The ONLY Break And Retest Trading Strategy You’ll EVER Need (Step By Step)

0:00 welcome everyone back to Ch Fanatics the go-to channel for all the very best trading strategies and concept breakdowns with the very best traders in the world talking which today we have a very very special guest he's currently on an incredible run this year over $400,000 so far and just in the last 24 months closing in on a million and we're going to break down the exact strategy he uses he is the founder of Options Insider it's the one and only Vincent Desano aka Desi Trades thank you RZ i appreciate it thanks for having me no thank you for being here i'm super excited to go into this strategy where do you think the best place to start is uh well first of all I want to say this is like the best podcast for me i just I love levels i love charts that's like everything uh so

0:47 I'm super excited i think we talked about that on our podcast oh you were saying how I wish we had charts yeah exactly uh I think we start with just the core strategy uh which is the break and retest and it's a widely known thing to look for uh but how you execute it how confident you are in it the psychology behind it is also a huge factor of can you execute it correctly which is just massive the concepts of what you're looking for are quite simple but repetition experience in looking for it doing the same thing over and over again really is the differentiator of are you successful using it yeah no I've got you yeah let's begin let's crack straight on all right so we can just go ahead and do some very basic examples of what I look for obviously we'll jump into the charts later and get a better idea of exactly real examples live live trades as well that I have for you today uh

1:35 to really show you exactly what it is but the best setup the best break and retest the A+ one that I'm always looking for the one that I think works the most and I find most success of is when we have a previous day high that's when I am locked in knowing that this is absolutely something that I'm going to look for right so let's go ahead and just put a little dot here and say that that's PDH right pdh previous day high and we're going to go ahead and just put a little chart that goes up to that level right so that's our previous day high right let's say we sort of topped out there we went back down in the pre-market let's go ahead and put a line here that indicates the end of day let's say this is on Monday right so that's Monday's trade that's Monday's chart we have a previous day high of let's say $200 right we're not going to use stock X just so we know apple's

2:24 around $200 we could use Apple as an example so we have 200 previous day high in Apple we didn't trade anything that day right no trade setup it is what it is so then we have our after hours right after hours we have uh let's just say we sort of open up within that range and we open the day pretty much flat no overnight gaps no overnight downside we're just staying and opening at that same level we closed at so the next day when I see this right the first thing that I'm going to do is I'm going to look and make sure I mark out that previous day high right so that's going to absolutely be on my chart as a level right just sort of putting that on my chart the next day and going to be something I very closely watch to see if Apple or this stock in this example is able to break above that high right so that's a huge thing that I'll look for now of course we'll

3:12 get into some examples of using the S&P as well as the NASDAQ right because those come into play of what's Apple going to do right so we're going to also going to be watching the S&P and the NASDAQ after we go over this I'll break that down as well so at the core of it really all I'm waiting for is Apple to move higher right move up break above that high right and start to that's when I start to get interested now that's not anything to do with an entry there's no entry there you don't just enter on a breakout of a previous day high that's probably the most amateur way to trade and I think where a lot of people sort of get stuck in fakeouts right cuz they're just breaking a high taking a trade and hoping that it continues what I want to see happen is Apple to pull back to that level right and then this area where we start to come back down to that previous day high is

4:00 something that I like to call that is called the battle zone so the battle zone is really when you start to see that price action start to get really tight right you start to get that that wick action you start to get some really clear examples of some manipulation going on in the market um and that's that's where the money is made the battle zone is where the money is made being able to read the price action at that retest because that is the retest right is how you get paid gotcha right so rather than just break retest your break retest and actually looking at then the context of the price exactly and what time zone would you or time zone what time frame sorry would you be looking at so I always will watch the two-minut time frame got I think the one minute time frame is a little bit too messy right it adds a little bit too no too much noise to the chart for me uh

4:48 so I'll always use that two-minut time frame and I would say on average this retest should take anywhere between at least from the averages that come into my mind and knowing my trades I would say anywhere between six to around 10 minutes so about 3 to five candles is what I'll wait for to look at what's going to happen in that area uh so about six to 10 minutes right of price action and there's really no you can't really use time as how many how long are we going to look for that yeah it's really just what are the candles looking like above that retest level am I seeing right am I seeing bullish wicks like this am I seeing buyers pushing up right and holding price above this 200 level or am I seeing you know candles that look bearish right and holding let's say

5:36 this is our 200 level am I seeing us start to fail that level right so I need to start understanding the price action through the candles reading price action through the candles of what's going on at that level now something I want to talk about here is you had a previous guest on your show Carmine right and so Carmine really gets into the depths of what's going on and that price action using things like order flow and and and things along that line i believe that I'm able to read that order flow and understand what's going on behind the scenes by really focusing on what the price action is showing me so I know from past experiences that when I watch the battle zone when I start to read price action at that important retest which is previous day high in this case

6:22 I know that I start to see price action starting to form a really a battle right you're starting to really see the wicks go around you're you're you're not getting very fluid action because the fluid action is that breakout yeah the fluid action is you're pulling back right which is what some people will call a fair value gap right ff FVG right that's really that fair value gap so when you're pulling back into a fair value gap really all that is is a break and retest the retest yeah as Carmide would call it a low volume node so really all those concepts really mean the same thing it's at the end of the day what gives you that confirmation to take that trade what is something that you're always looking for something that makes you comfortable something that gives

