46. Price Action lecture

Market Insights and Personal Reflections

Current Market Overview

• The speaker begins with a positive outlook on their personal life and the market, indicating that everything is going well.

• They emphasize the importance of humility in trading, acknowledging their own negative traits while maintaining confidence.

• The speaker discusses the psychological challenges of trading, particularly the temptation to feel invincible after successful trades.

Bitcoin and Ethereum Analysis

• A significant observation is made regarding a "crack in correlation" within Bitcoin and Ethereum at high monthly time frames, suggesting caution during pullbacks.

• The speaker notes that discussions often cover various assets beyond just Bitcoin and Ethereum, which can lead to missed insights.

Trading Strategy Considerations

• They express a preference for not holding long positions in Bitcoin currently due to its reaction to higher time frame cycles.

• Emphasis is placed on how Bitcoin and Ethereum influence the broader crypto market, with occasional random coins gaining attention but ultimately failing.

Caution Against Trends

• The speaker warns against investing in new trends or mainstream phenomena like meme coins or NFTs, citing past failures such as Dogecoin.

• They advise using these trends as liquidity opportunities rather than long-term investments.

Future Market Predictions

• The speaker believes there will be opportunities to buy lower prices in the future despite current premium pricing.

• They reflect on past experiences where shorting seemed profitable but now advocate for participating before or during bull markets instead.

Market Sentiment and Contrarian Views

• There’s an acknowledgment of exhaustion in the current bull market amidst bullish news surrounding Bitcoin halving events.

• The speaker expresses discomfort with overly optimistic price predictions from influencers, preferring contrarian strategies.

Investment Philosophy

• Discussion includes a focus on realistic investment goals—aiming for gains above 25% rather than chasing unrealistic targets.

• While recognizing that cryptocurrencies may lack intrinsic value, they consider Bitcoin and Ethereum as safer bets compared to other options available in the market.

Economic Awareness

• The importance of understanding economic conditions is highlighted; being aware of local realities can inform better trading decisions.

Understanding Market Conditions and Trading Strategies

Low Probability Trading Scenarios

• The speaker discusses the implications of low probability trading, emphasizing that while trades may exist, they are not favorable due to higher time frame sequential market trends.

• Mention of the current market being above all-time highs, indicating a significant point in the previous cycle that traders should monitor closely.

Importance of Asset Triads

• The speaker introduces the concept of asset triads, stating that certain asset classes provide unique insights not available elsewhere in the market.

• Clarification on terminology: "IRT" stands for Interest Rate Triad, which is crucial for understanding market movements.

Correlation with US Dollar

• When IRT moves in tandem with the US dollar, it signals choppy market conditions observable in Forex and index futures markets.

• By analyzing IRT alongside key currency pairs (Dollar Index, Euro, GBP/USD), traders can gain clarity on prevailing market conditions—whether prices will rage or reverse.

Recognizing Market Behavior

• The speaker emphasizes that clear indicators exist to determine whether one should engage in trading; if conditions are low probability, it's advisable to refrain from trading.

• Observations about bond markets moving similarly to dollar indices highlight critical factors influencing price action.

Navigating Partial Weeks and Market Confusion

• Discussion on how recent price actions can lead to confusion among traders during partial weeks when significant economic events occur.

• Explanation of how these weeks serve to mislead both buyers and sellers by creating erratic price movements designed to frustrate traders' strategies.

Understanding Market Behavior During Low Probability Weeks

Retracement and Market Dynamics

• The speaker discusses the current market retracement, indicating that it aligns with their previous expectations despite not reaching anticipated price levels.

• Emphasizes that this week is characterized as a low probability week in Q2, which is typical for such periods. The market is behaving as expected during these times.

Partial Weeks and News Events

• Each quarter consists of 12 full weeks followed by partial weeks influenced by significant news events like non-farm payroll reports.

• Highlights the challenge of conveying complex information to audiences who may overlook critical insights amidst simpler content.

Market Maker Influence

• Discusses the importance of understanding market makers' actions, noting that they operate on a scale far beyond individual traders’ capabilities.

• Points out that volatility injections often occur without regard for retail trader activities, emphasizing the need for awareness of broader market movements.

