How to Trade Breakouts | The Volatility Contraction Pattern (VCP)
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- Опубликовано: 31 июл 2024
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📰 TL Trading Academy: traderlion.com/YT-TLA Buying Stock Breakouts is a highly effective trading strategy during strong bull markets. In this video Richard discusses how to buy these stock breakouts using the volatility contraction pattern (VCP)
This pattern was coined by Mark Minervini and describes constructive price and volume action as supply is absorbed from left to right during a price base. Then the VCP breakout is when the stock moves through a clearly defined pivot point. This is the ideal buy point for breakout traders.
In this video Richard provides clear examples to help train your eye to identify VCPs for yourself.
What is a Pivot point: • What is a Pivot Point?...
Enjoy!
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Timestamps:
0:00 Introduction and Agenda
0:30 What is a VCP
1:35 What is a Pivot Point
2:15 History of VCPs
3:13 Key Elements of a VCP
5:00 NIO Example
6:40 TSM Example
7:05 SPT Example
7:40 Why to use a VCP
8:28 How to catch a VCP breakout
9:20 How to Manage Risk for VCP breakout Buys
10:30 Key Takeaways
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👇 What you'll learn!
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Lesson 1: Build a sturdy trading foundation to overcome the biggest obstacles holding you back.
Lesson 2: Master 3 powerful trading setups to adapt and thrive in various market conditions.
Lesson 3: Efficiently screen and find top-performing stocks with strong momentum and high growth potential.
Lesson 4: Establish a streamlined risk management strategy using stop losses, position sizing, and portfolio heat analysis.
Lesson 5: Optimize selling decisions by identifying late-stage bases or key trend reversals by analyzing daily and weekly charts.
Lesson 6: Sharpen your trading analysis and decision-making by integrating cutting-edge analytical tools and techniques.
Lesson 7: How to establish and maintain routine weekly and daily trading practices to ensure consistent performance and continuous improvement.
Great video! My favorite aspect was when you left the viewer a few seconds with an unmarked chart to try and find the VCP. very helpful.
Glad it was helpful! Thanks Manoli
Nicely and concisely presented. Highly informative. Could have sworn I was listening to Mark himself! Blessings for a fortune to be made!
Richard, Hats off to your passion and dedication. You rock mate.
Thanks Samir!
Brilliant and crisp explanation of VCP. Thanks a lot Richard 🙏🏻
My pleasure!
Richard, much appreciated your efforts to empower the traders across the globe. each video contains so much learning. TL is the first channel for which i have put on notification. Thanks again.
Wow! Awesome
Many thanks Richard. Today I was reading "Trade like a stock Wizard" and your video came in perfect timing. Thank you again!
Great to hear!
thank you Richard, very useful, have watched a lot of your videos, like it all
Such a wonderful material in few minutes. thanks guys!!
Our pleasure!
I've learned so much from your videos. I can't thank you enough!
Glad to hear it!
Great Video. It is always a matter of judgment to determine the exact pivot point. In the first example, one could also argue that the pivot point is where the breakout from the top of the first candle occurs, which acts as an inside bar and thus holds a high importance as resistance and support.
Excellent video.
Thank you for sharing your knowledge.
A power packed video A great summary of VCP. Thanks for sharing 🙏
Glad you liked it!
Thanks for making this video on VCP.. I was looking for some good info on VCP and fortunately I landed on this page... You have beautifully explained the concept.. I would say this 11 minutes video is very well planned...
Glad it was helpful!
now this is a great explanation of what a VCP is and how to trade it, thank you!
Of course! Glad you found this helpful!
Love the content. Short and sweet. 👌👏
Thanks Andy!
Thank you Richard! Thank you TraderLion Team!
Our pleasure!
Very helpful. Great learning. Thanks a lot 😊
Glad it was helpful!
Thanks Richard and Traderlion, 5 ⭐️ yet again. 👊
Our pleasure!
amazing video @Richard - need more such videos explaining strategies
Will do!
Great video Richard with very clear explanation of VCP. Q: How can I screen/scan for potential VCP stocks? What filters can I use?
good work and very good brillant work of the VCP pattern showing traders the secrets
Thanks!
Great video. Learning a lot. Thank you.
Glad to help!
You're such a unique trader.. you respect and earn to everyone and everything
Cheers man thanks
Excellent video! This is exactly how I like to trade!
Glad you liked it!
