MARKET STRUCTURE (must watch) EVERYTHING you NEED to KNOW [SMART MONEY] watch it all! - mentfx

Introduction

The speaker introduces the topic of structure and how it can be used in forex trading. He mentions that he will be discussing Elliott Wave Theory and its relationship to smart money setups.

Elliott Wave Theory

The speaker explains that he uses Elliott Wave Theory extensively in stock research, but not as much in forex trading. However, he believes that understanding this theory is crucial for successful trading.

• Elliott Wave Theory consists of three impulsive waves and two mini retracements resulting in a push upwards.

• From a smart money standpoint, this translates to breaks in structure higher, reversals to order blocks, and continuations higher.

• After these three impulsive waves with two corrections occur, there is usually a three-wave correction that comes below some areas.

• Structure shifts during this process and takes out liquidity that rested below the lows.

Importance of Learning Elliott Wave Theory

The speaker emphasizes the importance of learning about Elliott Wave Theory for successful trading.

• Learning about Elliott Wave Theory allowed him to see the market in a fractal nature significantly better than before.

• This understanding helped him grow his career into understanding how to trade smart money and partner it with normal structure.

Understanding Normal Structure Play

The speaker discusses normal structural play in the forex market and why some traders may struggle with it.

• A bullish belief can instantly switch bearish with a break in structure.

• Order blocks may not work as well because they are based on the theory of fractals occurring back and forth bullish and bearish within a given setup due to multiple time frames operating in any market.

Conclusion

The speaker concludes by outlining the idea of Elliott Wave Theory and its relationship to smart money.

• Elliott Wave Theory consists of a five-wave pattern to the top.

• Understanding this theory can help traders better understand market structure and make more informed trading decisions.

Understanding Fractal Nature of the Market

In this section, the speaker explains how to recognize and understand the fractal nature of the market using Wyckoff concepts.

Recognizing Fractals in Market Movements

• The speaker explains that fractals are shown in market movements through breaks in structure, continuation potential reversals, and continuations.

• The same structure is repeated throughout different areas of the market, showing a fractal distribution.

• The snowflake rule is used to identify selling climaxes, STNB or springs, moves higher, tests, signs of strength, backups and continuations.

How Emotions Affect Price Movement

In this section, the speaker discusses how emotions such as greed affect price movement in the market.

Understanding Price Movement Based on Emotions

• The speaker explains that understanding price movement based on emotions can have a great effect on one's perception of structure in the market.

• The same structure seen in higher time frames also occurs in lower time frames.

• On a 15-minute chart for example, you can see liquidity being printed in trend lines.

[t=0:05:00] Recognizing Fractals Without Deep Understanding

In this section, the speaker emphasizes that recognizing fractals does not require a deep understanding of Wyckoff concepts.

Recognizing Fractals Without Deep Understanding

• One does not need to understand Wyckoff concepts deeply to recognize fractals.

• Recognizing what is explained will help one understand how fractals work.

• Understanding fractal nature of the market can be explained using Wyckoff or Elliott wave structure.

Understanding Structure and Timeframes

In this section, the speaker discusses how structure on lower time frames can impact higher time frame plays. They explain how smart money traders look for definitive structural places and wait for structure to print some kind of bullish formation.

Impact of Lower Time Frame Structure on Higher Time Frame Plays

• The speaker explains that as we continue to manipulate and change structure back and forth on lower time frames, it begins to shift heavily.

• They note that structure on lower time frames has to switch back and forth between highs and lows going bullish and bearish to still accomplish the same end goal which is the higher time frame structure.

• The speaker emphasizes that the lower 15-minute structure is actually responsible for that one hour bullish structure.

• They explain how recognizing the downward shift in momentum was actually for a higher time frame play is crucial because the higher time frame controls price.

Smart Money Trading Strategies

• The speaker notes that smart money traders look for definitive structural places and wait for structure to print some kind of bullish formation.

• They explain how they expect price to come into order blocks within these areas, give potential wipe off, and continue higher.

• The speaker describes how within moves, we see bullish structures shift bearish, remain bullish, shift bearish again, respect areas that are bearish, continue lower into those areas of white golf giving you fractal accumulations here distributions here accumulations here so on and so forth until it shifts bullish again.

• They emphasize that many smart money traders are looking at this red move as a continuation bearish but not recognizing that this downward shift in momentum was actually for a higher time frame play.

Importance of Recognizing Higher Time Frame Plays

• The speaker emphasizes that recognizing the higher time frame plays is crucial because the lower time frames are not what control the higher time frames.

• They encourage viewers to refer back to the directional bias videos that they made and spoke about how the higher time frame is the only thing that actually controls price.

Understanding Market Bias

In this section, the speaker explains how market bias is controlled by higher time frames and not lower ones.

Market Bias and Time Frames

• The market bias is controlled by higher time frames.

