Balance Theory is LITERALLY how stocks move

It can be used in all types of trading

Here's a breakdown of what it is and how I made close to $2,000 using it👇

Balance Theory is based upon the thesis that stocks are either trading in "balance" or out of "balance"

So what exactly is balance?

Balance can also be considered fair value. A price area where buyers and sellers are both comfortable trading.
You will see a balance area in zones where price is typically choppy.

You should be able to see clear support and resistance areas.

Here's an example on $BA
So how do we use this in our trading?

There's 2 ways that a stock will react to balance.

I'll go in depth on both.

The first one is a breakout👇
A breakout of balance is fairly simple.

Price is in fair value. Over time, one side (either the buyers or sellers) has to give up and the stock breaks out of balance.

It's no different than any other breakout.

Here's the example on $BA
You can see price had a strong breakout of balance.

You can trade this by getting long as the breakout happens or waiting for the pull back into balance

Simple right?

Let's move on to the second way to trade balance (my favorite)👇
2. Reversals

There is a key concept to understand about balance and here it is:

When price FAILS to breakout of balance and ACCEPTS back into balance, there is a HIGH probability that price will rotate to the other side of balance.

Woah, that's a lot. Let's break it down👇
So looking at $BA we can see price failed to breakout of balance

Price came out of balance, but immediately came back in and failed to hold the top of the balance zone
Now let's talk about acceptance.

Price acceptance simply means price spends time and volume in a certain area.

Price is accepting to trade in that area

Take a look at $BA
Now that price has
1. Failed to breakout
2. Accepted back into balance

It means there is a high chance price will rotate to the other side of balance...

and that's exactly what happened!
You can see that price actually did this multiple times on $BA

There were 5 opportunities you can see from just this one chart👇

How did I trade this on $ADBE?

Here's a balance zone on $ADBE that was from a while back.

I have it drawn in purple
Zoom into a few weeks ago, we can see price failed to breakdown of this balance zone.

We also can see price accepting back into balance.

I knew there was an opportunity at this point
I simply waited for a pull-back into a demand zone (which also coincided with the bottom of balance - a natural support area)

I got calls at demand and sold them as price rotated back to supply towards the other side of balance
I ended up making close to 90% on my calls and just under $2,000 profit.

Overall a very solid trade!
I hope you learned something from this thread

If you did, all I ask is that you like + retweet the original tweet to this thread❤️

Let's help hundreds of other traders who could add this knowledge to their trading toolbox🚀

Follow for more educational threads!

More from Jordan F┃Stock Trader

my girlfriend cheated on me with my brother while on vacation

Here are 5 trading strategies that could make you $100k this year:🧵

1. Supply/Demand

If you haven't heard of supply/demand and you follow me... I don't know what to tell you

Here's a thread going over what supply/demand

2. Balance Theory

Balance theory is about understanding consolidation vs expansion

It helps you determine which areas price is looking to go (and where price will reverse)

Here's a thread on

3. Short Squeezes

Although $GME and $AMC get a bad rep, you can still learn a lot from their price action

Short squeezes happen all the time and if you learn how they work...

You can make a butt load

Here's a thread on how to identify and trade a short

More from All

You May Also Like

शमशान में जब महर्षि दधीचि के मांसपिंड का दाह संस्कार हो रहा था तो उनकी पत्नी अपने पति का वियोग सहन नहीं कर पायी और पास में ही स्थित विशाल पीपल वृक्ष के कोटर में अपने तीन वर्ष के बालक को रख के स्वयं चिता पे बैठ कर सती हो गयी ।इस प्रकार ऋषी दधीचि और उनकी पत्नी की मुक्ति हो गयी।

परन्तु पीपल के कोटर में रखा बालक भूख प्यास से तड़पने लगा। जब कुछ नहीं मिला तो वो कोटर में पड़े पीपल के गोदों (फल) को खाकर बड़ा होने लगा। कालान्तर में पीपल के फलों और पत्तों को खाकर बालक का जीवन किसी प्रकार सुरक्षित रहा।

एक दिन देवर्षि नारद वहां से गुजर रहे थे ।नारद ने पीपल के कोटर में बालक को देख कर उसका परिचय मांगा -
नारद बोले - बालक तुम कौन हो?
बालक - यही तो मैं भी जानना चहता हूँ ।
नारद - तुम्हारे जनक कौन हैं?
बालक - यही तो मैं भी जानना चाहता हूँ ।

तब नारद ने आँखें बन्द कर ध्यान लगाया ।

तत्पश्चात आश्चर्यचकित हो कर बालक को बताया कि 'हे बालक! तुम महान दानी महर्षि दधीचि के पुत्र हो । तुम्हारे पिता की अस्थियों का वज्रास्त्र बनाकर ही देवताओं ने असुरों पर विजय पायी थी।तुम्हारे पिता की मृत्यु मात्र 31 वर्ष की वय में ही हो गयी थी'।

बालक - मेरे पिता की अकाल मृत्यु का क्या कारण था?
नारद - तुम्हारे पिता पर शनिदेव की महादशा थी।
बालक - मेरे उपर आयी विपत्ति का कारण क्या था?
नारद - शनिदेव की महादशा।
इतना बताकर देवर्षि नारद ने पीपल के पत्तों और गोदों को खाकर बड़े हुए उस बालक का नाम पिप्पलाद रखा और उसे दीक्षित किया।