91.

Overview of Trading Concepts

Recap of Previous Discussions

• The session begins with a recap of previous topics, focusing on four key assets: the Euro and the inverse dollar.

• Discussion on market movements emphasizes that markets primarily move to take liquidity above previous highs and lows or to fill imbalances.

• Introduction of swing points as pivotal indicators in trading, highlighting low/high formations (e.g., lower low, higher high).

• Importance of identifying market environments—trending vs. ranging—and adhering to specific time frames for analysis (15-minute, 1-hour, 4-hour, weekly).

• Explanation of how weekly candlestick patterns develop and their significance in determining entry points for trades.

Trading Strategies and Techniques

• Emphasis on focusing only on buying below the opening price after recognizing past mistakes in trading behavior.

• Description of accumulation phases in trading; higher highs/lower lows indicate potential long positions while lower lows/higher highs suggest short positions.

• Introduction to Woff schematics as a tool for identifying market patterns; simplicity is key—focus on basic formations.

Understanding Premium and Discount

Key Concepts Explained

• Today's focus shifts to two foundational concepts: premium and discount levels within trading ranges.

• Definition provided: anything above the 50% mark in a range is considered premium; anything below is deemed discount.

• Clarification that algorithms do not buy at premium levels nor sell at discount levels; this principle guides trading decisions.

Practical Application

• Example given regarding Bitcoin's price action when it was above $32,000—illustrating the concept of avoiding purchases in premium zones while waiting for reversal signals.

• Reference made to previous discussions about Bitcoin's movement within certain ranges and strategic entries based on identified levels.

Analyzing Market Impulses

Impulse Analysis

• Visual representation discussed regarding impulse movements within a four-hour chart; identification of dealing ranges crucial for understanding price actions.

Price Behavior Insights

Understanding Price Action and Fair Value Gaps

Key Concepts in Trading

• The speaker discusses the importance of recognizing price action, particularly when prices enter a discount phase before moving upward. They reference a mentor's insights on Euro pricing related to high time frame key levels and low resistance liquidity runs.

• The speaker emphasizes their ability to predict price movements based on previous impulse patterns, identifying premium zones where price is expected to move.

• A "key level" is defined as an intermediate term high or low that interacts with fair value gaps (FVG). These gaps are crucial for understanding market rebalancing without crossing 50% of the gap.

• The relationship between fair value gaps and intermediate term highs/lows is reiterated, highlighting their significance as prime targets for liquidity during trading.

Analyzing Market Ranges

• The discussion transitions into distinguishing between premium and discount ranges in trading. It notes that while these concepts may not be visible on higher time frames like weekly charts, they can be identified on daily charts through fair value gaps.

• The speaker illustrates how candle bodies not crossing can indicate significant market behavior. This phenomenon often leads to further upward movement after establishing a fair value gap.

Practical Application of Concepts

• Two critical elements are highlighted: identifying FVG on higher time frames (like 2-day or 3-day charts) and recognizing hidden price points formed by candle wicks that serve as liquidity targets before upward movements occur.

• Emphasis is placed on applying these concepts across different time frames—using high time frame analysis for broader trends while drilling down to lower time frames for precise entry points.

Liquidity Identification Techniques

• The speaker stresses the need for traders to identify both premium and discount areas consistently across various time frames, which aids in making informed trading decisions.

• A pivot point above opening prices indicates potential shorting opportunities within premium ranges. This strategy involves looking for specific fair value gaps at lower time frames (e.g., 15-minute charts).

Advanced Trading Strategies

• The concept of engineered liquidity is introduced, explaining how markets create necessary conditions before moving up or down. Identifying FVG helps traders understand where price might reverse or continue its trend.

• When analyzing higher time frame gaps, traders should look at lower time frames for intermediate highs/lows. This layered approach enhances entry accuracy in volatile markets like Bitcoin or gold.

Rejection Blocks Explained

• Rejection blocks are defined as candles with long wicks that close high; they signify strong rejection levels in the market. Recognizing these blocks can provide insight into potential reversals or continuations in price action.

Understanding Liquidity and Trading Dynamics

The Concept of Liquidity in Trading

• All liquidity that was previously in discount has been absorbed; for shorts, liquidity must be in premium, indicating a price shift from discount to premium.

• Liquidity is identified at key levels, specifically intermediate term highs or lows, which serve as pivotal swing points essential for trading decisions.

• Traders should focus on the highs or lows formed around Fair Value Gaps (FVGs), which need to be categorized as either premium or discount.

Key Levels and Time Frames

• A specific date was mentioned regarding the Euro's anticipated movement towards a fair value gap and an intermediate term low on the weekly chart.

• Emphasis is placed on monitoring four time frames: yearly, quarterly, monthly, and weekly charts to avoid confusion during analysis.

Price Movements and Trading Strategies

• After reaching certain levels marked by accumulation and manipulation phases, the Euro is expected to rise significantly.

• Understanding imbalances between premium and discount levels is crucial; these concepts are foundational for effective trading strategies.

Identifying Fair Value Gaps

• The first encountered fair value gap when targeting trades often dictates market movements; if this fails, traders should look for subsequent gaps.

• Homework involves marking impulses within charts to gain experience; identifying key levels will enhance trade execution.

Practical Application of Concepts

• Marking out impulses along with identifying premium/discount areas will help traders understand where most trades will originate from.

• Transitioning from higher time frames down to 15-minute charts allows traders to spot significant impulses below opening prices effectively.

Dealing Ranges and Market Behavior

• Recognizing dealing ranges helps identify potential entry points; gaps often indicate where liquidity can be found.

• Consistent patterns of liquidity engineering occur throughout markets; understanding these can lead to better trading outcomes.

Upcoming Sessions and Learning Opportunities

• Next week's sessions are scheduled earlier due to work commitments; they will focus on anticipating candle formations in trading strategies.

Questions About Trading Dynamics

Understanding Trading Psychology and Strategy

The Role of Psychology in Trading

• The speaker discusses the impact of psychology on trading, emphasizing that market movements can occur at a pace that traders struggle to keep up with, leading to impulsive buy or sell decisions.

Short Position Entry Analysis

• The speaker recalls entering a short position on Binance after analyzing the CME charts. They stress the importance of understanding order flow rather than just price levels when making trading decisions.