• Lower time frames do not control the bias that has been preset.

• The daily chart may have shifted bearish while the weekly chart remains bullish.

Importance of Higher Time Frames

In this section, the speaker emphasizes the importance of higher time frames in understanding market movements.

Institutional Order Flow

• Lower time frames follow higher ones and fall in line with them.

• Understanding institutional order flow involves looking at counterparty movements within a certain direction.

• Elliot wave theory is important in understanding smart money as it correlates to Wyckoff's ideas.

Fractal Nature of Markets

In this section, the speaker discusses how fractal nature plays out on different time frames.

Wyckoff Theory and Accumulation

• Wyckoff theory plays out fractally on many time frames.

• Accumulation followed by distributions results in a smaller accumulation down below and continuations of that sort.

• Within all these areas, you also have fractal things happening and new structure being printed.

Building Liquidity for Major Plays

In this section, the speaker talks about building liquidity for major plays.

Liquidity Building Strategies

• Moves are made to build liquidity in each direction in many areas.

• Lower time frame schematics can play out within these areas.

• Partially above given liquidity highs is necessary because price doesn't have to continue significantly higher and print profits for you.

Understanding Fractals and Market Shifts

The speaker discusses the importance of understanding fractals and how the market can switch between bullishness and bearishness. They explain that this is crucial to understanding Wyckoff, higher timeframe, lower timeframe confirmations, and setups.

Importance of Understanding Market Shifts

• The speaker encourages listeners to consider what is happening inside areas on a one-minute timeframe.

• They explain that these moves can be hard to follow for those new to smart money trading or coming from a retail background.

• Listeners are warned not to get emotional when recognizing structural moves lower as part of a higher bearish retracement.

• The speaker explains that moves up in the weekly timeframe are what is actually happening on the weekly chart.

Trading Bias and Order Blocks

• Listeners are encouraged to understand their bias in the market and trade accordingly until it is invalidated.

• Traders should look for confirmation and manage trades along the way, recognizing that trades will not always work.

• When trades don't work, it doesn't mean your bias is wrong; it just means a lower timeframe bias has not been established within that higher timeframe bias yet.

• Smart money traders can get confused about which order blocks they need to use because they forget where they are on the institutionally higher timeframe.

Recognizing Completed Moves

• Listeners are reminded that price can do a multitude of things, so it's important to recognize completed moves before making continued plays towards a certain direction.

• Traders should recognize that potential re-accumulation can occur after a move to an order block inside of here.

• The speaker explains that understanding shifts intraday, intra-week, and intra-month is necessary to have them all play into a potential bias.

Final Thoughts

• Listeners are reminded that even when they think a move is complete, there may be more to come.

Understanding Wyckoff and Market Structure

In this section, the speaker explains how to view market moves as part of a bigger move and how Wyckoff can help identify structural plays within the market.

Viewing Market Moves as Part of a Bigger Move

• The speaker explains that market moves can be viewed as part of a bigger move.

• He gives an example of how a daily chart's bullish bias can paint a monthly chart's bullish bias.

• The speaker explains that within the daily chart's bullish price action, there is continuous back-and-forth action on smaller time frames like the one-hour or four-hour charts.

Understanding Wyckoff

• The speaker explains that understanding Wyckoff is important because it does something similar to viewing market moves as part of a bigger move.

• He gives an example of how Wyckoff forms structural plays within intra-moves.

• The speaker explains that these intra-moves themselves can form higher time frame structural plays.

• He gives an example of how an entire Wyckoff distribution could have been an accumulation.

Understanding Market Structure

In this section, the speaker explains how market structure can be observed on different timeframes and how understanding it can help traders make better decisions.

Trading on Different Timeframes

• Traders can observe market structure on different timeframes, from tick charts to four-hour charts.

• The same principles apply to swing trades or scalp trades as they do to four-hour trades.

Recognizing Market Structure

• Bearish and bullish structures can shift back and forth. Understanding this movement can help traders identify biases and get involved in long institutional plays.

• Lower time frames should be used to confirm shifts in market structure.

• Shifts in bullish or bearish structures should be met with lower timeframe confirmations to seek continued bullishness or bearishness.

Importance of Fractals

• The market is fractal, meaning that something printed on one timeframe does not necessarily hold on another timeframe.

• Traders at Mount FX use partialing at smaller values because they understand the fractal nature of the market.

Conclusion: How Understanding Market Structure Can Improve Trading

In this section, the speaker concludes by summarizing how understanding market structure can improve trading decisions.

Benefits of Understanding Market Structure

• Understanding market structure helps traders identify biases and get involved in long institutional plays.

• Observing market structure on different timeframes allows for better decision-making across all types of trades.

Final Thoughts

• Elliot wave theory shaped the speaker's perception of fractals in the market.

• Understanding market structure can help traders make better decisions about when and where to get involved in trades.