ICT - Trading Plan Development 3.srt
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ICT: Okay, guys, we are looking at the top down ICT
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approach. Okay. And also, as we've always mentioned before
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in previous examples of education in my work, everything
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hinges upon the interest rate market. Okay, whenever you see
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in the interest rate market, we'll have a driving force in
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the United States Dollar Index, which is essentially the
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barometer for corn currency markets if the US dollar is weak
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at both 12 from bullish foreign currencies, and if the
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United States dollar is bullish, it bodes poorly for foreign
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currencies and expect lower prices and sympathy. And
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obviously, that train of command maintains its impact across
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all market asset classes that being the stock market, the
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commodity markets as well. It's not limited to just currency
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markets. So, obviously what do I mean by it all hinges on
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the interest rate markets well we watch the 10 year five
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year two year and 30 year market in the yields. Okay and by
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looking at the yields, what we look for is generally the
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yields are moving in tandem. Okay and then this example
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crudely examples, we're looking at a downward shift in
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yields. So that would indicate that yields are dropping,
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that is a risk off scenario. So while risk is off, we are no
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longer looking for buy signals, we're focusing more on the
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sell side until we see a divergence in the yields okay. And
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this could take form in five year it could be in a 10 year.
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Generally you want to be looking at
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three
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yields like for instance, like actually trade the British
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Pound in the fiber? Well, it's crossed with the US dollar.
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So, the triad, the yield triad that I use is the US yields
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the UK yields and the German yield test described here in
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this again, rather crude example, at some point, and usually
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between two to three months, couple times a year, there's a
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shift that takes place in the interest rate market. And its
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quarterly driven. So at some point, the yields will fail to
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make comparable lows. Okay, and just think, but more or less
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depth Dow Theory, because that's what I've applied here is
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they have to confirm one another. If they don't confirm one
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another, something's taking place. Fundamentally, I'm not
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claiming to understand what it is fundamentally that's
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taking place. I'm just stating that I see it in the chart,
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following the yields, so one diverges in this example, you
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see that the UK and the US yields failed to make lower lows
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while the German yields did, okay, that's generally an
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indication The German markets are less favored. But yes,
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they probably will move up in 10 in sympathy. So now we see
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a shift on their way now as yields are increasing for the
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next quarter. This generally will be bullish for foreign
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currencies and or bearish for the US dollar. And this will
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maintain its impact over the market for a period of time
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until at some point, the yields will encounter a resistance
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level of some kind. And that's going to come in the form of
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one yield failing to make a higher high and or more than one
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Okay, so what you're doing is you're looking for a shift in
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the overall trend of the yields, okay, so it's going to tip
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your hand that something fundamentally is slowing down.
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There's waning interest in risk and there may be a turn
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likely done soon. So now you want to be a little bit more
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cautious in your both buy signals. Because we may see a drop
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in yields which would be a call scenario and then the dollar
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should be rallying at this point. Okay, so these are the
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concepts that you have to apply, beginning with your top
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down analysis understanding are we in a risk on or risk off
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scenario overall in the interest rate markets and then once
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we have that, we can look at a more macro view down to a
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micro view.
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We are obviously beginning all of our analysis with the
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interest rate markets and you don't want to have to expect
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this to shift every single day okay, you want to be having a
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higher timeframe macro view on interest rates and monitoring
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that based on our buy signal? Are we in a buyer program or
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sell program? Next, obviously, we would be considering the
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direction of the United States dollar and the technical
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levels that that indicee is currently being impacted by
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obviously, it helps to trade with The understanding that's
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found in the futures market, that being the treasuries in
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the tea note markets that mean the five year 10 year and 30
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year treasuries. The stock indices are always a good to
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watch, I go from interest rates of the US dollar to Treasury
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markets. And I check out what the overall risk tone is in
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the stock market are the averages again confirming using Dow
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Theory, and if they're not, it may be an indication that
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there may be a short term and or longer term shift taking
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place in the marketplace. Then I obviously look at the CRB
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index i try to get a feel for Are we still in a risk on risk
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off scenario that's confirmed with the commodity markets and
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if the CRB is bullish, that would indicate that we are in
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fact risk going and that would be bearish for the dollar and
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bullish for foreign currencies. And obviously, it always
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helps to look at a few other select markets like golden
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Because those are good barometers for risk on risk off as
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well.
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For the anticipatory stage, Okay, first stage
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of analysis is always going to be the anticipatory stage.
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Okay, you're going to spend more time in this stage of your
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analysis than any other stage. And it begins with seasonal
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tendencies. That could be the are we in a bullish quarter or
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a bearish quarter based on price action? Are we in an area
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where seasonally we expect prices to rally or decline?
