If the price breaks the old high but immediately fails and closes back below it, a reversal is imminent. You enter a short position immediately above the failed breakout level. 5. Risk Management: The 3% Rule
One of the most actionable strategies highlighted in the text is Trader Vic’s precise technical definition of a trend change, known as the . If the price breaks the old high but
Complementing the 1-2-3 pattern is the "2B" pattern, which is designed to catch reversals when a false breakout occurs. The logic is that if the market lacks the momentum to decisively beat a recently formed high or low and only inches beyond it before quickly reversing, it is likely to correct against the prior trend. To trade this: Risk Management: The 3% Rule One of the
While Sperandeo respects fundamentals, his primary trading tool is Dow Theory. He believes that if a trader can accurately determine the trend and identify precisely when it is likely to change, they hold the keys to the kingdom. To simplify complex price movement, he developed his famous . To trade this: While Sperandeo respects fundamentals, his
Sperandeo argues that the markets are not completely random. They are driven by human nature and government policy. To predict long-term market trends, a master trader must understand macroeconomics, central bank policies, and the business cycle. The Role of Interest Rates and Inflation
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