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What is CRT Why do all other trading strategies suck 1440p
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What is CRT Why do all other trading strategies suck 1440p

What is CRT? Understanding Candle Range Theory

Introduction to CRT

  • The lecture begins with a warning that this video is not for those seeking quick, simple answers but rather for individuals looking to gain a deeper understanding of the charts.
  • Emphasizes that understanding Candle Range Theory (CRT) can enhance trading effectiveness compared to those who lack this knowledge.

Defining Candle Range Theory

  • CRT stands for Candle Range Theory, which posits that every candle represents a range; it can either be broken out of or "turtle souped."
  • A candle can close below its previous range indicating a downward trend or wick below and close above suggesting an upward rally.

Identifying Trading Ranges

  • Traders must identify which candle ranges they want to trade, such as monthly, weekly, daily, or 4-hour candles.
  • Each time frame has its own open, low, high, and close values; recognizing these helps in defining the trading strategy.

Fractality in Price Action

  • The concept of fractality indicates that price movements are similar across different time frames; what happens on a monthly chart will reflect on lower time frames like hourly or 5-minute charts.
  • Practicing on lower time frames allows traders to gather experience from higher time frame patterns.

Time Frame Alignment and Trading Strategy

  • There is no fixed sequence for time frame alignment since each prints at its own pace; traders should tailor their strategies accordingly.
  • Step one involves deciding which range to trade—daily, weekly, or 4-hour—and understanding the relationship between current and previous ranges.

Managing FOMO and Opportunities

  • Knowing the fractal nature of price alleviates fear of missing out (FOMO); if mistakes occur in one range, there are always new opportunities in subsequent ranges.

Understanding Trading Strategies

Key Concepts in Trading

  • Each trading opportunity is viewed as a journey, where traders aim to catch the market's opening. A bullish trader looks for key levels that indicate potential upward movement.
  • For bearish traders, identifying an open at a bearish key level on a higher timeframe is crucial. This strategy involves waiting for liquidity pools and old lows before entering trades.
  • The speaker emphasizes that all trading models should revolve around these fundamental concepts. Any additional complexity may detract from effective trading strategies.
  • The speaker claims an 80% accuracy rate in trading, which is publicly verifiable. This high success rate lends credibility to their insights and methods.
  • When evaluating someone's expertise, it's essential to consider their credentials and track record in the field of trading.

Simplifying Trading Techniques

  • The core premise of successful trading revolves around three elements: open, key level, and turtle soup (a term used for specific price action patterns).
  • Understanding the relationship between these elements can simplify complex trading strategies into actionable insights.
  • If traders struggle with this simplicity, they are encouraged to explore other methods like RSI or Elliott Wave theory instead of complicating their approach further.
  • Journaling trades helps identify mistakes and understand why certain predictions failed. Over time, this practice leads to improved predictive abilities in trading.

Candle Analysis and Market Structure

  • Each candle represents a range within the market; understanding this concept is vital for analyzing price movements over different timeframes (monthly, weekly, hourly).
  • The speaker introduces "time theory," explaining how each week consists of accumulation (week one), manipulation (week two), and distribution (week three).
  • Recognizing specific candles as indicators of market behavior allows traders to anticipate price movements with greater confidence—especially when using turtle soup patterns.
  • Successful trades often involve targeting the 50% mark of a range after identifying turtle soup setups or similar patterns.

Weekly Range Dynamics

  • Each weekly candle serves as an opportunity for traders; understanding its role in accumulation, manipulation, and distribution phases is critical for strategic planning.
  • Traders should look for Fair Value Gaps (FVG), breakers, and overall market structure within these ranges to make informed decisions about future price movements.

Understanding Market Structure and Trading Strategies

The Basics of Candle Range Trading (CRT)

  • Each candle represents a range, which can either be "turtle souped" or broken out of. This is the foundational concept of CRT.
  • Beginners may feel overconfident after grasping the basic premise but should recognize that further learning is essential to build on this foundation.

Entry Points in Trading

  • Key entry points are identified at the lows of price legs, typically around 50%, where "turtle soup" formations occur within CRT. Advanced entries involve selling above specific candles.
  • For bearish trades, sell above the open of candle number three; for weekly analysis, monitor price from Sunday evening onwards to determine optimal selling points.

Understanding Candle Dynamics

  • Each candle functions as a range: if bearish, sell above the next candle's open; if bullish, sell below it. This strategy applies consistently across different time frames and market conditions.
  • The principle of "open turtle soup decline" when bearish and "open turtle soup rally" when bullish is crucial for understanding market movements and making informed trading decisions.

Learning from Losses

  • Maintaining a trading journal to analyze losses is vital; each loss provides an opportunity for learning and improvement in future trades. Recognizing patterns through open-high-low-close analysis can enhance trading strategies significantly.
  • The speaker emphasizes that many concepts outside CRT and Turtle Soup are ineffective or misleading, urging traders to focus on these methodologies for better results.