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That
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there's a subtle tension it takes place in generally every
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marketplace there that is tradable. And it's my advice to
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use that to learn what they are and I'm going to share with
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you a few of them that are very strong in this. This
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presentation over the course of this presentation. You're
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gonna learn more, but you have to have answers. of where we
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are seasonally. And obviously, you know, while we're looking
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for seasonal influences in the marketplace, you're always
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watching that yield SMT Okay, you know, we're looking for
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the triad to be diverging comparable to the highs and the
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lows, one's going to fail to make a higher high and that's
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going to give you an indication that we're probably seeing a
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shift from risk on risk off and vice versa. Okay, and we
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always look at correlated pairs that we trade and it's good
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to be a specialist in market trading because it's not to me
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it's me it's never been in the advantageous to be a trader
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in every single every market, okay? Because you can't watch
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too many things at one time and have really good you know,
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relationship with the marketplace. If you're spread too
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thin, obviously, you How are you going to get a fix on
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what's going on in price. So be a specialist you know, pick
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one or two bars that closely correlated strongly correlated
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and inspect is basically trade likes, look at correlate
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highs and lows. And obviously you and me looking at the
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stock market and sees NASDAQ Composite Index, the s&p and
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such. Okay, every week you want to be maintaining a watchful
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eye on the CBOT and we watch the net traders position. Okay,
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the overall net position, are they bullish or bearish? And
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are they lessening or increasing their shorts? That's going
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to be an indication whether or not the market is in fact,
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bullish, bearish or if the current market moves have been on
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their way is in fact legit or if it's not. You always watch
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the open interest and premiums between the nearby and next
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month out on your currencies. And you're going to be looking
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for indications that there may be a strong demand for or
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waning demand, if there is a premium for that particular
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market. market sentiment obviously, you know, this could be
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derived that by using Market vein numbers we can look at
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some sentiment based on chatter that's going on in the news,
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the forums, talking heads on TV, if everybody's expecting
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the same thing generally going to be the other way. And
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obviously, we always have a watchful eye on key higher time
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frame support resistance levels. That is the mack daddy of
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all things that we do in technical analysis, understand our
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key support resistance levels. Alright, the execution stage
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before we take any trade before we do any order entry, okay.
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Once we have a higher timeframe top down analysis done we
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have an understanding of where we are at in terms of yields
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and interest rates. Okay, we got to get for the day that you
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would actually be doing any trading, you still get a market,
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major market turn or are we still bullish overall going into
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the new day, and what I mean by that are we risk going on
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scoff you have to understand this because if you're buying
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generally in a risk on scenario, that's good. But if you're
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buying foreign currencies in a risk off scenario, you have
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the tide moving against you, and it's very, very difficult
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to make money in that situation. So it pays to understand
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what it is you're doing every single day and judging what
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markets doing going into London, are we rejecting highs or
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rejecting lows, probably pricing in the daily low daily
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high. You want to be trading in that directional premise.
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And obviously it goes without saying that if we have a buy
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or sell for programming, the higher timeframe based on
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directional premise on monthly, weekly, daily, and four hour
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and if we're in a bull program by program rather you will be
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focusing on the buy signals. Obviously, we have to have our
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macro support resistance levels from the higher time frame
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monthly, weekly, daily for hour and one hour on our sub 60
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minute charts. So in other words, our 515 minute charts have
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To have these higher time frame support resistance levels in
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the chart, you have to see them, be aware of them, okay?
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Don't just have them written on a piece of paper, have them
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on your chart, look at them know where they are, where
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they're at, you'll get a better feel for prices actually
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trying to do
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market structure. Okay, before we execute, we have to
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understand where are we at. If we're bullish, we're looking
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for immediate term or long term lows on the left hand side
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of our chart, okay, so we're going to be looking for short
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term to me term lows to be keying off of to get ourselves in
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sync with the higher time frame macro view. Okay, and market
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structure is a key role in that understanding and execution
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in your trading. If you're bearish, okay, you want to be
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seeing out long term or short term high on the left hand
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side of your chart and where you're trading Now you won't be
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shooting for enemy term highs or short term highs to be
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getting short and getting in sync with that overall market
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structure that is bearish. The market flow Obviously, you
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have to understand, simply because the market is poised to
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trade higher, and technically, yields may be moving up and
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risk own. All those things are in place, you know, support
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has been traded to. It makes a lot easier trading if we use
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market flow and a higher timeframe for our daily to make
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sure that we have the
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tide in our favor.
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Okay. And then once it starts moving, it makes trading a lot
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easier. Okay, so we have a bullish market structure, bullish
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market flow with a bullish macro view, okay, and we're
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trading with risk on scenarios in a buy program. Now, simply
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moving to a simple time and price theory of expecting the
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low to form during London. Okay, you can expect the Asian
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range to be a very key role in your order placement. You'd
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be looking for the Asian range high or less than look for
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your buy signals and vice versa. If you're acting Back to a
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risk off scenario, you'd be using the time of day principle
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of the Asian range low or greater looking for you to swing
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up and looking for your shorts to be, you know, anywhere in
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the London open and or the New York open sessions to be
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keying off of that directional premise in the higher
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timeframe drilled down through all the steps we just covered
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here. More detail obviously will be given as we go through
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actual real top down analysis and real breakdown of a market
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moved it took place in the spring into summer months of
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2012. But for now, what we're doing is is we're outlining
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really the top down approach in a nutshell so that we you
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going into your charts every day, this is the framework that
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you should have in your your psyche as a trader, what it is
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that you're doing every day is that on a daily basis, is it
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the same thing over and over again, this is my routine. You
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may tweak it a little bit, you may take some things out of
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here and move it around. You do something a little bit
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different in terms of order. But these are essential to me
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in terms of my concepts, my material, the things that I use
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when I do my analysis. And then finally, once we understand
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what we're supposed to be doing based on the higher time
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frame premise, it goes into your order entries. Okay? And
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90% of the time, I'm using limit orders to get in and get
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out and stop orders for protection. And unless I'm trading a
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breakout, and I want to be buying strength or selling
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weakness, okay, that's the only time I'm using a stop, and
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it's 10% of the time. So what does that tell you? 90% of the
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time, I'm not trading breakouts. Okay, I'm actually feeding
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the market moves, trade entry orders. We're going to talk
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about that in the last module, because we're gonna actually
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give you specific orders and specific examples on how to use
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these orders for actual demo trading counts. So you can you
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can practice in the sandbox and see whether or not these
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things work. For you going forward. Alright, the reactionary
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stage right there. Basically there's times the market where
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if you're in the trade, okay, and you have little to no
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movement at all, you've anticipated a market move and price
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does go stagnant. It is nowhere just starts going sideways.
