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The Sauce
THERE ARE 4 INGREDIENTS TO BECOMING A TRIPLE PERCENT TRADER:
1. knowledge: do you know who is part of the game? Who is on the other side of my trade?
a. banks, institutions, funds, etc
understand who they are & what their purpose is in the market. How do you take
advantage of it?
2. discipline:
a. what is your morning routine?
b. do you have a systematic way to enter and exit trades?
Do you stick to this or deviate?
3. Clarity:
a. goals
b. what is your "why'?
c. what is your exit plan? (take profit/stop loss)
4. Trader Identity
are you aggressive?
do you pull the trigger too fast?
are you conservative?
Do you take your time to make your decisions?
do you like confirmation?
waiting for indicators , signal services, talking heads on tv
what are your spending habits ?
are you impulsive?
Do you research everything?
do you wait for a sale?
the way you respond in the real world is the same way you will respond in the stock market
that's my type
scalper/day trader: enters and exits trades intraday (from market open to market close)
swing trader: enters a trade and holds for more than one day up to 365 days
long term holder/investor: enters a trade and holds for at least 366 days
What is your style? Personality? Preference? Who are you?
trader vs investor
Trader investor
more active more passive
more risky more in control
need to manage emotions they are emotionless
entries & exits matter not concerned with sniper entry
uses smaller time frames uses higher time frames
ex. 5 min, 1H chart ex. 4h, weekly chart
Anticipate not participate
By the time you get in is it too late?
Are you chasing?
CANDLESTICK BASICS
BULLISH - IF PRICE CLOSES ABOVE OPEN
BEARISH - IF PRICE CLOSES BELOW OPEN
LONG BODIES
STRONG BUYING/SELLING
SHORT BODIES
LITTLE BUYING/SELLING
SHADOWS
ACTION THAT OCCURRED PAST THE OPEN AND CLOSE
LONG SHADOWS INDICATE AND SIGNIFY SESSION
HIGHS AND LOWS
SHORTER SHADOWS INDICATE TIGHTER PRICE
ACTION
BULLISH VS BEARISH
What are the candles telling you?
WHY ARE CANDLE STICKS IMPORTANT?
they are receipts of transactions that have already
taken place within the market place
valuable information about price movement
understand what the big boys aka smart money is doing
core basics
Until the threshold is broken, there is no breach
GWS - CONTROLS THE MARKET
dictates buy/sell bias
What are we looking for?
Breaches Support and Resistance is where people begin to get
What are breaches? emotional
Breaches are the force that breaks through a "strong wall"
of buyers/sellers Volume
Use the analogy of when Something strong gets broken best indicator to gauge momentum in a stock to confirm
Driving a Car trends and sustainability
accident VS traffic shows agression or lack thereof
WHEN you stop and turn around vs when You
slow down our job is to understand what price is trying to
What is the flow of the market?
GAUGING MOMENTUM Don't overcomplicate the data
why is something pulling bacK? AT WHAT SPEED?
Buyers
to focus on the buyers, we need to see where the sellers give price can come as low as the gws & maintain buyer bias as long as
up control gws doesn't get taken out
uptrends forming? higher highs and higher lows?
if they dont take out, gws could turn into a range
Where do the buyers step in? how? does it break above and stay above?
which direction is the market headed?
Where does the turn happen?
Breach: support & Resistance
above the breach is buyers territory
buy biased
looking for long positions
Sellers
price can come as high as the gws & maintain seller bias as long as
to focus on the Sellers, we need to see where the Buyers give
gws doesn't get taken out
up control
downtrends forming? lower lows and lower highs?
if they dont take out, gws could turn into a range
does it break Below and stay Below?
do the sellers step in? how?
which direction is the market headed?
Where does the turn happen?
Breach: support & Resistance
below the breach is sellers territory
sell biased
looking for short positions
Support & Resistance
formed from swings (when price reverses and changes Support & resistance are levels that act as a
direction) ceiling or floor
uptrend - previous swing acts as support price may struggle to get past/through
downtrend - previous swing acts as a resistance these levels
start on bigger time frame (overall big picture) differs from supply & demand
top down analysis s/D are key zones where smart money waits
MARKET STRUCTURE to move the market
LOWER TIME FRAMES avoid low probability setups/fake outs
current market conditions
confirmation
Rejection/candlestick patterns etc.
Supply & Demand Cheat Code
THE FORCE THAT DRIVES PRICE IN ANY MARKET IS AN IMBALANCE OF SUPPLY & DEMAND
LOW RISK TO HIGH REWARD SETUP
TRADING LIKE AN INSTITUTION
4 BASIC LAWS OF SUPPLY & DEMAND
1. IF DEMAND INCREASES & SUPPLY REMAINS UNCHANGED, THIS RESULTS IN A SHORTAGE AND THE PRICE GOES UP
2. IF DEMAND DECREASES & SUPPLY REMAINS UNCHANGED, THIS RESULTS IN A SURPLUS AND THE PRICE GOES DOWN
3. IF SUPPLY INCREASES & DEMAND REMAINS UNCHANGED, THIS RESULTS IN A SURPLUS AND THE PRICE GOES DOWN
4. IF SUPPLY DECREASES & DEMAND REMAINS UNCHANGED, THIS RESULTS IN A SHORTAGE AND THE PRICE GOES UP
Supply & Demand Zones: Important Concepts
SUPPLY & DEMAND IS WHAT MOVES MARKETS - PRICE MOVES BECAUSE OF
TWO REASONS:
1. MARKET IMBALANCE: NO AGREEMENT ON PRICE (A TRENDING MARKET)
2. MARKET BALANCE: AGREEMENT ON PRICE (CONSOLIDATING OR BASING
MARKET)
DEMAND ZONE - MORE BUYERS > SELLERS (PRICE INCREASE OR PRICE
RALLY)
SUPPLY ZONE - MORE SELLERS > BUYERS (PRICE DECREASE OR SELL OFF)
FRESH ZONES
HAS PRICE COME BACK YET?
EACH REVISIT OF ZONE IS MORE UNFILLED GET FILLED
ZONE WEAKENS
Demand Zones
FORM IN AN UPTREND OR BULLISH CONTINUATION
IDENTIFY A BASING CANDLE FOLLOWED BY A STRONG MOVE TO THE
UPSIDE
DRAW YOUR ZONE FROM THE TOP OF THE BODY OF THE BASING
CANDLE TO THE BOTTOM OF THE WICK (IF APPLICABLE)
THIS IS WHERE WE TAKE OUR TRADES (ONLY AFTER OR IF PRICE
RETURNS)
START WITH HIGHER TIME FRAME & MOVE TO LOWER TIME FRAME
(WK, D, 4H, 1HR, 30M, 15M, 5M)
CAN BE FOUND ON ANY TIME FRAME
FRESH ZONES EQUALS HIGHER PROBABILITY
Supply Zones FORM IN AN DOWNTREND OR BEARISH CONTINUATION
IDENTIFY A BASING CANDLE FOLLOWED BY A STRONG MOVE TO THE
DOWNSIDE
DRAW YOUR ZONE FROM THE TOP OF THE BODY OF THE BASING
CANDLE TO THE TOP OF THE WICK (IF APPLICABLE)
THIS IS WHERE WE TAKE OUR TRADES (ONLY AFTER OR IF PRICE
RETURNS)
START WITH HIGHER TIME FRAME & MOVE TO LOWER TIME FRAME
(WK, D, 4H, 1HR, 30M, 15M, 5M)
CAN BE FOUND ON ANY TIME FRAME
FRESH ZONES EQUALS HIGHER PROBABILITY
Let's get into the charts!
