TRADING HIGHSTRIKE

ESSENTIALS
Learn how to trade some of the
most profitable and consistent
trading setups
TABLE OF CONTENTS

Chapter 1: Introduction 3

Chapter 2: Range Trading 5

Chapter 3: Breakout Trading 8

Chapter 4: Reversal Trading 10

Chapter 5: The Morning Gap Strategy 12

INTRODUCTION
HighStrike was developed after Ben, our founder, spent almost two years trying to figure out how to trade on his own.

He saw a huge need for guidance among beginner traders and investors, most of whom were losing money or quitting because they didn’t
have a plan or could not grasp the concept of what they were doing.

Ben launched HighStrike Trading School and as the business grew, he added team members who were highly successful and motivated
individuals that came through his program.

Every instructor and behind-the-scenes member we have is self-taught, learning, and thriving with the resources Ben has provided.

Proof that no matter what background you come from, learning how to get out of your 9-5 and make a living day trading is possible for
everyone.

We understand that learning to trade can be overwhelming. Here at HighStrike, we strive to remove the background noise and make these
concepts as easy as possible for you to understand.

This e-book has been created to give beginner traders an in-depth look at the three most reliable chart patterns and our favorite (and most
profitable to-date) trading setup.

These are the fundamental building blocks of trading. Once you have mastered these, you will be able to use them in conjunction with
other indicators and strategies to heighten your sense of confidence and security in the trades you are taking.

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IT IS IMPORTANT TO UNDERSTAND WHAT SUPPORT, RESISTANCE, AND A FEW OTHER TERMS ARE
TO GET THE MOST OUT OF THIS BOOK.

The support is the price at which buyers think is a good point to buy-in. Expect buyer pressure to increase and a bounce
up to resistance in price to happen to the stock.

The resistance is the price at which sellers think is a good point to take profits. Expect seller pressure to increase and a
price drop back down to support to happen to the stock.

The momentum is when a breakthrough happens and sellers start to turn into buyers. This is commonly seen in
breakout trading and reversal trading.

An uptrend is the movement of the stock when it creates higher highs and higher lows. This indicates that buyers are in
control.

A downtrend is the movement of the stock when it creates lower highs and lower lows. This indicates that sellers are in
control.

The demand is the deciding factor of how a stock will end up doing.

The volume is the number of shares being traded in the given time frame being looked at (IE: 1 min., 30 min., 4 hr., 1
day)

A corridor is two parallel lines, one acting as support and one as resistance, that the stock trades between

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CHAPTER 1: RANGE TRADING

1.1 Range trading is looking for support and resistance

and playing off their confirmations.
The simplest way to explain how to take advantage of a range The third and final thing to look for when confirming a range
trade is to buy at the bottom, sell at the top. That is exactly what trade is confirmation of support. This is the most important
we do when it comes to range trading. thing in any trade. You can draw as many lines as you want, but
without confirming that those lines are going to be supporting or
While this sounds easy, it is not always quite that simple. resisting the stock, it means nothing.
Range trading is a numbers game. Meaning you need to make
It is important to understand that you do not want to buy
sure you win more trades than you lose. If you feel this is a high
directly at the support. You have no way of knowing what the
percentage trade (more than 50% confident in it), you want to stock is going to do. On average, less than 50% of supports hold
look for three things. at that price. Why? Because the market is 20% technical analysis,
80% psychology.
The first is to see how many times has support been
touched? Anything with at least three touches is considered a It does not matter how well you draw your lines on the chart,
strong trend. The more times something happens, the greater the you have to ensure that the psychological points are being met
chance is that it will happen again in the future. Of course, the before you get into a trade. When it is confirmed that people are
past is not proof for the future, but the more it bounces off the comfortable with the price and begin to buy in again, you will
support line, the more likely it is to touch and confirm it again. notice a turnaround of the stock. On the next page, we will go
over exactly how to find confirmation to get in at the best
The next thing to look for in a range trade is determining if this opportunity.
is flatline support or trend line support. Flatline support is
stronger than trend line support and they are exactly what they
sound like.

Flatline support is a flat price point that support keeps coming

back to. Trend line support is the stock making either higher highs
or higher lows. In comparison to the flatline support, which has
multiple support touches (image 1.2), trend line supports follow a
slope (image 1.1).

It is important to note that price coexists with your support line.

If it keeps coming back to touch the support and people keep
buying in at that point, this is a sign of greater confirmation.