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Okay? That's a time for you to more or less killed the
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trade, especially if you're expecting a price move and we're
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moving into a specific time of day where volatility should
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be increasing, but it isn't. Okay, it's just better just to
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close the trade. Do not expect your success to be hinged
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upon one single event, one single trading day. Okay. And I
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think if you really take a look at your heaviest losses,
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look at your biggest losing days, okay, or your string of
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losing days. I guarantee if you go back the mindset you had
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going into that trade is that you are expecting and hoping
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and praying that this move is the winner. This is going to
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be the one that puts you over the top or get you back to
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even. Okay. Don't Don't think like that. Okay? demand the
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tools to place you in optimal trade entry. If it doesn't
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provide you that and you don't see a very short term near
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term feedback in your trade. In other words, are you seeing
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the things that you're expecting in terms of volatility? Are
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you seeing a rejection at the lows that you were buying
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into? Are you seeing are you seeing follow through the
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upside after you bought that long? If you're not seeing that
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and it's going stagnant and you're getting close to the end
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of the day going into London close or if you're going into
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New York open, okay, and prices are stagnant. It may
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actually bounce up against you. If you're, if you're short.
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Or if you're if you're long it may actually pull back
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against your could just go into longer term. consolidation.
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Why sit in? Okay, if it's showing you failure to move,
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that's your time to react kill the trade. There's no risk
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now. Okay? If it runs off if you would have stayed in made
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money, big deal, let it go. Okay. But we act quickly when
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trying to preserve our capital. We act slowly when we're
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trying to make money.
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Okay, we want to be methodical. We want to be very, very
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focused. Okay and detail oriented. When it comes to exposing
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our money to risk. We want to really put it to work when
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there's something highly probable in our favorite to take
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advantage of why risk on very low odd setups.
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There's no reason to you there's enough of them happening in
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a week. There's enough of them happening in a month in over
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a year Good grief. You have tons and tons of opportunity to
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make money. Don't sit in questionable trades. If it's not
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moving for you kill the trade. Take another setup. If you
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see rejection, A key support level that's counter your
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expectation or you're injured and you're in the trade. Kill
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it, why eat up open profits, okay? Turn your paper profits
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into literal profits, go to cash, move to the sidelines,
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take your profits and get out. Okay? If you see rejection,
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strong rejection, something comes across, you know, the
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wires and hits, you know, unexpectedly, which, you know, in
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the event that, you know, major catastrophe or global
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national event, something of that nature, you know, that
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could rock the markets, you never really know when that's
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going to happen. So if you see that it's just better to
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collapse the trade and just get out. You could always get
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back in, always get back in even for those folks that are in
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carry trades. Okay, you can get back in those moves. Okay.
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And look what happened in Japan. If, you know, the
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earthquake hit New tsunami took out you, reactors and the
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whole world's waiting for you in Japan. You slip into The
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ocean in dissolve those things, we can't expect them in
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their acts of God. So we have to, more or less just take
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ourselves out of out of the risk environment, okay in stand
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on the sidelines where it's no more risk, okay? And we can,
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you know, hopefully gain a more objective view of the
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marketplace and then react object new with objective
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analysis not you know, reactionary gambling and trying to
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get in there and throw the dice and chase the market chasing
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you mentality. That's not that's not how we make money,
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okay? You want to react by getting out and take yourself out
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of the risk. And obviously, if you're sick, and if you have
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a life, you know, event that takes place and requires your
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time, your kid might have something that you know, requires
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you as a parent, where your spouse needs you to do something
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with them. You What takes precedence is your relationship in
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the real world or the charts. Okay? Hopefully, you know, I
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appreciate you guys wanting to spend time with me in these
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video modules, but I certainly enjoy it but I enjoy My
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family more and you know if it's going to be a choice
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whether if it's you and YouTube and baby pips, it's going to
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be my family. Okay? So if something takes place that
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requires me and my time or if I get sick you got to react
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and if you're in a trade and you just think that you're not
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going to be able to adequately managed to position react
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react responsibly and just collapse the trade and or tighten
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up the stop loss so that way if you do fall, ill or you fall
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disconnected to the marketplace because of life events that
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need to take place maybe there's a death in your family.
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You're gonna be able to think objective Lee during that.