7:07 you an actual game plan and a structure behind the trade you're entering right because you have to be confident with what you're looking for right i've built this out i know like I can I dream about this i mean I I know exactly how this plays out right when I'm looking at the charts which we'll look at later right i know exactly what I'm looking for to fire and to take that shot and at the end of the day it's not 100% right no trading strategy is 100% there's no such thing as a 100% trading strategy that's right sometimes we'll go ahead and get So I'll go ahead and zoom in on this and make this larger for the audience i'll make an oversized candle here because obviously we're a little bit small on the on the whiteboard but let's just say we get a wick underneath our previous day high right and let's say that candle closes something like that mhm right and so you do

7:55 at times see price temporarily break below that retest level right and so there is somewhat of a margin of error that you have to allow at that retest level yeah right you can't just say "Oh it went down right it went under for a second no longer a trade." Right that's that's just being too I would say too precise and too uh too tight with what you're looking for exactly right so that's why we want to see price develop we want to see okay a few wicks that come under we want to see a few wicks that pop back over it's like you said that battle you want to see those buyers and sellers interacting at that specific level exactly and so what I want to do is I want to sort of zoom in on just this area here right so we'll delete everything here and then let's just zoom in on the battle zone right and so we'll go ahead and go over that so let's just title this

8:43 the battle zone right and this is where the money is made is in the battle zone so right here hey guys just a very very quick one if you're enjoying this playbook and you want to get it sent directly to you make sure to go on chartanatics.com put your email in and every episode we drop we will send you a direct PDF breaking down this exact playbook or alternatively also the playbooks will be put all together with the rules over on Tradezella that is an incredible collaboration so if you want to actually add the playbook to your Tradezella make sure you go check that out as well but let's get back into this episode so let's say we have that same $200 level on Apple right right there that's Apple and that's the $200 level on Apple now let's say we can sort of

9:31 put some candles here moving higher moving higher breaking out over that level right continuing to push higher continuing to push higher so we have those candles just let's say five green candles in a row no pullbacks no nothing just ripping through that level right a lot of people will start to chase right chasing at the highs because they're like "Oh my god Apple's going straight up i need to start getting into this trade i can't believe it right i'm gonna miss this." That's all the FOMO and all the fear and all the not following a single strategy starts to get you know starts to come into play of why losses start to stack up now that trader will enter here at the high right and you'll get a wick like this that starts to show you hey you know you're starting to get selling up there you're starting to get some rejections coming in and that's when you start to

10:16 move lower right you start to see that pullback you start to get those candles moving back to the retest and at this point a lot of these traders will start to stop out of their trade right before the retest even happens right before that retest even occurs so they're pretty much just randomly buying randomly selling and we're taking advantage of those sellers at the end and then you got people trying to sell there as well you Yeah you're taking advantage of these sellers at the end of the day these people that are buying on chasing and pulling back everyone that did that everyone that was in in everyone that was a part of this trade right here that bought at the high sold at this retest is where that's our money yeah that's the money we're about to take right so we get back to the retest level and something that I love to see start to happen which I know

11:02 is a rudimentary thing to look for right but it is very true in the markets is what I like what I is what you would call a bull flag yep right so this is our bull flag that's our pullback the retest after the breakout breakout retest bull flag right and we want to start seeing the action here all in the battle zone right all right there is where we get paid right so we want to start seeing stuff like this wick maybe below wick back above maybe we have a candle that sticks right above it right and starts to break out of that bull flag m then eventually what you're going to see is you're going to see a candle that engulfs that previous price action yeah right and then we're taking our

11:47 long position right here gotcha now the next thing I'm going to talk about and we'll go ahead and erase this again and then even get more minute and more detailed about right there just before we do in terms of if if price was to in this area happen to close here right right just close there but then trade back above and sort of trade around this line is that fine it's still it's still a valid thing to look for right it's not like we're ever just saying "Oh it's you know the only time I would ever say trade's not going to If you get the opposite right?" Exactly if you get a candle like that that clearly rejects it right and then let's say for example the S&P is also rejecting a major supply or the NASDAQ's rejecting a major level okay we waited we never got our confirmation retest didn't work no trade in this example so no trade no trade you're not going to look to

12:35 short uh well yeah if you want to go that yes so exactly so what I would start to look for in this case if I am interested in now looking for a whole market rejection right at this point if I'm going to flip this I need to now be finding a thesis as to why I would look to short the market got right so we can get into this but like let's use this area on the chart so let's say you're getting the S&P starting to reject a major supply which then correlates with a breakdown of this level on Right so then okay right we're saying all right S&P 500 starting to very clearly reject one of our major supplies now the question is can I really set up a short here right or do I have some levels below that I really don't have interest shorting into right okay is there let's say this is the opening

13:25 print let's say there's a major demand here on the ES right so sometimes and this is what we're going to talk about the no trade zone right the next their next concept is no trade zone ahead of No it's okay so let's say this is my node trade zone let's say this is the overnight high right let's say that's like a previous day high let's say this is the previous day low or like the opening print so what you'll often see is right you'll get that rejection you'll come back down to the opening print and then you're going to bounce again and in this case if this doesn't align perfectly you might maybe look for that quick rejection the retest rejection but then if that ES holds you're going to get sort of wicked back out of that trade right so for me to short to me to for me to flip my thesis I need the S&P and the NASDAQ to align as well so in this example if I wanted to short

