Newsletter Nov 7

Have you ever entered what looked like the perfect trade, only to watch it fail miserably?

I used to bang my head against the wall trying to figure out why some seemingly perfect setups would fall apart…

Until I discovered something that changed everything.

It’s called market breadth...

(think of it as the market’s “vital signs” – showing how many stocks are moving up versus down).

And it’s something most traders completely ignore.

But here's why this matters to you…

The other day, I was watching several stocks setting up beautifully; the charts looked perfect, and the momentum was there.

But something felt off…

The market breadth was showing negative 1500.

In simple terms?

While some stocks were dancing in the spotlight, the majority were actually dropping – it’s like a party where only a few people are having fun while everyone else is heading for the exit.

This is the kind of insight that separates consistently profitable traders from the ones who keep wondering why their “perfect” trades keep failing. Because Market breadth measures the overall market health, looking at how many stocks are rising compared to how many are falling.

For example, a negative 1500 reading means 1,500 more stocks are declining than advancing. It’s a sign that the broader market is weak, even if individual stocks look strong.

It shows you what’s happening beneath the surface – the stuff you can’t see just by looking at individual charts or watching CNBC.

I learned this lesson the hard way a few years ago when I would get caught up in trades that looked good in isolation but failed because I wasn’t seeing the bigger picture.

And now?

It’s one of the things I check before entering most trades.

And if you want to take advantage of this "trading weapon" try this next time before entering a trade:

    1.    Check Market Breadth: Look up a market breadth indicator (many platforms have one) to see whether most stocks are rising or falling.

    2.    Use Market Breadth in Your Strategy: If breadth is highly negative, consider scaling back positions or focusing on short setups. When positive, it’s safer to trade with the trend.

    3.    Monitor Regularly: Make checking breadth a habit, especially when markets are volatile.

Because here’s the truth:

Trading isn’t just about finding good setups. It’s about understanding the environment those setups are trading in.

Just like you wouldn’t plant a garden without checking the soil conditions first, you shouldn’t enter trades without understanding the market’s overall health.

To Your Success,

Team Theta Warrior