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Okay, grief can have a major impact on a trader psyche, and
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it's just better to just more or less, remove yourself from
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the risk. Okay, and you can always get back in.
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Alright guys, fractal analysis in price action. All right,
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what's a fractal? Well a fractal is A pattern in nature and
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in many things that you know, as a as a Christian, okay. I
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believe there is a creator. Okay. And I give thanks to him
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on a daily basis for the insights that I've been blessed
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with. And I share with you and I think that the fractals are
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one little signature on his part. also need to show there's
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so there's a design to this, okay, everything around this
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has a specific design. Okay, there it shows intelligence
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behind it. And everything in nature has the same phenomenon.
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It's much like Fibonacci. But a fractal is defined simply as
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a pattern that is repeated in infinite size up and down. In
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other words, Something that you see on one scale. Okay, if
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you scale into it and zoom in, you can see it same pattern
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repeated on lower levels. And obviously the same thing if
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you magnify it out and look at it as a macro view. Well,
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that same principle is an effect in price. Okay and price
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because I'll give you a real generic way of viewing it. When
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I say price. Okay, what comes to mind to you? Is it a daily
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chart? Is it a one minute chart? Is it a tick chart? For
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some of you have may have been a weekly chart, or it could
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have been a five minute chart. It doesn't matter what time
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frame that we are referring to. It's always just the last
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price.
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Think about that.
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You're looking at price right now. At the time of this
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recording the cables trading at 161 70 For that 164 by
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itself absolutely is useless to you, unless you have a
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understanding where you're at in terms of the big picture.
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Okay, by having the big picture. And using a higher
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timeframe, perspective in your analysis and understanding
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key support resistance levels, you can go into the
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marketplace and see patterns that repeat over and over and
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over again. There's specific fractal patterns. And I'm not
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going to reveal them all in this module, but you'll have a
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few of them shared throughout the presentation over the last
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few parts of the series. But the the fractal analysis
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concept can be applied to the simple optimal trade entry.
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Okay. What does that mean? How do we how do we go into the
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marketplace looking for a fractal? What is it okay, it's one
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thing that you, myself and other folks to understand
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practical analysis. We can go and show you a chart in
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hindsight I look this is where this did that. This is where
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it that's Great, okay, but without a firm understanding of
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what a fractal is and what it looks like and how it's
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applied to the marketplace, it's not going to do anybody any
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good. Okay, so this section is really just going to
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highlight an example of one form of a fractal. Okay. And
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there's all types of fractals. There's many different kinds
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of fractals in terms of price action. But the main thing is,
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is if you can't understand what a fractal is on a higher
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time frame premise, okay? It's going to mean little to no
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good use to you, if you're trying to apply it to intraday
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00:25:35,730 --> 00:25:39,270
charts. Okay, so what am I, what am I saying here? Okay,
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well, in this example, we're going to talk about a fractal
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okay? And this is going to give you a price swing, and we're
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going to more or less break it down and show you more
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insights on how price in itself works within a fractal
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nature. Alright, we're looking at it could be any price any
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commodity any stock, it could be anything. But for now we're
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just gonna talk about this being a currency pair. Okay. So
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price is trading within a specific range. Okay. And we
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noticed that above where prices currently, this is a key
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resistance level, okay. One would expect if we're this close
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to it, price would eventually try to run up to that key
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resistance level. Now as price runs higher and approaches
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that resistance level, at some point, it will hit that
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level. We as traders and technical traders, we would expect
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reasonably there would be a pullback or a bounce away from
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that particular price level. At some point price will come
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down in that retracement, okay and swing low, make a small
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little short term low. When that takes place, we now have a
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new reference point for short term support. Okay, now
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obviously If we have short term support here, and a key
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resistance level like that, a technical trader like we are
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or aspiring to be, when prices starting to bounce, again, on
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a short term basis, we could reasonably expect or anticipate
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another retest or run attempt to get back to that resistance
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level. Okay? At some point, it may get up here and blow
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through it, but many times it will fail to do that. Okay,
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and then start to come back down again. Now, here's where if
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you understand optimal trade entry, in which is basically 60
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to 70% trace level on the price swing. If you see this, this
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could load you into believing that this could be perhaps a
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bull flag. It could be perhaps another ABCD price extension,
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okay,
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or it could be
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a top
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Okay, we have to go back to the higher time frame,
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resistance level. That takes precedence. That is the one
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that we have more emphasis behind, not the short term little
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blips in the marketplace, okay. We expect sellers to be
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heavier in market than buyers. Okay? And we anticipate price
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to break below the low here. Okay? If we see that break
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below, okay, that's going to give us a shift in what market
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flow and market structure. We're looking at a market that's
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breaking down
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if
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this low is taken out. Now, if price does break down lower
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and breaks through that now we are confirmed, we have a
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bearish market flow and a early market structure reversal.