14:13 this 200 retest level after a rejection or a fail I'm also going to want to see the ES failing under that morning low or morning open right so there's more confluences to just that actual chart i'm starting here just so we sort of understand the uh the actual price action of what we're looking for but so now yeah I'm I'm glad we asked just just to clear that up we'll get over that deeper for sure but now we're going to go deeper into Let's go deeper into that so what we're going to talk about next is we're going to talk about how to set up our risk using the break and retest right because with options it can be difficult to know our exact dollar amount risk it's it's a very difficult thing to do it can be quantified through delta reading how much uh what the delta of your contract is and how much risk on the underlying stock you're risking so you can quantify it it's

15:00 hard to do very quickly right because you have very quick mental math uh but it is possible to quantify and really you're really wanting to understand how many points on the underlying am I risking right and if you're trading what you want to be looking for is how much of underlying risk on the stock am I going to risk right how much underlying basically from the 200 point to where I enter what is that gap right so let's say we put that 200 level back right and let's say we just got our bull flag breakout let's say that was our bull flag we just got our candle that engulfed the previous action and we got our bull flag breakout right so this is now and we'll use the green marker to indicate our entry point so right here let's say we go ahead and enter the position

15:48 right there that's our entry right so let's go ahead and say that's $22 on Apple right so right now if we enter there Mhm and our retest level is 200 this is now called an invalidation line right so I can use right so I can use the red marker and say okay 200 is now my invalidation validation i'm the same invalid invalidation line so now our strategy and our structure here is I'm long Apple off a 200 retest right so we can sort of map this out i'm long Apple right off the 200 level off 200 now my stop loss or my invalidation is a close or price action that starts to clearly show me

16:38 that it's rejecting 200 right if we start to see candles rejecting back under 200 then I am out of that trade my stop loss is now under 200 that's my invalidation long high my first target my PT1 is always going to be where that previous breakout high was right so let's say our breakout high was up here at $24 right that was our breakout high before we got the retest so that is now my first target for a scale off right and it's a scale off it's only a scaleoff uh because we want to look to see if we can hold runners here mhm so our first price target is that 204 that's our first target and what we're actually going to do after we hit that price target is we're now

17:24 going to look to see if that previous high of day now becomes another break and retest continuation scale in right and so we can either add or we maintain maintain yeah right so what we can now put here right and we'll use the green marker mhm is we can sort of quantify our riskreward right so our riskreward here here's our reward our PT1 reward is up to that 204 high yeah our risk for that first part of the trade is a close below or a clear rejection back below that 200 right so that's our first riskreward on our first price target now we go deeper here right we keep

18:10 we there's it gets deeper and deeper as we go on mhm the reason why I will look to take some off at that high right is to reduce risk right because there's a very high chance that we could push back higher reject the high double top right see another rejection and come back down and we take a full loss got Is it necessary to take a full loss if that hit that high a day is it necessary to allow that to or is it necessary for us not to take something off the table to at least whether it's going to be a win or not mhm at least we're taking something off right and so what I'll typically look for is I'll take a quarter right or almost sometimes a half of my position off two fourths let's say I have increments of a fourth let's say I have let's call it 20 contracts

18:59 right let's say 20 options contracts yeah so I'll take five or 10 contracts off at that high right and that's typically you know it's different it's going to be different every situation i would say that's typically anywhere between a 15 to 20% win right on an options contract that's like a very comfortable estimate right um so we're up around 15 20% we caught the beautiful break and retest long we had a nice risk we got our 15 20% we're taking half off we can lock up some profits here and now let's see if this thing can run hey let's take a break for a minute there guys cuz I want to tell you about our preferred prop firm Apex Trader Funding now Apex is no stranger to the podcast or even Chart Fanatics because we've done two incredible episode with two record holders in

19:47 terms of Trader Kane who got a record payout at $2.3 million at Apex and then beating that record in the end was Jadecap aka Kyle who also then has a record payout now of over $2.5 million in a single payout with Apex and that really just shows the infinite possibilities you can achieve at Apex Trader Funding now what traders love about Apex is that you can get up to 20 accounts so whether you get the 25K account ranging all the way up to the 300K account you can get 20 of those so if it's 20 300k accounts that is 6 million in tradable capital which is absolutely incredible not only that it's only a one-phase evaluation there's no daily draw down and up to $25,000 per account it's

20:39 100% yours and after that it's a 90% split in your favor that's right at Apex you can actually trade with Wealth Charts Traderate and Ninja Trader so you can choose your favorite trading platform and not only that you will actually get realtime data included when purchasing your evaluation with Apex what I personally love about Apex is that as long as you're trading your day-to-day strategy you don't have to worry about trading the news you can actually request your payouts every 8 days and there's actually no cap to your max payout which really shows the infinite possibilities you can have at Apex thanks to Chart Fanatics you can get the best offer available at Apex they are always running sales so make sure to use the code CF that will automatically give you the

21:25 best offer available at Apex the link for Apex Trader funding is in the description below so click that link use the code CF and you will get the best offer available become an Apex trader today now let's get back to the episode a very big thing here to to realize and to recognize about this example is when we do this this is a form of risk management right so of course we're going to want more than 15 to 20% to have like spectacular riskreward in the long term of course right but we don't always get that and why not grab it right and let's make it so if we do pull back and reject that that is not a now 20 to 25% loss that's now a break even trade gotcha or that

