knoxville breakout trend trade examples advanced version · 2019. 9. 13. · part one of the book...
TRANSCRIPT
Page 1
Knoxville
Breakout
Trend Trade
Examples
Advanced Version
Rob Booker
Version 2.0
December 27, 2014
http://tfl365.com/trendtrade
Page 2
INTRODUCTION
How To Use This Book
In the pages that follow I am going to show you 50
examples of breakout trend trades using Knoxville
Divergence. I want to show you how to spot an entry, how
to find a good profit target, where to place your stop.
Not every example will show you every element of the trade
– some charts will show you entries, some will show you
profit targets, some will show you stop loss placements. I
encourage you to build your own book of trade examples.
Ok, let’s get this started.
Part one of the book shows about 20 examples of the
standard Knoxville Breakout Trade. If you’re part of the $7
starter trend trade course, these examples will show you
almost every situation you will ever encounter.
Part two of this book is for those of you who are part of the
Advanced Trend Trade class. Here we cover examples of
trading pullbacks, for even tighter stops and wider profit
targets.
Enjoy the examples, and Happy Trading!
Page 3
PART ONE
How to Take the Breakout Trade
Set your Knoxville Divergence indicator for 30 candles
back, or at most 50 candles. This means that your charts will
now look for divergences that stretch over only 30 to 50
candles. (Refer to the videos in the course for more
information about this).
Then follow these two steps to take a trend trade:
1) Knoxville Divergence completes. It will show up on
your charts as a line above price or below price.
2) The breakout is the trade. We draw a line above the
highest candle in the setup (for a buy trade in a
rising market) and below the lowest candle (for a
sell trade in a falling market).
Those are the only two steps. Now let’s see some trades!
Page 4
S&P 500, 4 hour
This is the classic entry – bearish Knoxville Divergence,
which shows that the market is in a bullish trend, and then a
breakout above the highs. That breakout is the entry. Also
notice that before the breakout, the S&P had missed two
weekly pivots in a row.
Page 5
Oil (WTI), 4 hour
I like to place my stops behind a weekly pivot. I usually
choose either the most recent weekly pivot or the one before
that. I want to give my trade enough room to get going, but
not so much room that it can start to get away from me and
turn into a big loss.
Trend trading is the “easy money,” because you’re going
with the crowd. But if you hold onto a trend trade when the
market is making a big turn, you’re going to get killed. So a
tight stop is preferable. You can always get back in (at the
original entry price) if you stop out.
Page 6
GOLD, 4 hour
Look at the far left on this chart. We get bullish Knoxville
Divergence, which shows that we are falling fast and hard –
that’s a bearish trend.
*NOTE: I know it’s weird to say that we are looking at
BULLISH divergence and then taking a BEARISH view of
the market. But divergence can be used to find both market
turns and to show the best trend trades. It’s cool that way.
We sell on the first breakout, with a stop above the most
recent weekly pivot. We sell again on the next breakout
following divergence. And we place a new stop ON THE
ENTIRE POSITION above the newest weekly pivot. We
take a maximum of two trend trades. We stop out of the
whole position at a profit above the third weekly pivot.
Page 7
USD/JPY, 4 Hour
Can you see where we bought USD/JPY? You can see the
red divergence lines and the horizontal line – so by now,
you already know that we bought on the breakout.
*NOTE: You might wonder why we don’t buy on a
pullback. The answer is that we do buy on pullbacks, but
that’s another strategy – so keep that in mind. But more
important, we don’t always get a pullback in a strong trend.
(Shameless plug: get the pullback in the $27 Advanced
Course).
This trade stops out with a sweet profit when we drop and
hit the next week’s pivot.
Page 8
AMZN, 1 Hour
You have to look closely at this example. See how we buy
(the letter B on the right side) on the breakout following
divergence. We buy immediately on the breakout. We don’t
need to wait for a candle or bar to close.
Then we set our profit target at an area of previous
resistance – these are high probability profit targets. If the
financial instrument is making new all-time highs, then we
can’t use this method, of course. But we use it when we can.