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Okay, so now, we could reasonably expect this higher
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timeframe optimal trade entry. Okay. That would be the
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higher timeframe turning point. And now we can look for
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continued sell signals okay. So we see here a very standard
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optimal trade entry top formation the market broke down
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00:29:16,739 --> 00:29:20,999
okay. In itself this is a fractal okay look at this pattern
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right here. This in itself is a pattern that is applicable
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in fractal analysis as price breaks down and moves further
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00:29:33,689 --> 00:29:38,669
lower Okay, go back to the concepts we just learned in part
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two of the trading plan development series. Range
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contraction, range expansion and trading range to trend
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trading rings the trend okay so consolidation
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to trend
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consolidation to trend in this region here even though we
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saw price movement Up, Down Up down to make the optimal
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trade entry formation here. That's still a consolidation.
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See the range here?
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That's a consolidation.
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This move here is the trend, okay, or the price swing out of
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consolidation. So now, when price breaks down like this,
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what do we as technical traders expect to see another
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consolidation. So what's going to take place in the
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00:30:30,540 --> 00:30:35,040
consolidation is going to be a bounce. It could trade up to
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another resistance level, okay, which would be old support
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and price will eventually trade back into a consolidation.
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Okay, and we can now look for inside this consolidation,
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00:30:48,960 --> 00:30:53,550
smaller short term, optimal trade entry tops.
461
00:30:55,260 --> 00:30:55,980
Thank you.
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00:30:56,550 --> 00:30:59,610
We have a higher time frame price leg that's already turned
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on 100 timeframe key support and resistance level. As price
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broke down, we are now in our minds focusing on lower level
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515 one hour basis, optimal trade entries to look for what
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00:31:17,520 --> 00:31:21,690
lower prices, okay? So by having this mindset going in and
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trading during consolidations, we're essentially limiting
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our exposure to the market by only selling short. Basically
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00:31:32,730 --> 00:31:37,110
an established weak market, okay? And we have a bias going
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into our analysis. So we're not going to be subjective and
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just be lulled into new buying and selling, buying and
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selling simply because the price is doing whatever it's
473
00:31:46,020 --> 00:31:49,350
doing the time we sit down in front of our monitors. We are
474
00:31:49,350 --> 00:31:54,750
focused on one specific process and we have a higher time
475
00:31:54,750 --> 00:31:58,560
frame. support resistance levels are or on our side we have
476
00:31:58,560 --> 00:32:01,620
the fact that we have broken markets. Market flows on our
477
00:32:01,620 --> 00:32:04,950
side. Okay, cuz now think just looking at this price chart
478
00:32:04,950 --> 00:32:10,830
chart right here if this is a currency market flow is still
479
00:32:10,860 --> 00:32:16,290
bearish until we take out this swing high before this swing
480
00:32:16,290 --> 00:32:20,580
high formed, market structure was still bearish until this
481
00:32:20,580 --> 00:32:23,160
swing high was taken out. Obviously we keep making lower
482
00:32:23,160 --> 00:32:29,040
lows and lower highs and we maintain a sell scenario in our
483
00:32:29,040 --> 00:32:34,440
trading. Looking for shorter term you know where it's lesser
484
00:32:34,440 --> 00:32:38,610
timeframe, fractal pattern of optimal trade entry tops,
485
00:32:38,850 --> 00:32:44,010
okay. Again, price will stay within this consolidation as
486
00:32:44,010 --> 00:32:48,600
price moves up inside of each one of these price legs. Every
487
00:32:48,600 --> 00:32:52,470
single one of these, if this is a daily chart, every one of
488
00:32:52,470 --> 00:32:56,580
these smaller price swings in here. If you look at smaller
489
00:32:56,580 --> 00:33:00,000
timeframe charts, you'll see optimal trade entries on a
490
00:33:00,000 --> 00:33:03,990
Lower timeframe near the highs and the tops. They're going
491
00:33:03,990 --> 00:33:07,770
to be there because it's fractal in nature. Okay, it's going
492
00:33:07,770 --> 00:33:09,990
to be there, I guarantee you, we're going to look at some
493
00:33:09,990 --> 00:33:12,000
examples. Because I know you're probably scratching your
494
00:33:12,000 --> 00:33:13,860
head saying, Okay, this is great you to show me a line
495
00:33:13,860 --> 00:33:17,130
chart, Michael, but I really want to see, I want to be able
496
00:33:17,130 --> 00:33:18,990
to digest what you're what you're showing me and I'm gonna
497
00:33:18,990 --> 00:33:22,350
get to that. But this is the theory. Okay, so we, we have to
498
00:33:22,350 --> 00:33:24,540
have this before we go into the price chart. Otherwise, this
499
00:33:24,540 --> 00:33:25,920
is gonna look like I'm cherry picking.
500
00:33:27,960 --> 00:33:28,680
Eventually,
501
00:33:28,740 --> 00:33:32,340
price will move outside of the consolidation and into a
502
00:33:32,340 --> 00:33:35,790
trending move again. So we move from consolidation, to
503
00:33:35,790 --> 00:33:39,630
trending move to consolidation to trending move. Now we have
504
00:33:39,630 --> 00:33:44,220
a complete fractal on the higher time frame inside of this
505
00:33:44,250 --> 00:33:48,060
overall price structure. This pattern can be broken down
506
00:33:48,060 --> 00:33:51,990
into smaller sub units on the lower timeframes, and you'll
507
00:33:51,990 --> 00:33:56,040
see the same pattern you see here on the lower timeframes as
508
00:33:56,040 --> 00:34:01,680
well by having this perspective, going into analysis, having
509
00:34:01,680 --> 00:34:04,350
it on a higher timeframe first and then moving down to a
510
00:34:04,350 --> 00:34:07,920
lower timeframe. It helps with your daily bias. It keeps you
511
00:34:07,920 --> 00:34:10,020
on the right side of the market generally unless there's a
512
00:34:10,020 --> 00:34:13,050
major market reversal. Hopefully if you're if you're
513
00:34:13,050 --> 00:34:15,300
monitoring that macro view Anyway, you should be
514
00:34:15,300 --> 00:34:18,000
anticipating that anyway unless there's an act of God or
515
00:34:18,000 --> 00:34:21,660
something new, unexpected takes place in rocks the market.