Awesome video!
loved it thankyou so much kudos to your work
Glad you enjoyed it!
Nice work Richard!
Many thanks!
Thanks for your sharing!
Just want to genuinely thx you for a summarized vcp explanation...still learn how the trade & practicing, so my question is how do I apply the Moving Averages & how to use the volume in the process
Thanks for great video bro
Timestamps:
0:00 Introduction and Agenda
0:30 What is a VCP
1:35 What is a Pivot Point
2:15 History of VCPs
3:13 Key Elements of a VCP
5:00 NIO Example
6:40 TSM Example
7:05 SPT Example
7:40 Why to use a VCP
8:28 How to catch a VCP breakout
9:20 How to Manage Risk for VCP breakout Buys
10:30 Key Takeaways
Richard - thanks for the nice video. When I think of a time frame, I think of length of time (horizontally)...when I think of price, I think up or down (vertically) as that's how stock prices are graphed...so, I am what do you mean when you say the the higher the time frame the more significant the pivot? (1:50)
😊p0⁰⁰⁰⁰⁰⁰😊😊
@randyhughes7695 higher time frame as in 2hr, 4hr 6hr, 12hr, daily, weekly, monthly.
He is saying the higher the time frame, the less false signal. Another way of saying it is the higher the time frame the more significant the pivot point
Splendid! Thank you so much.
Glad you enjoyed it!
Great explanation
Thanks for the video, always appreciate the work, very clear and simple. Do you know anyway for me a TradingView user to have the volume bar in different color when institutional buys in? Thanks
great video Richard
Thanks 👍!
Great video
Great vid! thank you
Glad you liked it!
Hello Richard,
Great video!!! Thank you. Do we look in both weekly and daily chart for VCP pattern ? if yes, which is more significant
Awesome vid!!!
Glad you enjoyed it!
Thank you Richard
My pleasure!
Very informative video!
Glad it was helpful!
Thanks，help me a lot，love it
Glad to hear that!
Tks great video as always. Idea for related video, how to scan on MS for VCP.
Thank you so much 😊
Thank YOU for watching!
Thanks Brother
Hello Richard, as always a great video from you. I have a question regarding how to catch a VCP breakout. I have in Tradingview the indicator "Volume Buzz 2.0". Which volume percentage over average is a entry point for you (10%, 20%, 50%...)? And do you use for accuracy a 30min or 1h chart when the markt opens? Thx
Great video, very clear explanation. Also worth mentioning that these setups occur in any market based upon supply/demand; not just stocks.
Some of the most profitable VCPs have been in cryptos.
Good point, anything traded can form VCPs
Found it hard to see in cryptos. Can you enumerate even just a few and certain timepoints?
@@user-ot1vf5oq4p HEX June, July & Aug 2021
XRP March, April, & Dec 2017
SHIB Oct 2021
ADA Jan 2020, Jan 2021
SOL Jan, Aug, Oct 2021
BTC 16th & 26th Dec 2020
Awesome content 🔥🔥🔥
Glad you liked it! Thanks Olivier
Favorite pattern
Richard - I am having a hard time with my PP entries. Where do you place your buy order?
Do you try to anticipate and place it just under the PP?
Do you place a buy order just above the PP? and if so how far above?
Do you wait for a confirmed breakout and buy at the end of the day or early the next day?
I am having a hard time with this and was wondering what the best method is. If you would make a video on this it would be great. Thanks for all your great videos and education, they are much appreciated.
you are the best
Hey Richard, thanks for sharing such great knowledge.
I had one question, once we have found the setup, do we wait till the daily close of the candle to confirm breakout and enter next day or dow we enter on intraday 1H timeframe itself on the same day?
Great video, thx. How to find stocks with VCP?
Richard would you trade a vcp pattern thats coming out from a long term down trend but showing strengths and a good pattern even though its still below its 200ma?
This is nice. Wondering can u have a vid with Tom Demark?
Very nice examples. How and where do you find your stocks. I am interested in setting up Think and Swim to screen stocks to find this pattern. Is that possible ?
Nice videos you make
Thanks!
Can you plz tell me how did you set ur mouse pointer?
How to screen for such stocks?
I can't forever use a random scanner
Pls do tell.
Hi Richard, excellent video! Do you have a method to scan for these setups like TC2000 or TradingView?
