the next

45:57 candle breaks and pushes higher, and it does, max loss is the low of this candle. And in this case, this is even easier because if the price breaks below this breakout price, then that's also a place to get out because it's it's showing that it's not able to hold this support. Right? This was resistance. Can it now be support? So, it breaks this level. It pushes higher. And so, now my entry is right in here. Right there. That's where I'm a buyer. So, I buy right there for that first candle to make a new high. Candle over candle pattern. And then I want to see it continue for a second candle over candle, a third one, and a fourth one. Now the problem is I like to buy the first candle over candle setup following a breakout or a change in trend. So one breakout and

46:51 this is a breakout over uh resistance or change in trend. So the the change in trend is when we're in the example of right here the price has been declining and then we're buying this candle over candle. And so in this case, we're buying right here by the moment this green candle breaks the high of that red candle right there. That's our entry point. Max loss is at the low right down here. Candle over candle. So this is a pattern that you will hear traders talk about a lot. You'll hear traders say, "I'm looking for candle over candle. I'm waiting for the first candle to make a new high." So when candles are making new highs, the price is progressively pushing higher,

47:37 right? New high, new high, new high, new high, new high, and then new low. Don't like that. New low. And then sort of choppy here. New high, new high, new high. Change in direction, resistance, resistance, challenging, challenging, and then new high, new high, new high, new high, new high, new high. And this goes from $30 all the way up to $40 a share. That is a huge move. And as you can see, I'm sitting up $278,000 on the day. Now, let me tell you something. For those of you guys who are brand new, you may find that it's a lot easier while you're trading to be hearing commentary from a trader like myself. So, while I'm trading in the mornings, I run a broadcast where I'm giving you my real time market commentary. So, I'm telling you exactly what I'm seeing in real time. And

48:27 I'm even showing you my positions window so you can see where I'm buying and where I'm selling. So it's fully transparent. Now the benefit here is that you get to piggyback off of all of my years of educated intuition. So you don't have to be kind of figuring out on your own, wait, is this the candle over candle or is this, you know, the first candle to make a new high or is this one too extended or is this the right one? So, it doesn't mean I'm right 100% of the time, and I don't want you to try to just blindly follow me on every trade I take. But my goal is that I'm able to share with you my knowledge of the market, and that for you, it helps speed up your learning curve so you can better understand what's happening because you're not having to kind of translate it all on your own. I'm this intermediary for you between what's happening

49:14 and then me converting it into sort of plain English of this is what I'm seeing right now. So, in the description, you will see a link for twoe trials at Warrior Trading, which we run throughout the year. So, at any time, you could do a twoeek trial. It's two weeks and it's $20. So, during that trial, you get real-time market data. And so, your $20 covers the data. It's not about making money. It's just about giving you a chance to see what it's like to be a member of the community and whether or not you'd actually want to continue learning from me or if you'd find benefit in being a long-term member. And my feeling is that if it's not the right fit and you don't like it, then whatever. It's no big deal. So you're out of pocket 20 bucks for the cost of data. Well, we have to spend that anyways. But if you love it, then you feel like really good about

50:00 continuing on because you really gave it a good test drive. So now the second candlestick chart pattern that I trade every single day is called the micro pullback candlestick pattern. This one is not just two candles. It takes three to five candles to form. This is what it looks like. We've got our first candle that makes a new high right here. Suddenly, the stock starts surging up. Now, as it's surging up, what's typically going to happen is the stock is going to be hitting my scanners right over here. So, these scanners are searching the market in real time for stocks that meet my five pillars of stock selection. So, we had um APVO squeezed up 77% finished the day up 77% with 113 um million shares of volume. This is unbelievable. But when we have these stocks that

50:49 make these really big moves, as they start to squeeze, I see them on my scanner. Okay, so the order is stock is on the scanner. I get an audio alert in real time to notify me that there's a stock out there that meets my criteria and is moving quickly. So pay attention. All right, I pull up my chart. I see it's already squeezing up. What do I do now? I could jump in potentially for a candle over candle right away. So I would watch it. I would cautiously wait. And if we had that little top, that little momentary dip, and then that next candle surges up and goes green, and that's going to be a green candle like this with a little bottoming tail. And I'm going to buy that teeny little dip. That's going to be based on setup number one, which is candle over candle.

