Price Action Secret: How to Predict Trends and Profit With Supply/Demand - Advanced Trading Concepts

Understanding Price Action on SPX

In this video, the speaker explains how to understand price action on SPX and how to put together a trade using his thought process. He breaks down the concepts of Value Area High (VAH) and Value Area Low (VAL), which act as magnets for price movement.

VAH and VAL

• VAH stands for Value Area High, while VAL stands for Value Area Low.

• When price comes back below VAH, we expect it to go down to VAL.

• When the market opens, we take out yesterday's high and come back down to hit VAH before spiking back up.

• The speaker got long when price bounced off demand at VAL.

Two Pieces of Information

• The speaker noticed two things: buyers were not strong enough to hold price above the high, and sellers were able to outsell buyers at lower levels.

• This indicates that there is strong resistance at this level due to supply forming here.

• The downtrend has started, so the speaker knows that price is unlikely to go above this area.

Putting on a Trade

• We need a system in place before blindly going short.

• The speaker knows that there is supply and a downtrend, so he wants to get in short.

Establishing a Short Bias

In this section, the speaker discusses how to establish a short bias and enter into a trade.

Establishing the Bias

• The speaker establishes that they want to get short but not at the current price level.

• They wait for price to break out low before considering entering into a trade.

Potential Trade Entry

• The speaker considers getting short when price comes back up after breaking out low.

• They would put their stop above the high and target a move down to the Val level.

Reassessing After Missing Setup

• If they miss the setup, they reassess and look for another opportunity.

• They wait for price to confirm downtrend by breaking below previous lows.

Two Pieces of Information

• Once downtrend is confirmed, the speaker looks for two pieces of information: where sellers are in control and where price should be defended.

• Based on these pieces of information, they determine where to place their stop and target.

Targeting Val Level

In this section, the speaker discusses how they use Val Theory to determine their target level.

More Supply Formed

• Price breaks below previous lows with more supply formed.

• This confirms that sellers are in control and should defend previous highs.

Using Val Theory

• The speaker uses Val Theory to determine that price will likely move down to the Val level.

• They have more confidence in this target based on recent market behavior.

Finding Good Risk-Reward Trades

In this section, the speaker discusses how they find good risk-reward trades by determining their stop and target levels first.

Determining Stop and Target First

• The speaker determines their stop and target levels first before considering an entry.

• They look for areas where price is unlikely to go based on their bias.

One-to-One Risk Reward

• The speaker is comfortable with a one-to-one risk-reward trade because they have a strong winning percentage in the long run.

• They prioritize finding good risk-reward trades over trying to get a better reward ratio.

Ideal Short Entry

In this section, the speaker discusses their ideal short entry and why they prioritize finding good entries over waiting for better reward ratios.

Small Fair Value Gap

• The speaker identifies a small fair value gap as their ideal short entry.

• They prioritize finding good entries over waiting for better reward ratios because they may miss out on profitable trades.

Understanding Supply and Demand in Trading

In this section, the speaker explains how to use supply and demand to identify who is in control of the market and where price should not go.

Identifying Who's in Control

• Understanding trend, supply, and demand helps traders identify who is in control of the market.

• Knowing where price shouldn't go can help traders put on better trades with good risk-reward ratios.

Applying Supply and Demand to Trading

• Traders can use supply and demand to set up trades with decent risk-reward ratios, such as one-to-one or one-to-one-and-a-half.

• When buyers are strong enough to take out sellers at a high level, it indicates that buyers are in control of the market.

• If buyers are in control of the market, traders can expect a move higher from a low level.

• By understanding where price shouldn't go, traders can take much better trades with good risk-reward ratios.

Joining the Freedom Team for Trading Support

In this section, the speaker invites viewers to join his trading support team for weekly Q&A calls, live trading sessions, and one-on-one calls.

Joining the Freedom Team

• Viewers interested in joining the Freedom Team can DM the speaker on Twitter with the word "YouTube" to secure their spot.

• The speaker offers weekly Q&A calls, live trading sessions, and one-on-one calls for members of his trading support team.