1.2 Example of a range trade

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 BUYER PRESSURE

To determine confirmation, you want buyer pressure at the

support. To determine buyer pressure, look at the shape of the
candle:

The candle on the left is a Doji candle. It shows a lot of

downward momentum in the first half of the time frame and
strong upward velocity in the second half of the time frame.
This indicates buyer pressure as people are buying the stock as
the price drops and supporting it with a high level of velocity.

The candle on the right is a large body candle. This indicates

strong upward velocity and buyer pressure. Through the entire
time frame, the buyers showed heavy momentum and the
candle closed much higher than open.

If you are wanting to short the stock, you will look for the
inverse of these candles. You would want seller pressure at
resistance to push the stock back down.

These candles are the most important aspects when it comes

to confirming whether or not something is going to bounce at
support or not.
1.3 Example of different candles that show strong buyer
pressure.

LINES ARE ZONES

Nothing is ever 100% when trading. It is important to note
that a support line is not a line, but more so a zone. This is
because it is not an exact price, but an area of price.

So if the support price is $62.41, that doesn't mean it will

always bounce off support of $62.41. It could move down to
$62.38 or stop short at $62.44. This does not mean the support
is invalid.

There could be larger or smaller orders that force the stock to

drop just under the line, end up being supported by the support,
and start moving upward again. This is called engulfing.

This same idea applies to resistance areas as well.

Sometimes it helps to draw a box at the resistance/support
points instead of a line so you can understand the movement
better.
1.4 Example of a resistance zone

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HOW TO LOCK IN PROFITS OR CUT YOUR LOSSES
When we enter into a position, three things can happen:

1. The stock can go up

2. The stock can go down
3. The stock can move sideways

THE STOCK CAN GO UP

If the stock goes up, that is what we want to happen, right? This means you need to start formulating a game plan for how you
are going to get out of your position. The simplest thing to do is to look at where the resistance is.

Range trading is a very simple pattern to trade because you buy at support confirmation and sell at resistance confirmation. Try
your best not to let feelings of greed and overconfidence get in the way when you get close to resistance. Remember that the more
times resistance is confirmed, the stronger it becomes. Do not keep holding on and let your gains turn into losses. Your best bet is
to go along with what the market is doing because you will never be able to outsmart it.

THE STOCK CAN GO DOWN

If the stock goes down, do you want to stay in that position or get out? It is important to have a game plan for cutting losses, as
supports can be engulfed and drop further. Is it possible this is false support? If so, how long do you plan to stay in the trade? You
will never be 100% certain that support will hold or the trade will work out the way you want it to.

What I tend to do when this happens is look at the total percentage difference between support and resistance. Let's say it is 5%.
Now that the average movement between support and resistance has been determined, it is time to decide on risk tolerance. Your
risk should always be less than your reward, meaning you should always take a smaller loss than you would gain.

In this example, since there is a 5% movement on the stock, it would be foolish to let your losers run more than 2-3%. I always
cut losses at 1-1.5% because I like to keep my losses short. If it ends up turning around after I've been stopped out, that is okay. It
is much easier to get back into a trade than try to recoup losses that did not need to happen.

The best rule of thumb is to cut right below when the trend would have broken or when the stock stops doing what you thought it
would be doing. This leaves you with roughly a 50% win ratio. If you lose 50% of your trades but cut your losses short, your wins
will start to compound on themselves and outweigh the risk.

THE STOCK CAN MOVE SIDEWAYS

When a stock is moving sideways, ask yourself these questions. Do you still understand the trend? Is the trend you predicted
still valid? If the answers are yes, there is no harm in staying in, right? If you do not like the stock moving sideways, you can get
out and try again. You will break even and just go into a new position.

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CHAPTER 2: BREAKOUT TRADING

2.1 Breakout trading is when the stock crosses through

the resistance and uses it as new support.

The first thing you need to know about breakout trading is that We will focus on an upside breakout trend for this example,
the same support and resistance lines from range trading can though you can do the same thing with the downside. Keep in
apply to breakout trades. The difference is the way you use them mind though, if you use this for the downside, it'll be a mirrored
with how the stock is behaving. image of what we are talking about. Everything will need to be
reversed.
So how do you know if you are going for a range trade or a
Once the stock breaks out above the resistance line, there are a
breakout trade? First, look for an engulfing candle at that
few things you need to do to confirm this is the trade you want
support or resistance level. What has been happening against to get into.
that line repeatedly? If it has had multiple rejections and all of a
sudden there is a large engulfing candle, it's likely the stock will
break out and cross the line.

Once it breaks out, that does not mean it is time to get into the
trade though. You want to wait for it to consolidate some back to
the line. If it is truly breaking out, you will see the stock come up
to the resistance line, cross it, and turn the resistance into support.
That is when a break out is most likely imminent.