51:37 But let's just say for the sake of argument that you get one huge green candle, but there was no chance to buy it. Or let's just say maybe you even missed the chance to buy it. And that's okay. So it went without you. But don't worry, no reason to chase it. There will be another opportunity. Okay, so the next opportunity is waiting for the micro pullback. So it dips down just like this. You get one red candle and then I jump in. So what am I looking for? I only buy this because why? This candle made a new high versus the high of this red candle. So, in fact, right here, we got that very quick candle over candle pattern. I jump in and I look for that squeeze back up. Now, sometimes a micro pullback will have just one red candle. Sometimes it'll have two. Sometimes it'll have three. In this case, I drew it or I animated it with just the one pattern,

52:26 with just the one candle, which is fine. We'll see that very frequently. And in fact, let me show you an example of a really nice one uh I I believe it was a one candle micro pullback. So, right now the stock has hit the scanners. So, it's on our scanners right here. This is a um biotech pharmaceutical company that has breaking news. It is currently up over 100%. So, it has rapidly squeezed higher and it has just given a a a very quick candle over candle pattern. I jumped in it and jumped out of it almost in the blink of an eye for $700 of profit. So, I jump in and out. $798 of profit. That's my first trade. Now, I'm waiting for the next trade. Okay. So, what we're

53:13 going to look for is a micro pullback. So, watch here. What do we see? Green candle, green candle, green candle, green. The little top right here. High volume on the buying, light volume on the selling. We like seeing that. Does this hold down here? Now, this is the moment of truth. This could reverse completely. It could drop and then it's all over. But it doesn't. In fact, what I noticed is that there's a buyer right here that is holding it up. It's up 104%. And so, I decide to jump in right here and watch this candle. That is a one candle micro pullback. And it goes almost in an instant from $6 up to seven. And it continues to push higher. It goes up to seven. It dips down for

54:03 a moment. Then it's going to push a little bit higher. This right here is a candle over candle formation. Next candle breaks the high of 750. And it goes candle over candle. Now we're looking for a move up to eight. There we go. There's $8. Now another micro pullback is starting to form here. It breaks eight. It goes all the way to 820. A little topping tail just up there at the top. Hits a high of $9 a share just for a moment. And then it dips back down. Now, in this trade right now, in less than two minutes, I'm sitting up, as you can see, over $75,000. Over $75,000 on that stock. When you have a stock that squeezes up 200% that quickly, that is an opportunity. But if you did

54:53 not know the micro pullback setup, if you did not know the first candle to make a new high, you would have missed that completely. That is how important these candlestick chart patterns are. I trade them every day. So let me explain the psychology of why this setup works so well. It is initially a rapid move up that attracts traders. This is especially true when the move is driven by breaking news. So, how do traders find these stocks? Well, scanners like the one that you see here are readily available and traders all across the market are utilizing them. That combined with social media, when something starts moving, people find out about it very quickly. So, the first pullback, the first pullback right here, that first dip, get rid of this. That first dip

55:44 is formed by initial profit taking from anyone who was fortunate enough to be in way down here either before the news came out or who jumped in for the very first candle over candle formation when this first started popping up. So you get a little bit of profit taking as it dips down. But right here as it's dipping down and the stock is up 100% on the day. There's a couple important facts. This stock right now is the number one leading percentage gainer in the entire market. It has news. Now, we check our daily chart. We do a little technical analysis. 200 EMA, let's just say, is at $30 a share. And the current price is at six. So, we've got a lot of room before we're going to run into resistance. Now, when this stock is squeezing up and it has that much room before

56:34 it runs into resistance, there's a lot of traders who are going to look at this and say, "This is a lowrisk opportunity, the lowest risk opportunity I'm going to get to buy a strong stock." And what we know is that on any given day, there may there may only be five stocks in the entire market that go up more than 50%. But those are the type of stocks that once they've broken that kind of first hurdle of being up 50%. Their likelihood now of going up 100, 150, 200, 300, 400, 500%. Is very high. Once a stock becomes the hottest stock of the day in a hot market, it can make a huge move. It's just initially getting from zero on the day to up 50% that is so difficult and the company