The stop on a trade from the 60 minute chart goes below the
most recent daily pivot, or even the daily pivot from as
many as two or three days back.
Page 9
TWTR, 1 Hour
I like longer term charts (4 hour and higher) because we
don’t get involved in so much market chop. Here is an
example of market chop.
We sell – then we stop out. Then we place an order to sell
again at the ORIGINAL entry price, the same price as
before, and then we stop out again. Then we take a third
trade, and this time, the stop is wide enough, and the stock
is ready to take a dive.
One nice thing about using options with these trades is that
you could buy a butterfly put spread, or just buy a put, and
you would not have to worry about the stop-loss. You would
just be buying time.
Page 10
FB, 1 Hour
We want a trade quickly. If we don’t get a trade quickly,
then something has gone wrong with the trend. We should
see the divergence, and then within 20-30 candles MAX, we
should see the breakout.
*NOTE: If you’re trading options, you don’t want to take
your options trade until the breakout occurs – that way you
don’t get tricked into a trade.
Page 11
AUMN, 1 Hour
Want to trade penny stocks? No problem. This stock cranks
out some amazing wins (and so do many other penny
stocks). This is a 10% gain in a day.
The first two trade setups never open – we don’t get a
breakout within 20 candles. Then on the third divergence,
we get a breakout, and we set a profit target at the previous
high (it’s easy to find, it’s the high that was made on the
previous divergence). Of course, buying and selling penny
stocks carries a huge risk – slippage, wide spreads, etc. But
if you can handle your risk, you can find some great trades.
Page 12
TKMR, 1 Hour
Want to trade pharmaceutical stocks? Ok, crazy person, let’s
fire it up. Here we get two buy trades in quick succession,
and then we really blast off. We move from $11 to $20 in
just 6 days (or less). Then, right before earnings, we get out.
We would rather close out our trades before earnings. That’s
when we get pullbacks and all kinds of nastiness that we
simply don’t need.
Page 13
JCP, 1 Hour
Let’s say you want to trade fundamentals. And let’s say you
pick a stock that is just a dog. And you want to sell it.
Knoxville Divergence can help you with the entries. If you
have really strong conviction about a company (like JC
Penny), you can just keep selling on every divergence. You
might even break the rules and not even wait for a breakout
beyond the divergence.
*NOTE: Of course this assumes you’re doing your research
to find the best companies or worst companies, or financial
instruments. I don’t do much of this kind of research, but I
should. There are some huge wins when you the technicals
match up with the fundamentals.
Page 14
TSLA, 1 Hour
Another fundamentals trade. Here’s Tesla, a good company
with great prospects, and maybe you like it (I do). I know it
might not fit your description of a great company, but just
play along in my world for a moment.
So we buy on a breakout of divergence, and then what
happens? We stop out. FRUSTRATING!
But we can always get back in on the next move to the entry
price – don’t forget that just because a trend trade stops out,
doesn’t mean it won’t be a winner on the next trade. This
can happen a lot on tech stocks.
Page 15
TSLA, 1 Hour
What happens when you see a gap above the divergence?
This means that your preferred entry price has been missed
and you might be tempted to walk away from the trade.
Don’t. If you like the fundamentals, take the trade anyway.
Buy it at the next price you can get, and ride it to your
preferred profit target.
In these instances, you need to reduce the size of your trade
because your stop is going to be farther way. But what I find
is that these gap trades can be very profitable. Let’s take a
look at a few more of these.
Page 16
BIDU, 1 Hour
Here’s another example of a gap trade. It seems insane.
Who would buy a stock on a gap like this? I would. I would
definitely do it for two reasons:
1) Knoxville Divergence WORKS
2) Post earnings gaps usually have a little bit of juice
available to get you to the next level.
It’s a simple as that. The stop is wider, so you have to
reduce your trade size (as we mentioned in the last
example). But it’s a high probability trade.
Page 17
BIDU, 1 Hour
I like the examples where we show one or two stop-outs and
then a win. That’s how it works. I would, in fact, consider
taking EVERY first breakout with a half trade size, and then
the second with a half trade size, and then the third with a
larger full trade size. It’s sometimes the third breakout that
moves the best.