Now you need to take your resistance line and draw it out
further. What was the last interaction the stock has had with
that line? If it was a rejection, then it is likely the stock is going
to continue being rejected by the line. If the last interaction is
engulfing and possibly crosses over, there is a great possibility the
stock becomes engulfing again, will pop over resistance, and be
rejected by it continuing upward.

It is important that before you get into a breakout trade that you
make sure you are looking at the last interaction the stock has had
with the line you drew. If it was positive to your plan, the next
step is to start planning out your position.

2.2 Example of a breakout trade

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HOW TO CONFIRM A BREAKOUT TRADE
Once a trade breaks out above the resistance line, there are
going to be a few things to confirm before getting in. The first
thing you want to confirm is buyer pressure. For the range
trade, we talked about how a large body candle or a Doji
candle is what you want to look for. That is not the case with
breakout trading. These candles are great indicators a breakout
is coming and buyer pressure is there. You want to confirm it is
happening with three consecutive green candles (see image
2.3). These candles need to have decent-sized bodies. This is
the number one way to show that the resistance line has been
cleared and the stock is now moving in an uptrend.

After confirming buyer pressure, you want to confirm

volume. This is not something necessary for a range trade
because you are buying low and selling high. It is crucial to
have high volume for a breakout trade because you need the
momentum to cross through the resistance line and continue
moving upwards.

Around the event of a breakout, you will typically see 2.3 Three consecutive green candles
consistently taller volume bars that show the shares being
traded are much more active now than they were in the past.
Strong interest and pressure are shifting from the sellers to the
buyers, which in turn confirms the breakout.

Now that it has been confirmed, when do you get into the It can be confusing at times because breakout trades do not
trade? The best time to get into the trade is once the trend has have resistance points. You enter into price exploration when a
rejected off the old resistance line, turning it into a new support breakout happens. This is why it is important to have a
line (see image 2.4).
percentage you plan to take profit at.
Making sure you get in at the exact right time is more of a
nuanced thing. There is no exact science to it, but you learn Look at what happens if the trade goes sideways on a
how to feel it out over time. breakout trade. As long as the trend stays above the resistance
line that has now turned into strong support for you, it is okay
In the case of a false breakout, you will want to cut your to let it consolidate.
losses somewhere below the resistance line that becomes a
support line. Look at consolidation points under that
resistance and draw a line forward. If the stock breaks down to It is not until the stock drops below the new support line that
this consolidation point, it would make sense to sell. Typically you start to have issues. So if that happens, cut losses. Again,
this is around a 1% loss, in my experience (see image 2.4). the closest consolidation point is where you should expect the
price to go if the trade fails to break out of its sideways trend.
On a breakout trade, you can look to lock in a 5-15% move
to the upside. Be sure to lock in profit when you have it. Do not
get angry with yourself if the stock continues to run up because
profit is profit and no one ever knows when the stock is at its
peak.

2.4 Example of where to buy the breakout and where to place stop losses
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CHAPTER 3: REVERSAL TRADING

3.1 Reversal trading is looking to get in when the stock

starts to turn in the other direction.
This is the third and final of the three basic building blocks of Now that you have fabricated a new resistance, you are going
trading setups. Reversal trading is exactly what it sounds like. to do the same tactics done with the breakout trade. You will
This is a situation where the stock is trending in one direction and wait until the stock breaks above this new key resistance (gray
then the stock starts to turn and run in the other direction. line in image 3.2). This is a sign that buying pressure is showing
up, which means it is time to take your position.
The most common way of doing this is to be watching a
There are certain situations where a reversal trade is more
downtrend and waiting for a reversal into the uptrend direction,
common. This is usually the second to the third hour of the day.
buying into it, and making a profit. Many stocks start the day red and spend the first 30 minutes to an
hour this way before you see them start to undergo reversals.
Sometimes it is difficult to tell when a reversal will happen.
That is why you need to be aware of a few things. The first is to 10:30-11:30 am EST seems to be the golden hour for reversal
know that, even in a downtrend, there is always a support line trading.
and a resistance line. Start by marking those on the trend. Just
like a breakout trade, you are looking for the stock to break out Reversals tend to make their own trends, establishing higher
through the top direction. highs and higher lows. When you can show the uptrend has come
to fruition, it is a powerful feeling to know you have confirmed
Once you have identified these, you want to look at the lows the reversal correctly.
and the highs of the trend. Every low is important in terms of
spotting the reversal. The key to spotting this is finding a higher You will be looking for the same indicators as a breakout trade.
high and higher low. The three green candles in a row, long and lower shadowed
candles, and a bounce off the new resistance turned support line.
Usually what will happen is the stock will continue to have
downward movement and make lower highs and lower lows until
it comes to a consolidation point. Once it hits that point, it will
consolidate some and you will start to notice higher lows forming.
This is the start of the reversal.