Correlation and Volatility

• Observes that during distortion weeks, correlations between assets can lead to increased volatility; however, not every red folder news event guarantees a trading setup.

• Mentions precision swing points but suggests many traders are already aware and studying these aspects diligently.

Distortion Weeks Explained

• Explains why certain weeks are designated as distortion weeks within each quarter—these periods often serve to mislead or extract funds from traders before normal trends resume.

• Anticipates a return to clean price action following these distortion phases, reinforcing the idea that patience will yield better trading conditions later in the month.

Trading Strategy Considerations

• Advises against engaging in trades during low probability price action weeks; instead, recommends focusing on personal development and risk management strategies.

• Suggests using this time to analyze past performance and refine trading techniques rather than forcing trades under unfavorable conditions.

Currency Pair Analysis

• Discusses specific currency pairs like GBP/USD and EUR/USD, noting their differing ranges and behaviors during current market conditions.

Understanding Market Conditions and Trading Strategies

Analyzing Price Movements

• The speaker emphasizes the consistency of price movements, noting that similar patterns can be observed across different time frames.

• Acknowledges low probability trading conditions during weeks designed for market distortion, highlighting the importance of recognizing these periods.

• Encourages traders to journal their experiences, especially during unclear weeks, as a means to track performance and improve decision-making.

Identifying Low Probability Conditions

• Reiterates the presence of mirrored price actions indicating low probability conditions in trading.

• Suggests waiting for price to break above certain highs or lows before engaging in long-term trades during uncertain market conditions.

• Points out clear liquidity on the buy side, reinforcing the idea that current market conditions are not favorable for high-probability trades.

Timing and Market Structure Shifts

• Discusses the significance of shifts in market structure and how they can signal potential trading opportunities when combined with specific indicators like SS SMT (Smart Money Technique).

• Highlights that the day before Non-Farm Payroll (NFP) reports is typically a low activity day where traders should refrain from making moves.

Managing Expectations Around News Events

• Advises against seeking high-probability setups on days leading up to major news events due to expected liquidity stacking by institutions.

• Emphasizes understanding when low probability conditions will occur, allowing traders to prepare accordingly.

Utilizing Value Gaps in Trading

• Explains how observing falling prices can indicate potential future movements based on historical data and value gaps.

• Notes expectations regarding currency pairs like GBP and EUR potentially falling more than USD due to available range space.

• Introduces concepts around Fair Value Gaps (FVG), suggesting that identifying these gaps can lead to higher probability trades if timed correctly.

Conclusion: Practical Application of Insights

• The speaker expresses enthusiasm about sharing insights with others who may benefit from this knowledge, reflecting on personal experiences in trading.

Understanding Market Dynamics and Trading Strategies

Key Concepts in Market Expansion

• The discussion begins with the importance of noting specific market candles, particularly the 9:30 candle, as a reference point for understanding price expansions.

• The speaker highlights the presence of gaps in the market, indicating areas where price movement may be significant. Notably, there are no gaps present at this time.

• Multiple screens are utilized to monitor various time frames, emphasizing the need for comprehensive analysis beyond what is immediately visible.

Probability and Market Behavior

• The day is characterized as having low probability for trading success, suggesting caution during such periods.

• Observations indicate choppy market conditions that can complicate trading decisions.

Future Engagement and Community Insights

• The speaker plans to address audience questions in future sessions while reiterating the importance of focusing on high-probability trades rather than less reliable indicators like crosses.

• A reminder is given about an upcoming live session scheduled after a major economic report (non-farm payroll), which will provide insights into market sentiment.

Personal Reflections and Community Management

• The speaker expresses uncertainty about future community management but values maintaining a close-knit group of dedicated members.

• Despite potential financial success, personal well-being takes precedence over managing large groups or advertising extensively.

Tools and Automation in Trading

• Discussion includes plans to share personal algorithms with community members that could automate trading strategies based on identified patterns and probabilities.

• Emphasis is placed on creating emotion-free tools that enhance accuracy in trading decisions, highlighting their rarity in public domains.

Conclusion and Next Steps

• A commitment to return for another session tomorrow is made, encouraging participants to engage actively with shared materials and homework assignments designed for varying skill levels.