1. When the Marker Breaks TheoTrade Summer School with Tony Rago
© Copyright 2018 TheoTrade, LLC. All Rights Reserved
When the Marker Breaks TheoTrade Summer School with Tony Rago

2. © Copyright 2018 TheoTrade, LLC. All Rights Reserved
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4. When the Marker Breaks What is a marker?
Using the “no hard stop” methodology
When the marker breaks – how to plan an exit
Risk Management in a losing trade
The disaster stop – how and when to make the decision to take it

5. What is a Marker? Price > Everything
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What is a Marker? Price > Everything
What is a marker?
Risk Markers are areas identified on the chart that provide guidance and clues to the overall direction of the tape. They represent the entire handle.
They are used to identify risk from an entry on a SPOT.
You can ALWAYS identify risk in ANY trade using the markers.
We “lean” against the marker respective to our entry. Once a 2min bar closes below/above the SPOT you are coming from, it “OPENS” the corresponding SPOT above/below.
They are the price level that you are using to support the trade you are in.
If you are long you are using the marker BELOW the SPOT as support.
If you are short you are using the marker ABOVE the SPOT as resistance.
Risk markers are NOT used entries.

6. Risk Markers are on the 2’s
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Risk Markers are on the 2’s

7. Using the “no hard stop” on Entry Methodology
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Using the “no hard stop” on Entry Methodology
Why NOT using hard stops on entry works.
I have found that hard stops at entry lose more handles than they protect
Reading price action is key to success using this methodology
SPOTS are where we expect a reaction
Markers OWE us support or resistance
Markers will get tested
The sweet spot for risk on any NQ trade is 4-6 handles
The sweet spot for risk on any ES trade is 2-3 handles
It is imperative that you allow the 2min bar to close on a marker test
If the marker holds the trade remains “good”
Homework establishes trust
Your nightly homework is an exercise to review RTH to see exactly how price reacts to SPOTS and Markers
The more you do this the more you will trust the levels
The NQ repeats itself over and over again
Find the patterns and trust the levels

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10. When the marker breaks – planning your exit
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When the marker breaks – planning your exit
The trade setup is:
You identify risk and are willing to risk 4-6 to make 10
You are committing to that risk – that is the potential loss in any setup
You are signing a proverbial contract upon entering the trade
You must be willing to take a loss
Once you are in an active setup
You have identified risk and the setup is valid
Price continues to go against the setup
You must remain patient and let the 2min bar close
The marker can get a full test and then reverse in your favor
The Marker breaks and opens the SPOT above/below
Once the marker breaks you have options
You can let it go right at the marker that you are leaning on
You can wait for the next bar to see if it gets back into your risk zone.
You can let price resolve to the open SPOT and watch the reaction to see if it bounces/fails to the marker you were leaning on
You can wait for the marker to get tested to see if it opens the SPOT from which you are long/short

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Broken Marker
Price relaxes back into the risk zone
Price now back inside the marker
Broken Marker
Price bounces back into the risk zone

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The Disaster Stop
Once our marker has broken
We are at the mercy of price
We must let price test the open SPOT
The marker below that SPOT becomes the marker for the disaster stop
If that marker breaks you must consider the disaster
You are simply fighting the trend
Check your bias – price action is key
Look around are you on the wrong side of a strong trend?
Is a -14 to -16 better than a -50?
Take the hit and go with price
High volatility markets provide more opportunities to mitigate disaster
Risk is a very personal thing
YOU must determine your threshold for risk
Just because I or someone else is willing to hold it doesn’t mean you should
Determine what your threshold is and stick to it

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52 Becomes the Marker for disaster
Disaster stop to be taken here
No reaction
Marker breaks and opens the 46
SHORT 36 AGAINST THE 42