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3 TRICKS TO FINDING
MASSIVE OPPORTUNITIES
IN ANY MARKET

BY ROB BOOKER

BESTSELLING AUTHOR OF "ADVENTURES OF A CURRENCY

TRADER: A FABLE ABOUT TRADING, COURAGE, AND DOING
THE RIGHT THING," HOST OF THE TRADERS PODCAST AND
THE FOUNDER OF BOOKERWEALTH.
Go Big or Go Home: 3 Tricks to Finding
MASSIVE Opportunities in Any Market
What’s an asymmetric opportunity?

Everybody I work with hates that term. They think it’s too complicated, too abstract, that
it muddies the very simple concept I’m talking about.

But I like it.

I think it’s interesting and mysterious. Asymmetric? Does that mean it’s made with
triangles or a rhombus or something? It could be anything!

But I’m getting away from the point a little bit...

Despite the (somewhat) confusing terminology, asymmetrical trading is actually quite

simple.

It means a trade where there is potential for a massive payout in exchange for a really
small initial investment. That’s the asymmetry. Small investment, HUGE upside.

Makes sense, right?

And examples are everywhere. Bitcoin at $100 was an asymmetrical investment. No

one really knew it at the time, but when you could snap up Bitcoin in the early days you
were buying into a MASSIVE opportunity for just a few dollars at a time.

That’s just one example, but you get the idea.

And I'm not recommending a trade in all trading involves a substantial risk of law loss
and don't risk your house or your kid's college fund on anything like that.

And right now I’m seeing a ton of asymmetrical opportunities pop up in the market. More
than ever before in my 20-plus-year career as a trader, the types of asymmetrical trade
setups that used to show up once every 10 years are happening all the time.

Wells Fargo in March of 2010 when Charlie Munger bought a whole bunch of it and it
shot up… that's an asymmetrical trade setup.

Bitcoin dropping by 80% a year or so ago… that’s another asymmetrical trade setup.
Since that big drop it’s up several multiples.

But the point is, these are the kinds of opportunities that used to happen once every 10
years.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

Real estate at the bottom... real estate at the top.

A tech stocks bottom out… then tech stops reach another top.

Those types of things were cyclical, and they only occurred every once in a while. But
the world is now full of brand new alternative financial instruments.

They’re different. They’re new. And if you just take the time to stop and look, there are
some massive opportunities in these markets right now.

So, how do you identify these asymmetric setups? How do you size them up? How do
you evaluate whether they’re worth it or not once you find one?

Aside from the obvious stuff I mentioned above – I mean, just buying the dip after the
big Bitcoin drop would have been enough to uncover that opportunity – there are a few
tips and tricks that successful traders use to find asymmetrical trade setups.

Here are my 3 favorites…

#1: The Cup and Handle

The Cup and Handle pattern is often used by traders for long-term stock trading
analysis. However, this pattern is also effective for short-term trading strategies that set
up over the course of a several weeks instead of years.

And… the pattern also works surprisingly well when shopping for asymmetric
opportunities, as it applies across financial markets such as futures, commodities and
currencies.

The Cup and Handle pattern is a bullish continuation pattern that begins with a
consolidation period followed by a breakout. The pattern was created by William O'Neil
and discussed in his book, How to Make Money in Stocks.

As the name suggests, there are two parts to the pattern: the cup and the handle.

The cup forms after a strong move and looks like a bowl or rounding formation. After the
cup is completely formed, a trading range develops on the right part of the pattern which
ends up being the handle and the handle is formed.

A subsequent breakout from the handle's trading range signals a continuation of the
previous price move.

In practice, it looks like this…

 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

For example, below you can see IBM going through a typical Cup and Handle Pattern.

The volatility of the market you are trading will have a substantial impact on how deep
the cup shape gets. The more volatile instruments tend to cause the deepest cup
formations.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

The most important part of the formation is the Handle.

This is the last stage of the consolidation prior to the breakout. Generally speaking,
Handle patterns should not last more than two weeks for our trading purposes.

Handle formations that form in less than two weeks seem to produce the best breakouts
with the most follow through momentum. When Handle formations last a very long time
it is a sign that the market may not have sufficient momentum to move forward and
break out of the trading range.