516
00:34:26,970 --> 00:34:29,190
Okay, so we have our fractal pattern here.
517
00:34:29,490 --> 00:34:30,060
It's a
518
00:34:30,840 --> 00:34:36,900
down swing in prices, a swing that you can see in any
519
00:34:36,900 --> 00:34:41,820
timeframe, it's not limited to any specific one. But what
520
00:34:41,820 --> 00:34:47,580
would it look like in a real chart? Well, it just so happens
521
00:34:47,580 --> 00:34:52,410
that I'm looking at the cable and we're going to use today's
522
00:34:52,410 --> 00:34:55,440
example. So it's, it's more timely, it's it's something that
523
00:34:55,440 --> 00:34:58,800
you can look at right now. I know some of you probably are
524
00:34:58,800 --> 00:35:01,410
watching this video. Probably From the time I did the
525
00:35:01,410 --> 00:35:05,520
recording, but as of the moment I did this I screen captured
526
00:35:05,520 --> 00:35:09,180
what price was doing and this is a 15 minute chart of the
527
00:35:09,180 --> 00:35:17,160
cable British Pound USD. Alright and if you look at this
528
00:35:19,170 --> 00:35:23,250
alright if you look at this we have a major resistance level
529
00:35:23,250 --> 00:35:27,630
here 163 price trades up to that much in the same way we are
530
00:35:27,690 --> 00:35:32,370
our crude example to the left, shows price goes up, comes
531
00:35:32,370 --> 00:35:36,930
down, okay and then comes up and makes another attempt to
532
00:35:36,930 --> 00:35:40,860
get back to that resistance level but it fails and it gives
533
00:35:40,860 --> 00:35:46,380
you an optimal trade entry. Note this low right here. And
534
00:35:46,380 --> 00:35:50,970
now note the fractal example in the upper left. That's that
535
00:35:50,970 --> 00:35:56,250
low that would shift everything to bearish Okay, that is
536
00:35:56,250 --> 00:36:00,960
broken here. So now what you would be looking for His
537
00:36:01,020 --> 00:36:04,230
optimal trade entry sell patterns because now you are an
538
00:36:04,230 --> 00:36:08,610
established bearish market. Okay, everything you do from
539
00:36:08,610 --> 00:36:13,320
that point on should be looked for selling Okay, even your
540
00:36:13,320 --> 00:36:17,100
scalps okay? If you're an intraday trader look for smaller
541
00:36:17,100 --> 00:36:20,730
short term optimal trade entries sell signals okay focusing
542
00:36:20,730 --> 00:36:25,680
on one pattern in fractal in nature you can find several
543
00:36:25,710 --> 00:36:29,250
opportunities in this example alone that gives you optimal
544
00:36:29,250 --> 00:36:36,870
trade entries. For instance this optimal trade entry that we
545
00:36:36,870 --> 00:36:41,430
see here when it broke this example of market
546
00:36:42,060 --> 00:36:43,920
flow changing
547
00:36:43,950 --> 00:36:44,700
to bearish
548
00:36:45,780 --> 00:36:49,950
this swing high has to break before it becomes bullish
549
00:36:49,950 --> 00:36:56,670
again. price moves lower trades up and inside here. Just a
550
00:36:56,670 --> 00:37:00,990
small little timeframe moving in here A small optimal trade
551
00:37:00,990 --> 00:37:06,810
entry in here and sells off. Look at this high here to this
552
00:37:06,810 --> 00:37:10,410
high here, I mean this low here. Do you see how price trades
553
00:37:10,410 --> 00:37:13,050
down up into an apple trade entry and then look at the sell
554
00:37:13,050 --> 00:37:20,430
off. See that? Look at this high here in this low here in
555
00:37:20,430 --> 00:37:25,740
this high here. That's optimal trade entry. Okay. Look how
556
00:37:25,740 --> 00:37:29,910
many times it gives you optimal trade entries just in that
557
00:37:29,910 --> 00:37:34,500
small section of time. See this high here
558
00:37:35,820 --> 00:37:36,720
to this low here.