You can scan for the trend template, but then mostly it's about training your eyes and analyzing bases
Nice video
Thanks
Hi
richard which drawing tool you use ?
Can we expect a VCP indicator from you Richard on TV?
Do u have any course that teaches from the beginning .I am a new trader
Looks like that NIO example is actually in the July/Aug timeframe in 2020.
Great video Richard questions to join members would only get alerts on Twitter? And do you have a live chat room? Where traders can trade alongside you guys? Also is it required to be a Market Smith subscriber? Thanks in advance.
Thanks Frank. Private access is all about guiding traders and pushing them so they can do this themselves. We are not a live chat room or send alerts. But we do have a community where traders shares studies, methods, and ideas. I would recommend checking out private access: www.traderlion.com/tl-private-access/
Thanks for the video Richard, are there scanner available for the VCP pattern ? And how long it takes to form a VCP pattern on daily timeframe based on experience.
You can scan for the trend template, but then mostly it's about training your eyes and analyzing bases
@@TraderLion thank you 👍
Use a 3d EMA, hide candles/bars on screen, and the patterns become obvious. VCP, cup and handles, etc.
👀
can algos be used to find these?
How do you find the stocks with VCP patterm setup? Do you manually go through all the stocks after you find the stocks that meet Mark’s criteria (8 conditions) ? Thanks
You have to look at the charts
Great explanation, thank you . You mentioned that volume should be above average Volume. How high should it be to grab your intention?
I like seeing it at 500% volume buzz but anything over 100% is usually good. You can also compare a 15m volume bar to recent ones and look for a surge
@@TraderLion thanks for your answer. Do you always like to enter at the pivot high line? I see better risk to reward probabilities entering at tight consolidations below pivot line, near the pullback lows of the base. Where the crowed is not operating, before the breakout at pivot high line.
how can you scan for VCP?
Dear Richard, what do you think about If we can make a rule based approach for volume on last contraction? As far as I remember Minervini says on his book, to have volume on last contraction lower than 50 day average volume and 1-2 day really low volume almost minimum of entire base. Or do you suggest any other approach?
That's a great rule of thumb
Good video Richard, and
how to search vcp pattern by
screener?
You can scan for the trend template, but then mostly it's about training your eyes and analyzing bases
Quality and Quantity, both are their in this channel
Awesome to hear thanks!
Richard would you have a scan filter for these set ups.
You can scan for the trend template, but then mostly it's about training your eyes and analyzing bases
i didn't know luka was also into the stock market...wow
lol!
Could you make a video about HVC set up?
Great idea Tony thanks!
Is it accontinution pattern
Great video but, how do you find this stocks? What parameters do basically look at the screener? Thanks
Hey Luis, you can scan for stocks in an uptrend but then you have to do the work and look manually through charts
@@TraderLion Okei. Thank you
Any plans for a video on how to scan for VCPs?
You can scan for the trend template, but then mostly it's about training your eyes and analyzing bases
No link to the book
❤️💪🏼
when do you move stops up to breakeven?
Great question! The main two factors is market environment & personal account equity curve. The stronger the market while you have past profit cushions the more relaxed you can be with the stops. In choppy environments or coming out of trading slumps the goal is to get stops to break even as quickly as possible.
Would this be still good in the forex setting, say hourly instead of daily
Yes the same supply and demand dynamics are at play
here's a quick tip for breakout traders
if you buying a breakout in first 1-2 hours of market open only buy if vol is more than average on daily time frame and lower time frame back to back green candle
if you see less vol on breakout wait for closing hours and if you see vol coming in closing hours then buy
Theoretically sounds good. But how to identify stocks
How to scan stocks for VCP
You can screen for the trend t4empalte but to find VCPs you have to look through charts
I find TT is good vcp setup now
Is vcp only for long? That means vcp is never a good option for short right!
You can refer options PE chart to understand VCP there. VCP is a character that works in all markets
What will be the timeframe ??
This is a daily chart
These are weekly charts, correct? Newbie here.
Daily
That failed VCP breakout looked like a perfect short entry. You have all the longs positions selling off to add momentum.
how you find the contraction ? what you really called a contraction?
Personally use the RMV indicator on Deepvue, but you can use ATR/ADR contractions, bolling bands, keltner channels, etc.
Oh forgot to ask if it works for a downtrend?
Base breakouts work best in strong uptrends above a rising 200sma
Okay thx...I won't lie it's all new to me
Does it work for forex?