The Handle is where the breakout signal occurs.

The best type of Handle breakouts begins with strong momentum and builds up
momentum over a period of several days. You need to keep in mind that the market just
went through a relatively long trading range cycle and once the trending cycle starts the
trend should fall into place relatively quickly without turning back.

Notice the strength and increase of volatility right after the breakout levels are broken in
the example below.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

The Cup And Handle is a great trading pattern that works well at identifying asymmetric
opportunities, particularly with different time frames and across different financial
markets.

The cup formation can last anywhere from several months to just a few weeks
depending on the time frame you are trading. The Handle is the most important part of
the formation and it must last only a few weeks and not hang too low in comparison to
the Cup formation. The breakout following the Cup formation must have sufficient
momentum and produce noticeable increase in both volume and volatility to make the
trade worthwhile.

#2: The Tail Gap

In a nutshell, the Tail Gap method is based on simple trading principles such as trends,
gaps and volatility, but provides everything necessary for consistent returns.

And it’s another classic that, when used carefully, can ID the next big asymmetric trade.

Let’s take a look at some past trades so that you can see how the Tail Gap strategy set
up in the wild.

Most profitable technical trading strategies require you to trade with the main trend and
this one is no exception. In this case, it’s important to avoid going against the trend and
focus on opportunities that are sloping at least 20%, either up or down.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

Or this...
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

You can see in this example that AGG is in a downtrend. The entry signal should be
avoided because the main trend is slopping down.

Only short signals should be taken in this case. Since this is a long entry signal, we will
avoid it completely.

The goal is to catch the trade as the market is correcting the deviation and coming back
to its normal trading level within the trend.

This is supposed to happen very quickly (and it usually does).

The Tail Gap Strategy remains one of my favorite technical trading strategies because it
offers great risk to reward characteristics and it just makes sense to me.

Usually when markets gap against the trend, it's for a short period of time and this
strategy helps you capitalize on this.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

#3: Support and Resistance

All of trading can be reduced to this concept: Price levels are constantly moving.

Whether you trade with support and resistance… divergence… the Fibonacci Spiral of
Death… the Ludicrous Iron Condor Program of America Incorporated (make Condor
trading great again). Whatever it is you do, it doesn't matter.

All of trading is simply this: Prices are always moving from one price level to another
price level.

What we want to do is mark at which levels we want to enter a trade. And the simplest
form of measuring these levels is horizontal support and resistance.

The simplest method in the world for drawing support and resistance fundamentals
involves just looking at a pricing chart. I like the 60-minute chart, but you can do this
with any length chart you want.

We’re looking both for upright and inverted (upside down) “V”s. These Vs mark where
prices dipped lower and then rebounded, and then where it dipped lower and
rebounded again.

How to Spot Support

When the points of several “Vs” land at the same general level on the Y-axis of the
chart, it identifies a level of support.

The point of the “V” represents an area where prices dropped but could drop no further.
In other words, it’s a place where prices should stop moving downward. If the price
continues to drop below that level, it’s called breaking through.

A support level is an entry level and a profit target level all in one. In other words, if the
price eventually breaks below this level, that's an entry for a trade.

Once again, prices are always doing one thing: moving from one level to another. And
that's why support and resistance is essentially the only thing you’ll ever need. It’s
fundamental.

How to Spot Resistance

When you have the points of several inverted (upside down) “V”s landing around the
same point on the chart’s Y-axis, it marks a level of resistance.

As soon as price breaks through (or a candle closes above) that level, it’s an entry
point.
 Go Big or Go Home: 3 Tricks to Finding MASSIVE Opportunities in Any Market

If you’re feeling a little anxious or want to be more conservative, you could draw an
intermediary level of support or resistance somewhere in between your other two
marked levels. It would simply increase the probability that the price would reach that
level.

It's not always going to do that. And just because price breaks through a level of support
or resistance doesn't mean it's going to go all the way to a profit target.

And that’s it!

My 3 favorite tools for spotting the big, asymmetric opportunities in the market (any
market) and ringing up big trading wins.

I hope they’re as valuable for you as they have been for me. Good trading!

© 2019 BookerWealth - Financial Publishing