In this example, we buy, then stop out. Then we buy again,
then stop out. Then we buy again on a gap, and it runs
nicely upward. Then we get out before earnings with a win.
Page 18
YHOO, 1 Hour
What happens if you see a ton of Knoxville Divergences?
Well, first of all, it’s a sign that you are in a savage trend.
Eventually this trend will end (that’s part of the Trifecta
Course on Counter-Trend Trading). But for now, you want
to buy, and buy again, and buy again. Just keep moving
your stop, keep protecting your trade, and you will be just
fine.
Page 19
GBP/JPY, 15 Minute
The short-term charts can work really nicely. Just be ready
for lots of volatility. And be ready to sit in front of the charts
to babysit your trades. If you like action, you’re going to
love the next few pages because that’s what you’re going to
get.
In trade setup #1 above, we get NO TRADE because we
don’t see a breakout within 20-30 candles.
In trade setup #2, we get a traditional lovely Japanese Yen
currency pair trend trade. A really, really fast move lower.
You get in, you get out, Boom Shaka Laka!
Page 20
EUR/JPY, 15 Minute
Where do you put your stops if you don’t have pivots? If
you’re working with the 15 minute charts, or lower, you
don’t want to use the daily pivots for stop levels. So we
need to rely on regular support and resistance.
In this example, we simply place the stop below a near-term
recent low. That’s perfect.
If you have access to the intraday pivots on
TradingView.com (look under indicators > Marketplace
Add-Ons > Rob Booker), then you’re going to be able to
use the 1hr and the 4hr pivots for your stop placement.
Page 21
CAD/JPY, 5 Minute
By now you have noticed that I love the JPY currency pairs
for trend trades. They are for sure the best of all the
currency pairs.
In this example, I’ve got the intraday pivots on the chart.
The green lines are the 4hr pivots, and the red ones are the 8
hour pivots. (You can get these in TradingView.com charts,
in the MarketPlace Add-On section of the indicators list).
You can see that the CAD/JPY started to make us some
money, and then it turned around and went all the way to the
stop. This is a 25-pip stop out. Not bad.
Page 22
CHF/JPY, 5 Minute
We stop out twice here (that’s not uncommon on this pair –
I actually don’t ever trade this currency pair on the short-
term charts, but I wanted to show you an example of a
double loss).
The first stop-loss is under the most recent 4hr pivot (in
green). The next buy trade comes at the same level as the
first entry, but we can move the stop closer this time, to just
below the most recent 4hr pivot. Both trades stop out.
That’s gonna happen sometimes. (There was no third trade
here).
Page 23
NZD/JPY, 5 Minute
Sometimes we think that if we trade the short-term charts,
we get more action. But sometimes we watch and wait, and
then we don’t get a trade. In these two setups, we don’t get
the breakout we need in order to take a trade.
Page 24
AUD/USD, Daily
The longer term charts are the easiest to trade. But the
longer term charts will produce way fewer trades.
Some financial instruments will only produce one trade per
year on the daily charts. And that’s fine – there are plenty of
financial instruments to choose from.
In this example, the Australian Dollar prints bearish
divergence, and then we draw a line across the top of the
candle that finished the divergence line. Then we buy on a
break above that line.
*NOTE: Once again, don’t forget, we are buying on
BEARISH divergence. Watch the course lessons again if
you need to – it’s a little bit odd, but it’s what we do.
Page 25
WFC, Daily
It might seem boring to trade a bank stock like Wells Fargo.
But these can move nicely, with less volatility than tech
stocks or commodities.
In this example, we stop out on the first trade, but then trade
the stock again on the next move to our entry price. The
nice thing about trading a bank stock (or a Dow stock) is
that there are usually lots of wonderful old support and
resistance levels to pick as profit targets.
Page 26
INTERMISSION
I’ve showed you 20 or more examples of the standard trend
trade. It can be a wonderful setup and can produce hundreds
of trades per year for you. Pick your favorite financial
instrument and do some testing to see how it works. Then
start trading with a small trade size and build your
confidence.