22:11 could even be a profitable trade right if we scale out at that high it could still become profitable even if we do end up getting stopped on runners you're playing the long game right you're you're understanding the variables that are going on here you're understanding that there's a lot of risk in play and you want to at least take something off there take some off and understand that okay maybe this one doesn't really go for me the 40 the 50 the 60% runners but at least I'm now be being able to sit back relax and let this play out would you say two things one these are the sort of trades that will pay for losses and also pay for sort of dynamic sizing if you want to down the line in terms of having like you know a buffer in your account but then secondly uh are these quite fast trades in terms of uh the execution because it's 2-minute time frame yeah I would

22:58 say these are these are relatively quick trades i would say from the time that a a really good retest trade sets up here and goes to that high is probably 10 minutes right maybe like five two minute green candles but it feels longer when you when you're in the moment and then that's why you know to your point for this particular setup to you know sort of scale out even just a partial is to pay yourself and sort of as you say take take that ease back this whole period could take about 20 to 30 minutes but during that time your mind is absolutely firing off yeah this I mean this area is the most difficult for traders right cuz they it's very hard to trust yourself and that's why it's the battle zone right and it really is and so when you come back to here it's it's very unnatural for some people to be longing something after and being interested in longing something as

23:44 you pull back right this section right here when we're retesting is when I am coming up off my seat right and I'm like "Oh here we go." Right this is exactly what I need to see right before that I'm like "Oh man another breakout is it going to come back for us i'm not going to just chase this thing let's wait to see if we get that retest." And so that's when you start to really got to lock in right and these are the differences that make profitable traders versus the unprofitable traders like I would say rather than panicking or rushing or chasing right and equally not trying to sell some people uh because they think it might be a fake out to sell it when in reality you just got to sit and wait for your confirmations to play out exly yeah i mean when and we can quickly I want to touch on one last thing and before we can start to talk about flipping this these trades like you

24:32 said you made a good point these trades pay for the losses right this this scale out that ends up being break even or this scale out that ends up being slightly profitable is is paying for the losses right it's it's making it so those losses are smaller it's making it making it's giving you that buffer yeah right and when you can sit back and relax and not be panicked about the position size you're in is when you can start to very vividly and very clearly watch price action and then you'll start to see something like this start to happen right another breakout of this high then another break in retest right you're still in the trade it goes higher again right and now you're up 50% right and you're continuing to scale off at your discretion yeah we talked about this yesterday with Carmine right because I've been hanging out with Carmine this whole weekend and we've been talking about discretion versus strategy gotcha right and so the strategy

25:23 this area is where pure strategy comes into play right when you start to break through the highs and start to really seeing price action move is when a lot of my discretion comes in right cuz I can then read this price action right is it still strong am I am I reading rejections or am I seeing just just continuous and continuous movement it's almost like the bonus money that's the bonus money this is the money that makes the difference right if you can get this trade to go 50 60% that's the account changing trade right this is like the entry criteria that you have to follow to catch it yeah to catch it love that that's incredible no that's a great way of framing it because you know I've not really heard that that sort of detail when it comes to the discretion side i have to be fair always sort of reflected that the trade management a lot of the time can be the discretion

26:11 while the execution and the process um is actually the bit that needs to be more mechanical or fixed but I love it cuz you can see the risk management side we pave the the losses with the small wins but then if the small win turns into a bigger win as you see in this occasion because again the other option is obviously if we did manage to scale in as well yeah you if you were to scale in that's a good a good question if you were to scale in you're following the same process again exactly just right here just right there following the same process to the high right there just continuing to drive it higher right how often does that happen for you is that something that's a sort of infrequent so this happens when you have a trend day that's the only time it happens right and so there's like sure this is a great example but there's so much more to really dive down into

26:56 and we we really talk about that in our group like the S&P and what the NASDAQ is doing during this time is is just I mean even as important as this right cuz if if you're not watching the NASDAQ and S&P during this time you're you're showing I mean you're basically watching it yeah you're watching with one eye closed right you have to you know I'm I got my charts set up uh top left is always the futures and I mean I'm always like this right just like like looking up at that ESNQ to make sure that it's still following along with what's going on here exactly so what we can do is flipping this to the bearish side if you want to get into that of course yeah okay so we can wipe it all off yeah go ahead so we went a little bit about risk we talked about the the entry criteria should we get rid of this as well uh yeah we'll keep that we'll keep the

27:44 battle zone so now let's talk about flipping this or we can even let's just go ahead and talk about a break and retest rejection right and so how do we look for this not only to the long side but how can we play this to the downside because we're going to have really good examples of this uh later on in the in the in the podcast about retest rejections and actually me personally these are better i I like retest rejections downside is like an elevator upside is like an escalator right so when that downside starts to come in I mean it just starts to flush and these are these can be some monster trades when we get this so same concepts right let's say we have a uh let's say we have a pre-market low right a pre-market low or even a previous day low yeah

28:30 right previous day low let's just go ahead and use previous day low as our example because the breaks of previous day lows are are the nastiest so when we have a previous day low here let's say that is uh let's call it let's just use uh let's use the same 200 200 previous day low and let's say the previous day we traded down into that we bounced after hours right right here mhm next day now so let's say there's two examples here let's actually go ahead and put it let's do a little split screen here and let's put both of them on the screen side by side same examples but the pre-market did something different so here's example one and here's example two correct right in example one we open the day above that previous day low right in that example we have to be super and I mean super

29:22 cautious of shorting back into that previous day low i mean that is some of the worst trades that you could take right because you get that morning trap you get the little morning bear trap wicks off the low just rockets higher again right this is where a lot of traders gets messed up right right there so for us to even get interested in a trade if we're opening this low and this close to a previous day low we need the break below that low we need the retest of that low now before we get too deep into that I want to talk about section two and sort of keep them up to date section two or example two is we go ahead and open the market below interesting the previous day low right and if we break this is the best trade ever right here and I like I get smiley

