I wish I had known these 3 things before starting
I went from losing thousands of dollars in day trading just by following these steps
𝗺𝗮𝗿𝗸𝗲𝘁 𝗽𝗿𝗶𝗰𝗲 𝗮𝗰𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗮𝗰𝘁𝗶𝗼𝗻 to enter and exit trades
Here’s how to find and read them 👇
1. 𝗠𝗔𝗥𝗞𝗘𝗧 𝗦𝗧𝗥𝗨𝗖𝗧𝗨𝗥𝗘𝗦
First, we need to understand and identify the three market structures
1. Bullish trend
2. Bearish trend
3. Consolidation/Range/Lateral
2. 𝗜𝗗𝗘𝗡𝗧𝗜𝗙𝗬𝗜𝗡𝗚 𝗧𝗥𝗘𝗡𝗗𝗦
Bullish trends - Identified by higher highs and higher lows
Bearish trends - Identified by lower highs and lower lows
Lateral - Identified by nearly equal lows and highs forming a box
3. 𝗧𝗜𝗠𝗘𝗙𝗥𝗔𝗠𝗘𝗦 𝗧𝗢 𝗨𝗦𝗘
MACRO TRENDS
- DAILY WEEKLY MONTHLY
MICRO TRENDS
- 4HR 1HR 30Min 15Min 5Min
Micro trends will help you identify an intraday trend for good entries and exits
Macro trends will help you identify the overall trend to stay in the trading loop
𝗧𝗜𝗠𝗘𝗙𝗥𝗔𝗠𝗘𝗦 𝗖𝗢𝗡𝗧.
Don’t get stuck in smaller time frames like the 5-minute one
One thing that has helped me find liquidity, not to sell in panic, and to swing trade is to observe the higher time frames
Always zoom out and look at the bigger picture and macro trends
4. 𝗕𝗢𝗦 𝗩𝗦 𝗖𝗛𝗢𝗖𝗛
Now that we have identified how to find trends, let’s see how to trade them
We have two concepts to understand
BOS - Break of Structure
CHOCH - Change of Character
𝗕𝗢𝗦 𝗩𝗦 𝗖𝗛𝗢𝗖𝗛 𝗖𝗢𝗡𝗧.
BOS - means the break of a lower low in the case of a bearish trend, while during a bullish trend, it means the break of a higher high.
CHOCH - Break of a lower high or higher low: after the break of structure, the price will reverse to change the trend. It will then break the recent LH or HL. In the case of a bullish trend, the price will break the higher lows, while during a bearish trend, the price will break the lower highs.
Change of trend: after the previous steps, the price will change its trend. This is known as a 𝗰𝗵𝗮𝗻𝗴𝗲 𝗼𝗳 𝗰𝗵𝗮𝗿𝗮𝗰𝘁𝗲𝗿 in the market. For example, if the last market character was bullish, then it has changed to bearish.
5. 𝗥𝗘𝗔𝗟 𝗘𝗫𝗔𝗠𝗣𝗟𝗘
Here’s an example of the BOS and CHOCH pattern. After a series of bearish trends (LL LH), the price breaks the lower low at a higher high. This signifies a BOS in a CHOCH that should indicate a trend change.
6. 𝗛𝗢𝗪 𝗧𝗢 𝗙𝗜𝗡𝗗 𝗟𝗜𝗤𝗨𝗜𝗗𝗜𝗧𝗬 𝗧𝗢 𝗕𝗨𝗬
Entering a trade: When a Choch pattern forms, mark a supply/demand area based on the recent trend. Wait for the price to retrace to the area and then enter the trade in the direction of the trend change.
Add the stop loss level: Place the stop loss a few points below the demand area. If it breaks below, it would invalidate the trade as it creates a lower low
Take profits: Exit the trade when a trend reversal pattern forms on the chart again.
7. 𝗪𝗛𝗔𝗧 𝗪𝗘’𝗩𝗘 𝗥𝗘𝗔𝗗
- Find trends
- Understand price action and market structure
- Find liquidity to make trades
- Timeframes to use
- BOS vs CHOCH
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