559
00:37:38,070 --> 00:37:42,210
Price trades down, comes all the way back up. Optimal trade
560
00:37:42,210 --> 00:37:46,530
entry sells off again. Look at the price structure here. It
561
00:37:46,530 --> 00:37:50,880
trades down comes back up. Optimal trade entry again, sells
562
00:37:50,880 --> 00:37:55,800
off. You see how by using a higher time frame premise. You
563
00:37:55,800 --> 00:38:01,170
can use fractal fractal analysis to keep you On one side of
564
00:38:01,170 --> 00:38:04,890
the market keying off of one specific approach to trading,
565
00:38:04,950 --> 00:38:08,610
in this case being a seller and it will keep you more or
566
00:38:08,610 --> 00:38:18,690
less you know with the right bias, okay? Now notice the high
567
00:38:18,780 --> 00:38:24,570
to low here, okay this high to this low. This is one price
568
00:38:24,600 --> 00:38:29,790
lake or one major dominant price swing then we had a major
569
00:38:29,820 --> 00:38:34,050
retracement deep in here, okay? If you go and look at these
570
00:38:34,050 --> 00:38:37,950
high here to this low we have a optimal trade entry. Okay.
571
00:38:38,340 --> 00:38:43,950
So now think about it. We use the fractal pattern here in
572
00:38:43,950 --> 00:38:48,930
this leg here, but now zoom out and don't look so close. In
573
00:38:48,930 --> 00:38:53,730
other words if we move maybe to an hourly chart, you would
574
00:38:53,730 --> 00:39:01,410
see this high to this low up to this high as a fractal
575
00:39:01,440 --> 00:39:06,750
pattern in sync capacity shows here, okay. So this high to
576
00:39:06,750 --> 00:39:12,090
the low would be more or less established. And an example of
577
00:39:12,090 --> 00:39:16,530
buying this high to this low and this low to this high would
578
00:39:16,530 --> 00:39:20,700
be crudely exampled by this low to this high. So watch what
579
00:39:20,700 --> 00:39:24,990
happens the same concept is now going to be applied with
580
00:39:24,990 --> 00:39:29,880
this price swing from high to low to high. This is a low
581
00:39:30,870 --> 00:39:34,950
market structure breaks down here. Okay, see this low? It
582
00:39:34,950 --> 00:39:39,240
breaks right there. So now what do you do? You look for
583
00:39:39,870 --> 00:39:44,880
optimal trade entry shorts. Here's your high trades down to
584
00:39:44,880 --> 00:39:48,480
a low starts to run up. What do you expect optimal trade
585
00:39:48,480 --> 00:39:55,440
entry? high low. Here's your retracement down. Look what
586
00:39:55,440 --> 00:39:56,070
happens again.
587
00:39:56,400 --> 00:39:58,770
See this high to this low
588
00:39:59,700 --> 00:40:04,980
also Trade entry down. Okay. Same thing here very short term
589
00:40:06,000 --> 00:40:10,500
high down the low end in here. And this is where we start to
590
00:40:10,500 --> 00:40:13,470
see what a breakdown did not fulfill.
591
00:40:14,580 --> 00:40:15,540
Look what happens here.
592
00:40:18,300 --> 00:40:22,290
See what's happened we have this high turn. So now we have a
593
00:40:22,590 --> 00:40:26,610
probable change in direction where now market flow has
594
00:40:26,610 --> 00:40:31,980
shifted to bullishness. So this, this fractal is now a
595
00:40:31,980 --> 00:40:35,580
replication of this price swing. So if we look at this high
596
00:40:36,480 --> 00:40:41,730
to this low in terms of pit magnitude and towards the price
597
00:40:41,730 --> 00:40:46,410
swing, it's replicated in terms of distance and the words
598
00:40:46,410 --> 00:40:50,160
this range from low to high is essentially the same thing
599
00:40:50,160 --> 00:40:52,950
you see here this high to this low
600
00:41:00,000 --> 00:41:03,840
Market turning points. All right, we talked about market
601
00:41:03,840 --> 00:41:08,880
flow. And we talked about market structure. But without
602
00:41:08,880 --> 00:41:13,410
having it understood on the actual individual candles or
603
00:41:13,410 --> 00:41:18,240
bars. It could be a little unnerving to some folks that are
604
00:41:18,240 --> 00:41:20,280
just starting to watch this and scratching their head
605
00:41:20,280 --> 00:41:22,380
thinking, you know, what, what am I supposed to be looking
606
00:41:22,380 --> 00:41:25,590
for? Well, regardless of what time frame you're looking at,
607
00:41:25,860 --> 00:41:31,500
okay, if you have a pattern that is looking for a sell
608
00:41:31,500 --> 00:41:36,600
scenario, okay? You're looking for a sell scenario, there
609
00:41:36,600 --> 00:41:41,280
are several opportunities to use price to get you into a
610
00:41:41,280 --> 00:41:45,690
move. Okay, and for instance, we're going to take this is a
611
00:41:45,900 --> 00:41:50,340
turning point for a sell as price runs up, and we're going
612
00:41:50,340 --> 00:41:52,440
to be assuming that this is a resistance level up in here of
613
00:41:52,440 --> 00:41:56,430
some kind. And maybe this is a five minute chart. Okay, you
614
00:41:56,430 --> 00:42:00,000
zoom down to a five minute chart into that resistance level.
615
00:42:00,000 --> 00:42:02,910
And a time of day when you would expect the turn to take
616
00:42:02,910 --> 00:42:07,020
place for instance in London and we see the price run up
617
00:42:07,080 --> 00:42:09,870
okay on this one, one kilohertz is going to represent in
618
00:42:09,870 --> 00:42:13,950
this example a five minute candle. Then we see the lower
619
00:42:13,980 --> 00:42:18,630
candle here form. So now we have a five minute swing high.