30:10 I mean I remember plenty of six figure trades five figure trades just thinking about this right so if we open below that previous day low and if what what you're looking for in the morning I want to make this even cleaner What you're looking for in the morning is a morning rally straight into that level and I mean like aggressive i want to go vertically higher i want people in Discord chats around the world saying long this thing like I want to be long it's going straight up like look at look at Tesla straight up right that's exactly the ex that's the exact like just behavior I want to be going on there you want to see a lot of volatility and momentum period straight up straight up into the previous day low and then you get this right here you get a

30:57 huge wick candle right leaving behind a huge tail at that previous day low candle closing red right underneath that level and then you know we're about to make some money right and so what we do here is we set up that same riskreward right and same thing the battle zone same exact thing right stop loss above that previous day low yeah right you're looking for the bare flag right this is now a bare flag got you yeah right cuz that's a bare flag up into that high you're looking for a candle to engulf that price action down below and then you got your breakdown yeah right so is the entry here the entry is so the same i mean I can get if we want to go full screen and I might have to get a little bit bigger on this but entry is when you see remember those two candle let's

31:45 say you get some candles here yeah right that sort of just stay sideways go ahead and make this a little bit cleaner for you let me go ahead and make it perfect so same thing right push up candle rejects that high right next few candles let's say we have just sort of an inside candle let's say we have another maybe we have another attempt higher right and something that's hard to explain here on a whiteboard is like the live action of course right because like this candle could come and trade up here within 2 minutes but then it could close still below it exactly yeah in real time you it's that it's that thought of like oh we're gonna invalidate right there's some intuition there's some there's some you know discretionary reading what's going on no doubt right but you know that

32:32 you're going to be focused on what's happening at this level right i I think it's easier for people to read price action when they're just focused on this right they're not thinking about a thousand different things let's focus in on this right and read those candles so let's say another candle trades up wicks back lower closes again right leaving a huge tail like that got right if I'm looking at 5 10 minutes of this kind of action here we're taking that trade all day i don't care if this thing reverses back up i don't care what may happen we have to accept that uncertainty right we have to accept that there's possibility of us being wrong still but we have absolutely seen what we need to see to take take an attempt so we're going to trade that bare flag right let's say it's bare flagging and once we get that break of the bare flag once we have that clear you know

33:18 consolidation range here we're going to go ahead and take that entry gotcha right stop loss above that high on a I would say we need something along the lines of this right really showing us that we're gonna close above it okay so would you put it above this high yeah i mean you I definitely would want to monitor those wicks right but if I start to see some very clear action holding above this then I'm absolutely needing to now accept that hey it looks like we've reclaimed that level right that's a reclaim reclaim of the previous day yeah right so that's a that's an awesome setup 100% for this one same thing we just need to wait for it to break we cannot short the low we need to wait for the actual break right and then that same action we saw here off the open is the same

34:06 thing we want to see here intraday aggressive back up heavy failure at the previous low bare flag retest yep gotcha yep perfect so that's the that's the core of the back the break and retest both to the upside as well as to the downside perfect let's talk about the no trade zone and how this comes into play really to find those retests so we'll go ahead and take the battle zone off yes and let's talk about something I like to call an NTZ ntz which is the no trade zone right so on the no trade zone let's go ahead and say we have a previous day high right here this is previous day high previous day right there right so we go ahead and trade back lower maybe here is our after hours

34:58 and our you know pre-market after hours in that day so we're going to put a little dotted line across here for the previous day high we're also going to take a pre-market low right so let's say you know we're trading like this and then we trade within let's say that's our pre-market low right so now so really the concept behind an NTZ is I want to be able to understand where is the price action going to be the most difficult to read where is it going to be very tight where's the channel going to form where are the fake outs going to come in right where is the area that I don't want to trade within which is really at the core of it the no trade zone should also give us our break and retest levels yeah right so if we have a no trade under previous day high and

35:46 a no trade above previous day low or I'm sorry pre-market low then that's really our break and retest rejection or our break and retest long ideas and between the right and between there is where so many traders just absolutely blow up their trading accounts right cuz they just the market opens we're here we're there we're here right we're here we're chopping we're chopping we're chopping nothing's happening here right and even worse well maybe not worse than blowing up but what can also happen is they they're getting long or they're getting short they're holding and holding and holding it and even by the time it does break out let's say in their favor they probably got out yeah out cuz they're either tired of staring at it or that like they're taking zero and they'll chase after it has broken retested they'll chase after exactly yeah and I mean RZ I'm

36:34 here as someone that's done this and successful but I have done that same thing exactly i mean I have I know exactly how that feels i've done it right i'm not going to ever say to someone that I have not done that is absolutely things that I've done and that's the only way I've been able to build these this playbook and these ideas to you know stay away diving deeper and and learning from your data and your patterns that you recognized exactly so we have that previous day high we have that pre-market low right whatever it may be maybe it's a maybe it's a previous day low right it's not always going to be exactly previous day high pre-market low right and I think that's where a lot of discretion comes in again right we have to know what's the chart look like today where's a very clear low from the previous day or the pre-market where's a very clear high what's a maybe maybe it's not even previous day right maybe it's a level from a few weeks back that's