In the next section, we’re going to talk about the pullback
trade. Let’s do that right now.
Page 27
A FEW WORDS ABOUT THE STANDARD
TREND TRADE
For those of you in the advanced class, I have a tip about
making the standard trend trade super powerful:
Look at how steep the divergence line is. If it is very sharply
angled, I call that “Class C” divergence, and it is PRIME
TREND TRADING MATERIAL. Increase your trade size
on these trades, or ride them longer.
Page 28
PART TWO
The Pullback Trades
The pullback trend trade is designed to avoid stopping out
frequently and to also have a larger profit target per trade. It
has more moving parts – although it’s still very easy to set
up.
Here are the steps:
1) Wait for a missed pivot (different time frame charts
require different types of missed pivots, and we’ll
cover that below),
2) Then after the pivot has been missed, wait for
divergence to form
3) Then trade in the direction of the missed pivot (the
trend direction)
Now, let’s cover a bunch of examples so you can see how
this works.
*NOTE: You might find it too confusing to trade BOTH the
standard trend trade and the advanced trend trade (they can
start to conflict with each other). In this case, JUST TRADE
THE ADVANCED VERSION. It’s better.
Page 29
GBP/JPY, 1 Hour
Here’s a simple example of how the pullback trade works.
1) We’re on the 1 hour chart, so we are going to watch
for a missed daily pivot,
2) We miss two daily pivots (just one would be fine,
but we miss two)
3) *If you don’t know what a missed daily pivot is,
refer to the lessons in your course online,
4) We then wait for a pullback, and bullish divergence,
and we buy as soon as we see that divergence.
That’s the trade entry. Let’s look at another example.
Page 30
Oil, 1 Hour
Okay, I admit this looks totally weird. Oil rises fast enough
to miss its daily pivot.
Then, 7 days later, after a substantial drop, it prints bullish
Knoxville Divergence. That’s enough for a buy trade. We
buy Oil immediately when that divergence is printed.
Some things to note: The divergence can come up to 10
days after the missed daily pivot (if you’re using a 1 hour
chart). If you’re using a 4 hour chart, and weekly pivots,
then you can wait up to 10 weeks for the divergence to
appear.
Page 31
JCP, 15 Minute
When trading stocks, use the 15 minute chart in
combination with weekly or daily pivots (there are other
combinations that we will talk about later on).
We see two missed pivots in a row, and then 9 days later, we
see bearish Knoxville Divergence form. Then we sell
immediately on the formation of that divergence.
*NOTE: Sometimes the pullback is so deep that it pulls all
the way back into the same area as the missed pivots. That’s
totally normal, and absolutely ok.
Let’s keep going.
Page 32
LNKD, 4 Hour
When trading from the 4 hour chart on stocks, use the
monthly pivots. This is really long term trading for some of
you, but they can be the biggest wins, even if they look
weird.
We get three missed monthly pivots in a row (the circled
purple lines on the chart). Then 9 months later (I told you
this was long term), the 4 hour chart prints Bullish
Knoxville Divergence. That means we buy immediately.
The pullback is DEEP. It is so deep you might say, “Rob, a
brand new bearish trend has formed.” But the FACT is that
there are still a lot of long term traders (like institutions)
still holding LNKD and they are buying on dips.
Page 33
USD/JPY, 4 Hour
(These pullback trades can look bizarre. I know.)
On a 4 Hour currency pair, you want to use the weekly
pivots. They are colored green on my chart.
The first part of the trade is when the USD/JPY missed a
weekly pivot on a strong move upward.
Then, just a week later (actually even less), the 4 Hour chart
prints bullish divergence. We buy right away.
I love JPY currency pairs for this trade. They trend so
nicely.
Page 34
ES, 4 Hour
On an index, if you’re trading the 4 hour chart, use the
weekly pivots.
We miss a weekly pivot at the upper left area of the chart.
Then, 7 weeks later, we see bullish Knoxville Divergence
on the 4 hour chart. We buy.
Page 35
ES, 4 Hour
Let’s talk about where you put your stop on the trade.