The second thing to look for is the high that came before the
higher low and draw a horizontal resistance line (see the gray
line in image 3.2)

3.2 Determining higher low and creating new resistance level

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 3.3 Example of a reversal trade

There is a reason we are using the same tactics for all three trades. These are the tactics that work. We
are reading the emotions of the market and following up with our position. Momentum and buyer pressure
do the rest of the work.

If you want to short a stock, you can get into situations where you see an uptrend and look for a reversal
to the downside and make money that way. You would look for a lower high followed by a lower low
followed by a breakout through the support line to the downside.

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 CHAPTER 4: THE MORNING GAP UP STRATEGY

4.1 The morning gap strategy is my most profitable

trading strategy to date.
This specific setup is one of my favorites. It is the morning gap strategy. This is good for someone who either works full time or does
not want to spend all day in front of a computer trading. It is a pretty simple setup as well.

This strategy starts by looking for the stock to gap down overnight (see red line in image 4.1). The opening price needs to be
significantly lower than the closing price from the day before, at least a 5-50% drop. A 50% decrease in price is quite large and not as
common, but sometimes news events come out and force the stock to crash overnight. Although on average, it will likely be around a
5-10% drop.

The next thing to do is establish the presence of buyer pressure. Remember, this is how we can have confidence a stock will go up.
With the very first one-minute candle of the day, it will look like one of two things. It will either be a short body candle with a long
lower shadow or a long body candle with short shadows. This first green candle should cut significantly into the gap created during
market closure ( roughly 2-3%).

The very first candle needs to be the one with significant buyer pressure due to delayed orders. This candle is the sentiment of
orders placed throughout the entire night AND at market open being filled all at once. You do not want to buy yet though. After buyer
pressure is confirmed, you need to watch for consolidation before the next round of sentiment comes.

Consolidation, or a sell-off, will happen for a few minutes. It should not be more than 10-15 minutes max. though. While this
consolidation is happening, make sure the stock does not drop below the opening price. If it does dip below the opening price, it is
possible that this jump up is a dead cat bounce and the stock will continue to drop. 12
"THE MORNING GAP STRATEGY IS WHAT I BUILT MY
TRADING CAREER ON." - Ben Zogby, HighStrike CEO
While the stock is consolidating, draw a resistance line at the top of the first candle with all the buying pressure (see image
4.1). This is now your key line to break through to implement an upwards breakout. Look for buyer pressure indicators to get a great
confirmation of breaking out and continuation to the upside. As a reminder, this will look like: large green candles, higher highs, and
higher lows. Once buyer pressure is confirmed and the old resistance line has become the new support line, you can enter your
position.

Now that you are in, what is your plan for getting out? Since we just broke through our resistance point, we need to look for a
new one. Go back further on the chart and look for levels that have been confirmed from days in the past. Look for potential reversal
signs in these key levels.

This trade should take no more than 10-30 minutes, 60 minutes at most. It is a very quick trading setup and you should look to
make 2-3% gains on this recovery from the gap down. This is not an all-day hold. Unfortunately, if it gaps down like that, it will
likely reverse and continue to be a red day for the stock.

SIGNS OF A REVERSAL PATTERN

Reversals can happen very often in this strategy, that is why this is considered such a quick play. You get to make a quick
profit on recovery and get out before it continues as a bearish day.

There are three things to look for when it comes to a reversal pattern:

1. Head and shoulders

2. Lower lows and lower highs
3. Three red candles in a row/large red body candles

HOW TO SHORT A GAP UP

The morning gap up strategy is going to be played as
the opposite of the morning gap down strategy. You will
look for a 5-50% gap up overnight. Then you will look
for the first candle to be a hefty red candle that confirms
selling pressure.

After the red candle, there will be some consolidation.

During that time, draw your support line at the bottom
of the first red candle. Once the stock has broken down
through the support and is rejected, it needs to continue
making lower highs and lower lows.

You will then enter your position by shorting the stock

or purchasing puts after the old support has turned into a
new resistance point.

Remember to take profits at 2-3% gains, as this will

likely reverse and go back to being a green day for the
company.
4.2 Example of the morning gap up strategy

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 THANK YOU FOR READING OUR BOOK!

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