37:20 a very major supply right and that's actually a really good example I have today so we want to get an idea of where our no trade zone is a joke that we make in the group all the time is you know I'm long I'm short I'm long I'm short I'm long I'm short right and then you just just keep taking a thousand trades within this area and it's just it's just a disaster so what we need here is we need a trade outside of the NTZ we need to break we need to retest we need to turn previous day high into a support and start to trend higher get back our original original model over yep so you can see how that's a perfect market structure right look at the market structure there you have this zone then your market structure is now higher right and these are the points where you're looking to take that trade right and you're just structuring this thing higher and you continue

38:06 to follow it on a beautiful trend day and we don't always get this trend day right but the best thing about giving yourself an NTZ is that if it's not a trend day you're not trading right and who cares if you don't trade in that right if I look at this this day right here and I'm you know today you know today's not a bad day looking at the action um but let's say like today was just a total sideways day and I'm here on a podcast and you know I look back at 4:00 and I say "Oh man thank God I didn't even look at the charts today." Right so if we're looking at this for me if it's 12:00 if it's 100 p.m and this is still what the market's doing right here that's it i'm out i'm not going to sit here all day let's take a break for a minute there guys cuz I want to tell you about our incredible sponsor Tradezella tradzella is the number one trading tool in the

38:55 entire trading industry tradzella allows you to become a more profitable trader allows you to make immense progress as a trader no matter if you're a beginner or an advanced level trader because it makes journaling easy it makes journaling something that is fun and enjoyable and something that is interactive so no matter if you're a crypto trader no matter if you're a futures trader no matter if you're a forex trader no matter if you're a stock trader all you have to do is select your broker your platform of choice and connect it to Tradzella and it will automatically sync your trades and pull all of that data onto the dashboard making journaling and finding your edge and adapting your edge so easy in collaboration with Tradzella and Chart Fanatic specifically we are actually getting the playbooks from the episodes that we're filming with these incredible

39:45 verified traders and adding them as playbooks onto Tradezella so you can actually go on there and see the rule sets already predefined so make sure you check that out as well now you can actually get 10% off your monthly subscription using CF10 on Tradzella right now but more importantly I would say CF20 for 20% off your yearly subscription with Tradzella the links for Tradezella are in the description below so make sure you go check them out use CF20 get 20% off your yearly subscription become a better trader today now let's get back to the episode i was about to say about timing oh yeah absolutely i mean you can't sit there all day you can't wait for it all day i would say the quality of these plays start to deteriorate as as the day goes on of course yeah because then your

40:30 volatility and your volume's going exactly so that's the no trade zone this is a new concept that I've been really focused on right even helps you just reduce unnecessary Exactly energy and Yeah exactly even 12 years later you know I'm still thinking of ways to make this more precise i think that's the difference right that's that's what makes the profitable traders that they doesn't matter 12 15 20 years they'll still go and and look to optimize and find ways to be better absolutely and in that case it's not even a case of like trying to find more trades the stops oh it's let's find less trades let's let's avoid this right because the more you can avoid that the probably more profitable that's powerful and I've always said that's the ultimate hack is how do you avoid the lowquality trades cuz now you make more money without taking more trades without without more Yeah without more effort right exactly so the last thing I think we'll

41:18 talk about on the whiteboard before we jump into the charts is the big I like to call it the big four correlation i don't use the fancy terms that you hear a lot i think it's pretty much the same thing as SMT right so big for me I call it big four correlation because there's you know big four sort of comes from an accounting firm i just think I'm I wanted to be uh investment banker accounting so big four is like all the big accounting firms so big four which for me the big four is NASDAQ right nq futures S&P 500 futures right the SPY ETF and the QQQ ETF right so I am watching all four of these every single day without a without a doubt they're in the same chart they're in the same chart every day i press one thing on T US i got a four square on T US they're in the same spot

42:05 every day right and I'm just becoming a master of reading these four together because you absolutely spot discrepancies between these four every day if you know what you're looking for you find those S&Ts you find that uh that they're not correlated at times so a quick example which we'll get into later on the chart is what happened actually last Friday so last Friday the 25th I took a losing trade this was a loss that you know could have been avoided but I did like the setup i felt like it lined up with what I wanted to look for but there was a very clear reason as to why it failed and it was to do with the big four correlation and so I want to quickly show you exactly what happened here so let's split this in half by the NASDAQ and that was the 25th of April for anyone out here oh what did I say you said 25th oh 25th of April just for anyone who's wondering

42:54 yeah 25th of April so we have the NASDAQ and the S&P 500 futures so we had a pre-market high on the NASDAQ futures right here right we moved lower and then later in the day we broke above that high and started to look like we were holding above it right this was exactly what the NASDAQ was doing at that same exact time we had an S&P that had that high moved back lower right moved back higher and rejected an equal high here like that mhm right and so when you spot this right this can be very dangerous and very difficult to trade right because the question mark here is does the NASDAQ hold right and bring the S&P with it yes or does the NASDAQ fail back under right because of the

43:45 S&P failing exactly and so so typically when you see in a situation like this where the NASDAQ's above a high and the S&P is below it some would call that a bearish SMT right so this is a really good sign of okay NAS ES is rejecting that high NASDAQ's above it we do not have a reason to long the market yet here because of this discrepancy and I did make the mistake full transparency of longing the QQQ because of this retest i slipped up i didn't spot that right and that was my own mistake but this is where going back into my trades right putting them in trade and seeing that was like okay this was a bad mistake i understand why it happened which is extremely important uh but it was something that I did wrong right and so what ended up happening i took that long it fell