620
00:42:20,070 --> 00:42:23,160
Now price will come down, okay and it may even come up here.
621
00:42:23,370 --> 00:42:27,840
Now what does this look like? This would be what an optimal
622
00:42:27,840 --> 00:42:29,970
trade entry sell signal okay?
623
00:42:31,170 --> 00:42:31,920
in here
624
00:42:33,180 --> 00:42:36,630
okay in here, we have another short term,
625
00:42:37,770 --> 00:42:38,610
swing high.
626
00:42:39,780 --> 00:42:43,410
This is a high with two lower highs going sorry with two
627
00:42:43,410 --> 00:42:46,020
lower highs on either side of it. So if you see this
628
00:42:46,020 --> 00:42:49,560
pattern, okay, in this whole range, this whole range could
629
00:42:49,560 --> 00:42:56,190
be as little as five pips. 10 pips, okay. You could be
630
00:42:56,190 --> 00:43:01,290
selling right here on this candle at market. Okay, or You
631
00:43:01,290 --> 00:43:05,670
can use a break below this candle here on a sell stop. Okay,
632
00:43:05,670 --> 00:43:09,960
so if you if you break down here, so be selling on a stop or
633
00:43:09,960 --> 00:43:15,180
selling at the market, okay, or using this low here. Okay
634
00:43:15,180 --> 00:43:17,790
because we have a low with a higher low on either side, this
635
00:43:17,790 --> 00:43:22,350
is a swing low, we can use this low as a indication to sell
636
00:43:22,350 --> 00:43:26,760
on a limit at this price or higher. So, for example, we'll
637
00:43:26,760 --> 00:43:31,590
say this is the cable, and this price is 161 50, we could
638
00:43:31,590 --> 00:43:35,310
have a limit order to sell at 161 50. And on this candle
639
00:43:35,700 --> 00:43:38,490
right here, once we see this candle close and it starts to
640
00:43:38,490 --> 00:43:43,200
open up here, entering a limit order at 161 50. To sell
641
00:43:43,560 --> 00:43:46,710
would fill you in this candle and then we would expect an
642
00:43:46,740 --> 00:43:50,550
anticipate price to break down below this low if we see that
643
00:43:50,970 --> 00:43:54,090
that's what you expect to see in market turning points and
644
00:43:54,090 --> 00:43:57,930
then you can look for range expansion to the downside and
645
00:43:57,930 --> 00:44:01,170
then manage your stops above the recession. Stop the highs
646
00:44:01,170 --> 00:44:08,520
up here as well. Okay, obviously the same thing applies is
647
00:44:08,520 --> 00:44:11,220
reversing it. If we are expecting bullishness in the
648
00:44:11,220 --> 00:44:13,650
marketplace, we're going to assume that there's a support
649
00:44:13,650 --> 00:44:16,500
level down here. We wait for again, this is a five minute
650
00:44:16,500 --> 00:44:21,240
chart, we could see a low with two higher lows on either
651
00:44:21,240 --> 00:44:25,350
side of it here, and price runs up. Okay, and eventually it
652
00:44:25,350 --> 00:44:28,440
starts to come back down again in here. It doesn't have to
653
00:44:28,470 --> 00:44:32,040
do this. Okay, you could just use the previous swing here.
654
00:44:34,020 --> 00:44:38,130
And if it breaks that, obviously that would be what you're
655
00:44:38,130 --> 00:44:40,260
looking for. But you want to be getting in before the
656
00:44:40,260 --> 00:44:42,600
expansion takes place you want to be getting in when prices
657
00:44:42,930 --> 00:44:45,690
on a tear tarps and you're starting to run, you want to be
658
00:44:45,690 --> 00:44:47,760
in before that you want to be in the accumulation phase,
659
00:44:47,760 --> 00:44:50,250
like we have here. This is a consolidation. You want to be
660
00:44:50,280 --> 00:44:53,400
in that, okay. So if we do get opportunity where it comes
661
00:44:53,400 --> 00:44:55,440
back and gives you a smaller short term, optimal trade entry
662
00:44:55,440 --> 00:44:59,220
in here, that's ideal. Okay, so you can use this swing high
663
00:44:59,220 --> 00:45:03,630
here By when a stop above this high here or you can put a
664
00:45:03,630 --> 00:45:08,310
limit order at this price or lower, okay to get in long and
665
00:45:08,310 --> 00:45:12,180
then obviously you're using the swing low and 30 pips, 20
666
00:45:12,180 --> 00:45:14,040
pips, whatever your risk manager is going to permit you for
667
00:45:14,040 --> 00:45:18,660
the trade to do your, your long setup and obviously you
668
00:45:18,660 --> 00:45:21,420
anticipate once you get in the move, you anticipate
669
00:45:21,690 --> 00:45:24,150
expansion and then when you start seeing these short term
670
00:45:24,150 --> 00:45:27,810
swing highs break out, okay, then you have what you expect
671
00:45:27,810 --> 00:45:31,590
to see in in your trade and then hopefully, you reach for
672
00:45:31,590 --> 00:45:34,530
your upper objectives and price for your profit taking