In this example, the S&P futures miss a weekly pivot – and
then just a few weeks later we see bearish divergence print
on the chart. In this case, we set up a sell trade – and take an
immediate sell as soon as the first bearish Knoxville
Divergence shows up.
But then price continues upward and we stop out just above
the highs.
That’s a quick stop, no pain. But – we could have avoided
this trade completely. Take a look at the next chart.
Page 36
ES, 4 Hour
First, let me tell you an important filter for these trades:
Two missed pivots in a row is a sign of a very strong
developing trend. Don’t mess with this! Don’t trade
against it!
In this example, moving from left to right:
1) We miss a weekly pivot as price falls, so we start
thinking about setting up a sell trade,
2) Price begins to rise on the pullback, but misses two
weekly pivots in a row,
3) So we IGNORE the pullback trade later on.
Page 37
ES, 15 Minute
On the 15 minute chart, we can use the daily pivots on the
ES. By the way, the ES can be a totally frustrating
experience – in any kind of trading – as you are competing
with the most sophisticated traders and robots in the world.
In this example, we miss a daily pivot as price rises.
Then we get three bullish Knoxville Divergences, but the
first two trades stop out. FRUSTRATING!!!
Can we avoid those stop outs? Yes, we can. Let’s move on
to the next chart and I will show you how.
Page 38
ES, 15 Minute
On the ES, and on super trendy stocks, you are going to
want to WAIT before you jump into a pullback trade. This
will save you thousands and thousands of dollars in losses.
Instead of buying immediately, we draw a resistance line
above price – we simply find a short-term spike upward
inside of the divergence area, and then place an order to buy
only if price crosses above this line. Watch the videos in
your course online for more information about this – and
check out the next few examples.
*NOTE: This method will reduce the number of trades, and
get you in at a later price, but it will save you a ton of
problems.
Page 39
TWTR, 15 Minute
When trading stocks on the 15 minute charts, use the
weekly pivots.
We miss a weekly pivot as price falls, so we want to set up a
sell trade. Then earnings are released and price ROCKETS
upward – even creating a gap. WOW!
Then price creates bearish Knoxville Divergence, and we
draw a support line under the gap. Under that line, we want
to sell the holy heck out of Twitter. Trades like this post-
earnings can be huge winners. And waiting for price to
break the support line doesn’t cost us much at all.
Watch the videos in your course online for more practice in
drawing these support line entries.
Page 40
AUD/JPY, 15 Minute
When trading currencies on the 15 minute charts, use the
daily pivots.
We miss two daily pivots in a row – a very strong indication
that a bullish trend is developing (and that it will continue).
Then just a couple of days later, we see bullish Knoxville
Divergence. We don’t buy immediately, however – we wait.
Instead, we buy above a resistance line. And this means that
it takes TIME for the trade to develop.
(This trade is a huge win, by the way, and it’s okay that we
are going to have a wider stop on a trade like this).
Page 41
AUD/JPY, 5 Minute
When trading currencies on the 5 minute charts, use the 8-
hour intraday pivots. (You can get these on
TradingView.com under Indicators > MarketPlace Add-Ons
> Rob Booker).
We see the AUD/JPY miss an 8-hour pivot. I apologize for
the really small candles but I had to fit a lot of stuff into one
chart.
In this example, there is no way to draw a neat horizontal
resistance level to act as the entry line. So instead, we draw
a trendline across the tops of the candles. We prefer a
horizontal line, but the trendline will do as a second option.
Page 42
EUR/CAD, 5 Minute
When trading currencies on the 5 minute charts, use the 8-
hour intraday pivots.
We’ve seen so many deep pullbacks that sometimes it
surprises us to see a pullback that doesn’t even return all the
way down to the missed pivot. But in this case, just a few
hours after missing the intraday pivot, we see bullish
Knoxville Divergence print. And we don’t have a great area
for a horizontal entry line, so we use a trendline.
Page 43
GBP/NZD, 5 Minute
Let’s talk about profit targets.
This can be an amazing currency pair to trend trade from the
short term charts.
We miss an 8-hour intraday pivot. We see bullish Knoxville
Divergence. We buy on a break above horizontal resistance.