44:34 back under i got stopped out s&p very clear double top and that's a bearish S&P that happened just on Friday right so in this situation we need the S&P to also be doing the same thing as that NASDAQ right breaking and retesting above to go ahead and you know take that trade long without that we avoid the divergence and again kind of back to the no trade zone of helping you reduce losses as well in this case the ES was still in it the ES was still in the no trade zone right below our no trade zone so it should have right it should have been an indicator for me not to take that trade and that trade was though on QQQ was it yeah I basically instead of longing the NASDAQ futures I took some options on the QQQ gotcha right so the NASDAQ the QQQ was showing pretty much pretty

45:22 much the same thing gotcha yeah perfect that's great should we go over the pros and cons yeah let's do it and again uh for everyone at home cons wise it doesn't mean it's necessarily a bad thing uh it's more so something to be aware of something that could be a hurdle and uh something that you just need to know when looking to implement something like this that's all absolutely so let's start with the pros yeah you know start positive start with the pros that's right so I would say some big pros of the break and retest is that it teaches patience um teaches the ability to or the the importance of not having FOMO yeah right because if you trade the break and retest uh you cannot have patience you or you need patience and you definitely cannot have FOMO yeah right because you need to wait for that retest to come in so it really really teaches that and you'll you

46:10 know if you're not if you're not implementing this when trading the break and retest you're going to find that you're you're losing every time right so that's a really big pro for me right and and has really helped me stay patient in my trades another big one is I think it's quite basic right yeah and that's something that I get a lot from people online it's it's quite basic right but it works it absolutely works there's a lot of ways to complicate it there's a lot of ways to make it sound more difficult than it is but it's just simply how the market trades you see it all the time i mean even today we had an absolutely perfect break and retest of 19400 on the NASDAQ futures again today and I would not be able to have action-packed and highquality content every single day if this didn't happen every single day right so every day I can wake up and be excited to go on the live streams and say and show them another example of the break and retest right and

46:59 so it's happening all the time it's about spotting it and staying patient for it and it's quite basic to understand um another major pro I would say is it it is structured right there's structure to what you're looking for right you're you're understanding exactly how to structure that entire thing out right sort of mechanical uh in its in nature yeah i would So so I would say another pro would just be that you're really focused in on reading the price action it does it's a really it's a really great way to start to read price action right because you know exactly where to read the price action where it's important and that's the battle zone right something that I think a lot of traders do is that they're reading price action all over the place every day there's only so many places that you really actually need to focus on price action right so instead of you

47:47 know from the 9:30 open to the 4:00 close Eastern time and watching every candle that goes on all day which is just going to make you numb in the brain like just can't do it m um you know exactly your shots like where is it that I am going to pay attention right where are those areas on my chart that I'm going to pay attention to reading the price action right I think that's a really big pro it avoids a lot of noise and takes away unnecessary things unnecessary things to focus on okay so those I think are some of the major pros right you have to be patient teaches patience you can't have FOMO or you're going to take very bad losses you're going to take poor entries and you're just going to get pulled back on and I guess the potential as well for the outlier trades you know the trades that can go and make high P&L exactly yeah i would say that would be

48:33 another great pro is that you're in a trade you know where that stop loss is you know where you know how important the hold that you entered on is and if that continues to hold then the running potential of of your trade is very high yeah right because as long as it's above that 200 level if we go back to the you know beginning of the video uh as long as it's above that level you have you know potential to reach new targets and maybe previous highs from previous days and so there's absolutely like an exponential growth to it if it's correct right so let's talk about some cons I would say of the break and retest and the first one that really comes into mind Yeah is you have to have confidence yeah so the reason you have to have confidence is because to really squeak out

49:24 the most percentage points out of the strategy is you have to be entering where that retest level is and sometimes before it feels right to enter yeah right so I would say you have to have confidence in what you're looking for right because when we were talking about that example when we pull back to that retest level price action is usually coming down in that situation it's starting to look actually aggressive to the downside right and so you know new traders may feel like okay that's bearish that's not bearish right it's the retest you want it's the pullback you want and so if you're going to get a good entry because it's so precise in that 2 minute 10-minut time frame you have to be entering close to that invalidation line close to that level if you

50:09 let that go too far higher right or too far up right and maybe if you're watching a 10-minute candle or a fivem minute candle by the time that fivem minutee candle closes you could now be right instead of being at $200 on the retest level you could be trading at 208 right and you can't take eight eight points of risk here right it's too far away so you have to be able to find that execution skews a risk-toreward yeah yeah to make sure that your riskreward is correct mhm if you're having problems having being confident and you're having problems executing that could be a big con you say speed as well speed right yeah absolutely you do have to be fast right i definitely see and you know to be honest I see a lot of people that sometimes try to copy my trades right just being

50:55 fully transparent if you're not fast with it I mean it's a hard it's this is not a strategy to be you know just oh what's desi and let me go ahead and let me go copy it right cuz it it will skew the risk you need to learn exactly why I'm looking at this right you need to be in it right when I enter right or even before me or it's got to be very quick yes right and so this is why something in my group is I don't text any alerts because I know that if I if I text alerts by the time I text it out it's changed right and so I'm not going to pass that information along to someone if it's not even something that I'm interested in right so you have to be fast which a con maybe to some is that you actually have to learn it i guess so is that a con i don't know maybe it is but for everyone no I