Critique of Other Trading Methods

  • While acknowledging ICT's contributions to trading education, the speaker criticizes his lengthy teaching style as unnecessary and suggests that their refined approach offers more clarity and effectiveness in trading strategies like Turtle Soup combined with CRT principles.
  • The speaker claims high accuracy in their trading methods compared to others in the community, asserting their position based on proven success rather than blind adherence to popular figures in trading education.

Summary of Candle Analysis Techniques

  • A structured approach involves recognizing three types of candles: accumulation (candle one), manipulation (candle two), and distribution (candle three). This framework aids traders in identifying key moments for entering or exiting trades effectively across various time frames.

Understanding Market Dynamics and Trading Strategies

Key Trading Concepts

  • The speaker emphasizes the importance of three candle patterns in trading: accumulation (Candle 1), turtle soup (Candle 2), and targeting the 50% level (Candle 3). Candle 3 is noted as typically being the fastest trade due to market manipulation having already occurred.
  • A critical rule highlighted is to never buy above a high or sell below a low, reinforcing the idea that retail traders often make poor decisions by buying at peaks, which leads to losses when the market moves against them.
  • The speaker suggests that understanding who is being negatively impacted in the market can clarify direction. Retail traders are often "screwed over" when they buy above highs.

Technical Analysis Insights

  • The discussion includes a reference to IRL (In Real Life) vs. ERL (Expected Real Life) trading strategies, indicating that many traders misunderstand technical targets, with emphasis on using the 50% level for trades.
  • The concept of market movement is explained as oscillating between ranges and trends. Successful trading involves recognizing these patterns and capitalizing on breakouts from established ranges.

Range Trading Strategies

  • Ranges are described as periods where both buying and selling interests converge. Breakout traders aim to buy above highs while breakdown traders look to sell below lows; however, initial breakouts are often false signals.
  • The speaker encourages students to take notes diligently during lectures, noting that successful students frequently review content multiple times for better retention and understanding of complex concepts.

Repetition as a Learning Tool

  • Emphasizing repetition, it’s stated that revisiting material solidifies knowledge. Each viewing can reveal new insights previously missed, enhancing comprehension over time.
  • The speaker reiterates that learning through repetition is crucial in mastering trading strategies and understanding market behavior effectively.

Practical Application of Turtle Soup Strategy

  • A detailed explanation of how turtle soup setups work within ranges is provided. It describes how price movements create fear among buyers before rallying back up after triggering stop-loss orders.
  • Understanding candle formations—specifically range lows and highs—is essential for identifying potential entry points in trades based on previous price action dynamics.

Analyzing Candle Behavior

  • The significance of candle closes versus wicks is discussed; closing prices indicate future price movements—closing above suggests higher prices ahead while closing below indicates lower prices may follow.
  • Observations about specific candles help determine bias for subsequent candles based on their closes or wicks, providing insight into potential future price actions within defined ranges.

Understanding Entry Strategies in Trading

Key Concepts of Candle Entries

  • The most advanced entry strategy involves entering on the second candle after a significant price movement. This is referred to as "model one," where traders wait for a candle that penetrates into previous lows.
  • A critical aspect of this strategy is identifying the specific candle that caused a rally, focusing on the body rather than the wicks. A strong down close candle indicates a significant market move.
  • The entry point is determined by waiting for any candle that breaks into an old high or low, emphasizing the importance of precise entries over general supply and demand concepts.

Sequence of Entries

  • The sequence of entries includes three key types:
  • Entry one: Turtle soup (a reversal pattern).
  • Entry two: Order block (a consolidation area).
  • Entry three: Market structure shift leading to a breaker or optimal trade setup.
  • Understanding this sequence is crucial; if higher-level structures are hit, looking for lower-level setups becomes less effective.

Summary of CRT (Candle Range Theory)

  • CRT consists of analyzing candles and ranges:
  • Candle one represents accumulation.
  • Candle two signifies manipulation.
  • Candle three indicates rapid price movement towards targets, typically aiming for 50% retracement levels.
  • This approach emphasizes timing over price levels, with each high and low being strategically timed across different time frames (weekly, daily, four-hour).

Practical Application and Homework

  • Traders should focus on capturing multiple instances of these setups within their trading periods. Catching just a few successful trades can significantly elevate one's trading performance compared to peers.
  • It’s essential not to force trades; patience is key. If conditions aren’t met for turtle soup setups, traders should wait for better opportunities instead of forcing entries.

Final Thoughts

  • As part of ongoing learning, viewers are encouraged to reverse engineer past trades shared in community platforms like Telegram to understand how they align with CRT principles.
  • Upcoming content will delve deeper into turtle soup strategies, reinforcing the importance of understanding these concepts thoroughly through repeated review.