57:22 ultimately is is not going to be able to do that or achieve that unless it has some type of fundamental catalyst. So, and you of course have companies that put out news every day, but it's not strong enough for the price to go up 50% 100% or more. The price goes up 3% and that's it. So this first pullback for my profit taking um and and people who possibly um had early positions and it could be um people who were shorting thinking that the stock is going to reverse but if it holds at least 50% of the initial move up then long biased traders see that as in total there's more buying than selling. So now we start to look at the volume here. And let's just say we've got high volume and it was increasing on the green candles. And then on the red candles we had light volume,

58:11 right? That tells a story. Then we got our first candle that makes a new high and volume surges back in and goes even higher. That's telling a story. Now what's the position of our moving averages? So now we've got our 9 EMA here. And then let's not forget our VWAP, which is right about the same spot probably because it's early in the move. So, we've got support at these levels right there. That's great. And then if we looked at the MAC D right here. So, we'll just kind of make this a little bit smaller. We look at the MACD. We'll make those small volume bars. We look at the MACD down here. What you're going to see is that because the price has moved up so quickly, the MACD is open. So, now you're wide open right here. And this is the first pullback. This is the strongest place to buy a stock that's moving quickly. And that's why this setup works so

58:59 well. I typically buy the first pullback and I buy the second pullback. But I try to be careful not to overstay my welcome because you know if it goes from 7 to 9 to 10 to 12 $15 at a certain point you end up feeling like you're buying it just way too high. So I trade the first and second pullback on the one minute chart and then I'll trade the first and second pullback on the five minute chart. Same t same pattern, different time frames. So right here, this is the micro pullback on APVO. So ended up finishing up $73,000 on the stock, $80,000 on the day. This big squeeze, micro pullback, surges higher. Fantastic. Here's another one. Up $55,000 on the day. Squeeze up, micro pullback, micro pullback, micro pullback. Trading each of those. So buying the dip, buying the dip,

59:50 and buying the dip. as it starts to get more extended and volume starts to decline, being a little bit more cautious. $175,000 on the day. Squeezes up, micro pullback, small micro pullback, and then it really pulls away. This went from $11 to nearly um $35 a share. It's huge move. $52,000 on the day on this one. UPXI one minute chart. Look at this micro pullback right there. Strong volume. Great. MACD positive. Everything checks out. Now, there were some trades on this early, which would have been fine. Right here, MACD is open. Decent volume. Volume picks up as it pushes higher. Little dips here, pushes higher. So, there's a trade there, a trade there. This is

1:00:36 not as clear because here the MACD was kind of still negative until it ripped. So, that would have been a little tricky. The only setup you could have done there is the candle over candle, initial breakout, and then that's your candle over candle. those two. So, do you see that that first candle pops up sort of surprise swings the MACD positive high volume buying dips down because you've got the topping tail and the little bottoming tail and then pushes higher. That's a candle over candle. And and in fact, on a 10-second chart, that probably would have been a micro pullback. And then this is a really nice one right there. And then it pushes higher. Here's another one. 27,000 on the day. Squeezes higher. First pullback, dip, rallies up. Second pullback, rallies higher. Third pullback doesn't go through the new high, starts to pull back. 35,000 on the

1:01:26 day right here. Micro pullback 420. Ends up squeezing all the way up to $7 a share. And it's lighting up our scanner here. This was the most obvious stock in the entire market in these moments. It was up over 120% on the day. Now, I'm going to show you the third pattern, which is the bull flag pattern. A bull flag is like a micro pullback except that it pulls back a little bit longer. So, two candles, but sometimes three and even four. So, the difference between a micro pullback and a bull flag really is how long the pattern takes to form. The longer it's taking, the less it's really fair to say it's a micro pullback because it's just taking too long. So, candle over candle and micro pullbacks are very fast. bull flags start to take a little bit longer. And if a

1:02:14 bull flag is occurring on a five minute chart, we we can't really call that a micro pullback because it's already taking place on a fiveminut time frame, which is just more time. So bull flags can look similar to a micro pullback, but if they're on a five-minute chart, we call it a bull flag. And if it's on a one minute chart, there can be some sort of blurring of is it quite a micro pullback? It's taking a little too long. Maybe now it's a bull flag. So there's sort of a cusp there, but you can see the pattern is very similar. So what are we looking for? First candle to make a new high. Oops, let me back this up. All right. So first candle to make a new high first pops up, dips down, and then right there, that's our entry. We buy during this green candle. We don't wait

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