51:43 like that but in terms of speed is there anything you have to have done outside of just the norm uh to improve speed or like optimize speed i would say you're going to have to have your broker ready to go right you're going to have to have that options chain ready you got to start to you know you you have to understand what's the contract I'm looking at right what's the correct contract and we get deeper into you know all this information some mental math but like am I trading you know I'm probably going to want to be at an at the money contract right i'm not going to want to trade a too far out of the money contract here because if I'm only taking 5 10 points on an underlying which could be big depending on the stock but if I'm taking a small move on the underlying if I'm too far out of the money on my options I'm not going to get that move right i'm not going to get it might not move as much right and if it goes against me and if that's too far of the money then you're gonna take a massive percent loss right so I wouldn't say it's a con

52:32 but it's just another thing to understand you have to understand you know the option contract that's correct for the strategy which for me is the at the money contract right so you got to be confident right is it a con maybe maybe not but if someone's not then it could be a big con would you say is this strategy only for options or can it be it's it's absolutely for futures as well no 100% like we'll show you examples today and I mean I see break and retests on the NASDAQ futures the S&P 500 futures all the time and actually I would I would almost say that it's equally if not better on futures it possibly is right because with futures you can absolutely quantify risk a little bit better but you don't get that exponential growth with the with a futures contract right when you get that really big growth the QQQ starts to expand or let's say you're trading the options

53:20 on the the QQQ right when it really starts to run those options are going to far outperform the futures contract you know and get that expansion in percentage P&L so so the only thing I would add then really is just what we're talking about is the discretion element it's not really a con it was positive and negative some people it might be comfortful but in reality in terms of something to be aware of is that when it comes to after the initial part as we discussed the entry model and the sort of first trade management section when you hit TP1 after that it's your discretion that's going to keep you in the game which is something to be aware of because you will still need to I would say create some form of rule process of like if X happens then Y and so on but it might not be as fixed as the original one correct um well is it chart time yeah let's jump into it yeah absolutely

54:06 let's take a break for a minute there guys cuz I want to tell you about our incredible partnership with propfirmtrader.com majority of you out there are prop firm traders you're using prop firms to leverage your trading skills to be able to get more capital and to be able to absolutely change your life so what's important to be able to find the right challenge for you with the best firms and most of all the best prices that is exactly what propfrader.com does propertrader.coms allows you to compare prop firms be able to find the best challenge suited to your trading style and get you the exclusive best discounts in the entire industry so that you're paying the cheapest price possible for your prop firm challenge so on propertrader.com you'll be able to use filters to be able to do that and find the exact challenge for you be able to find your favorite prop firms

54:53 on the futures side we have the biggest futures firm in the entire industry with Apex Trader funding giving us the best discount possible right now it's actually 80% off using the code PFT on the CFD side on Forex side we actually have a brokerbacked prop firm called Atmos Funded backed by Torex and they are giving an exclusive offer at 50% off all challenges again using the code PFT so make sure you go do that and not only that another exclusive offer only on Propirm Trader with another brokerbacked Propirm Blueberry 25% off using code PFT25 while also on your first payout you get a free double-siz challenge account so on your first payout you have 100K account you

55:39 will then get a 200K account given to you and on top of that you can get an exclusive offer only on propertrader.com with Alpha Capital on their one-step challenge 25% off using PFT1 so make sure you go and do that and there's so many more exclusive discounts only on propertrader.com it is the go-to site for all proper traders out there and one thing I'm really excited about that I personally helped to organize was the giveaway of giveaways the seven figure giveaway just through purchasing your challenges for the best price through propertrader.com every single week you will automatically be entered into an incredible giveaway a collaborative effort across all of these firms on screen between 100 to 200k accounts over seven figures it means that one person every

56:29 single week who's made a purchase through propertrader.com will be getting seven figures in challenges that could completely revolutionize your trading journey again all you do is for any of the firms on propertrader.com use the code PFT at checkout and you will automatically be entered every single week the link for propertrader.com is in the description below now let's get back to the episode well we got the charts out now we've actually got some active charts that we're going to be looking at live and then some incredible trades to go over as well so where do we begin today so today I want to go ahead and show you guys some examples just that happened today this is April 28th Monday around 300 p.m of some breaking retests on the NASDAQ futures right so you could trade this through the QQQ options you could trade this through MNQ you

57:19 could trade this through QQQ or I'm sorry through NASDAQ futures however you want to trade it right the break and retest is not solo to futures or options it's a trading criteria it's an entry criteria it's something that you will absolutely 100% see during the day on the market it's just I mean even us just sitting here I just showed you two examples and they both worked right and so like if you can spot these things throughout the day you can absolutely be correct and the if you follow the structure correctly you can manage risk correctly and profitate correctly so the first thing I want to talk about here is this low right here that came in in the overnight session right so Sunday futures open yeah right and you can very clearly see that we held that level right so I'm going to go ahead and zoom into this to get this even more closer and just to understand what

58:09 happened at this area so we can see very clearly that we had a very clear low that came in here i'm gonna make that green right very clear low this was actually also a very clear rejection from Friday's price hatch right so we can see that's a very clear level even right there a clear hold so 19395 19,400 absolutely a level of interest right that is now our level of interest we can very also clearly see where our no trade zone comes in right look at this we have this overnight high we have that 194 low so what do we have we have our no trade zone right so we don't want to be trading here this is our NTZ not interested in the NTZ actually a beautiful rejection of that high right could have traded that supply rejection nice right very clean um I'll sometimes look for that

58:56 as well little bit outside of the break and retest strategy maybe a little bit more discretionary or

…