Our first target is any 8 hour pivot that is above our entry.
Our extended target is the recent high that was made before
the big drop.
Any support or resistance level is always an acceptable
profit target. We can also trail our stops using pivots, just
like we do in the standard trend trade.
Page 44
GBP/JPY, 5 Minute
This is an example of a really, really good trade –
everything setups up perfectly.
The only problem is that we don’t reach our extended profit
target. And not just that – we don’t even reach the nearest
intraday pivot. For those of you who trade FX, you will
notice that this 5 minute trade, however, does move 100
pips in your favor. That’s 100 pips and NO DRAWDOWN.
I encourage you to find your own ways to scale out of trades
as they move in your favor.
You can also use the trailing stop method, and as soon as
price reverses back above an intraday pivot, you can exit
with your profit. This would be a nice win.
Page 45
GBP/NZD, Daily
If you are watching the daily charts, you should consider
using the monthly pivots.
The problem is that if you miss a monthly pivot – as we do
here – you might not get the divergence you need to take a
trade. You have two options:
1) Draw a trendline and just trade a break lower below
that trendline (and use our stops above the highs and
extended target)
2) Move to the 4 Hour chart and look for bearish
divergence there for the trade.
Page 46
IBM, Daily
Here’s a boring stock – IBM. It misses a monthly pivot on
the daily chart, and so we wait and watch and draw a
trendline above price as it pulls back. This is simple. It is
easy to do. It requires looking at the chart only once per day.
And it turns into a huge win.
I implore you to look for the simplest ways to implement
these methods. Using the daily chart is a way to do that.
Page 47
QLD, 4 Hour
If you are watching anything that is index-related on the 4
Hour chart, you will want to use the monthly pivots.
By this time, you can pretty much put the elements of the
trade together on your own.
*NOTE: When looking at longer term charts – anything
over the 4 hour time frame – you are going to get way fewer
trades. It’s okay, because the trades are huge wins.
Page 48
QQQ, 4 Hour
If you are watching anything that is index-related on the 4
Hour chart, you will want to use the monthly pivots.
Sometimes your extended profit target is an impossible
dream. And that’s okay – just forget about and use the first
profit target instead.
*NOTE: This is pretty much the dumbest trade ever. This is
a sell trade on the QQQ during the greatest bull market in
10 years. But it still gets to its first target.
Page 49
IWM, 4 Hour
I wanted to find more examples of trades that look stupid,
like selling in the middle of a bull market. Here’s one of
those examples.
We get a missed monthly pivot, then we get divergence, and
an entry below a support level. This trade stops out – but
then all of the sudden, drops anyway. This just goes to show
that sometimes we are going to get everything right, and
still stop out on our trade anyway.
Let’s look at one more example of selling into a bull
market.
Page 50
Page 51
DLTR, 15 Minute
This is an insane trade.
We use the weekly pivots on a stock when we are looking at
the 15 minute chart.
We miss a weekly pivot as we fall. But if you look back on
this chart, it has been on a SAVAGE GIANT RUN
UPWARD. There is no way we would be viewed as
intelligent for selling this stock. But we get bearish
Knoxville Divergence, and we draw a trendline, and then
we get a trendline break as the stock moves sideways.
Even if we sell, it’s a quick stop out. And if we had used a
horizontal level of support to get into the trade, it never
would have opened.
Page 52
CONCLUSION
I had a lot of fun teaching you these systems.
Your challenge is to find the right mix of financial
instruments and time frames to trade.
I exhort you to focus on one or two financial instruments
and one time frame chart. This focus will allow you to
become an expert in doing one thing really well.
If you want more help getting your mind right for trading,
and learning how to focus your trading to make way more
profits, here are my free 16 Rules of Trading:
https://robbooker.clickfunnels.com/16-rules-ebook
Just click that link to get a copy of the ebook with my
trading rules, and you’ll be invited to the $27 Millionaire
Trader Mindset Course.
If you want to just simply jump over to the course, here’s
the order page:
https://robbooker.clickfunnels.com/launch-page-4