What is CRT? Why do all other trading strategies suck?

What is CRT?

Introduction to Candle Range Theory (CRT)

• The lecture begins with a warning that this video is not for those seeking quick, superficial knowledge; it aims to provide a deeper understanding of Candle Range Theory (CRT).

• Emphasizes the potential benefits of mastering CRT, suggesting that it can lead to more profitable trading compared to those who lack this understanding.

• Viewers are encouraged to set aside preconceived notions and focus on learning from scratch, highlighting the importance of taking notes during the lecture.

Understanding Candle Range

• CRT stands for Candle Range Theory, which posits that every candle represents a range in trading.

• Each candle can either be broken out of by the next candle closing below or can experience a "Turtle Soup" where it wicks below but closes above, indicating potential market movements.

• The speaker clarifies that there are only two outcomes for each candle: breakout or Turtle Soup, with inside bars being an exception leading to similar results.

Identifying Trading Ranges

• Traders often struggle with identifying which candles or ranges they should focus on when trading.

• The speaker illustrates various time frames—monthly, weekly, daily—and their respective open-low-high-close structures as examples of different ranges traders might analyze.

• Step one involves defining the specific range you want to trade (monthly, weekly, daily), emphasizing that all these ranges operate similarly but at different speeds.

Fractality in Price Action

• The concept of fractality is introduced; what happens in larger time frames will also occur in smaller ones.

• Traders are advised to mark the open and close of monthly candles and observe how they relate across different time frames like 4-hour and hourly charts.

• This practice allows traders to understand price action better by recognizing patterns across various time frames.

Practical Application and Mindset

• Acknowledges that while each timeframe operates at its own pace, traders can still find relationships between them for effective analysis.

• There’s no fixed alignment among timeframes; instead, traders should tailor their approach based on observed relationships between selected timeframes.

• Encourages viewers to decide which range they wish to trade within a week—daily or 4-hour—and highlights how every range has relationships with previous ones.

Overcoming Fear of Missing Out (FOMO)

• Understanding fractal nature helps alleviate FOMO since missed opportunities today can be reset tomorrow with new trading chances available at midnight New York time.

Trading Strategies and Key Concepts

Daily Range Journey

• The concept of the "daily range journey" is introduced, emphasizing that each trading day presents a new opportunity. Traders should look for bullish or bearish key levels at the open to capitalize on market movements.

• A bearish strategy involves waiting for an open at a bearish key level, which can lead to declines after hitting liquidity pools or old lows.

Core Trading Principles

• The speaker stresses that all trading models should revolve around simple concepts: open, key level, and turtle soup. Any additional complexity is deemed unnecessary.

• The speaker claims an 80% accuracy in trades for 2023, asserting this record as a basis for their authority in discussing trading strategies.

Credentials and Authority

• It’s important to evaluate the credentials of anyone providing trading advice. The speaker highlights their world record in accuracy as justification for their insights.

• The simplicity of the core principles—open, key level, turtle soup—is reiterated as foundational knowledge necessary for successful trading.

Understanding Market Movements

• The discussion includes how price movements are influenced by candle formations and ranges. Each candle represents a potential trade opportunity based on its behavior (e.g., turtle soup).

• New traders may struggle initially but are encouraged to journal their experiences to understand why certain predictions fail and learn from them over time.

Candle Ranges and Trading Opportunities

• Each candle is described as a range that can either be manipulated or broken out of. This understanding is crucial for identifying potential trades.

• An example illustrates how specific candles represent accumulation, manipulation, and distribution phases within market cycles.

Practical Application of Concepts

• When a candle undergoes turtle soup formation, there’s high probability it will retrace to at least 50% of its range—a fundamental principle for executing trades.

• Weekly candles are analyzed with respect to their roles in establishing ranges; traders should focus on these patterns when planning entries and exits.

Summary of Trading Phases

• Three distinct phases are identified: accumulation (candle one), manipulation (candle two), and distribution (candle three). Recognizing these phases helps traders anticipate market movements effectively.

Understanding Trading Strategies and Concepts

Importance of Mentorship in Trading

• Emphasizes the significance of having a single mentor to guide trading practices, as every detail they provide is interconnected with foundational concepts.

• Discusses the strategy of identifying entry points using specific candle formations, particularly focusing on selling above certain price levels.

Candle Analysis for Trading Decisions

• Introduces a method for trading based on three candles: accumulation (Candle One), manipulation (Candle Two), and distribution (Candle Three). The recommendation is to sell above the open of Candle Three if bearish.

• Advises monitoring price movements from Sunday evening onwards, specifically at 5 PM New York time, to align trades with market algorithms.

Understanding Market Ranges and Price Actions

• Explains that each candle represents a range; traders should sell above the open of the next candle if bearish or below if bullish. This highlights the importance of understanding market dynamics.

• Stresses that all significant trading actions occur around the open prices, reinforcing the need to focus on these levels when making trades.

Learning from Losses

• Encourages traders to maintain a journal documenting their losses as each loss provides valuable lessons. This practice helps in refining strategies over time.

• Suggests analyzing past trades through various lenses such as open-high-low-close patterns to improve future decision-making.

Critique of Other Trading Methods

• Dismisses other trading methodologies outside CRT and turtle soup as ineffective, asserting that they waste time and do not yield results.

• Acknowledges ICT's influence but critiques his lengthy teaching style, suggesting it serves more for monetization than effective learning.

Personal Success and Methodology Validation

• Claims personal refinement of ICT’s teachings into more efficient methods like turtle soup and CRT, positioning this approach as superior based on proven success rates.

• Highlights personal achievements in trading accuracy, claiming recognition within the community due to high performance metrics.

Practical Application of Candle Strategies

• Reiterates key candle strategies: accumulation (Candle One), manipulation (Candle Two), followed by distribution (Candle Three).

• Advises blending candle analysis with timing indicators such as daily highs/lows for improved market readings.

Understanding Market Movements and Trading Strategies

Market Dynamics and Retail Traders

• The market often does not allow retail traders to recover losses, as market makers manipulate movements by targeting specific price points.

• Retail traders typically buy at highs, which can lead to significant losses; understanding who is being disadvantaged in the market can provide insights into trading direction.

Technical Analysis Insights

• An IRL trader's approach may be flawed if they trade based on their Fair Value Gap (FVG); the correct target should be 50% of the range.

• Markets operate in cycles of ranging and trending; successful trading involves recognizing these patterns and capitalizing on breakouts from ranges.

Range Trading Concepts

• A range represents a balance of buying and selling interest; breakout traders aim to buy above highs while breakdown traders sell below lows.

• Initial breakouts are often false, leading to a transition from range to trend, emphasizing the importance of patience in trading strategies.

Learning Through Repetition

• Successful students exhibit an obsession with chart analysis, often reviewing content multiple times for deeper understanding.

• Repetition solidifies knowledge; revisiting material helps uncover insights missed during initial viewings.

Candle Patterns and Bias Determination

• Recognizing candle formations within ranges is crucial for identifying potential trades; each turtle soup pattern includes a failure swing that can mislead traders.

• Understanding how lows are created over time aids in predicting subsequent price movements; this requires careful observation of market behavior.

Entry Strategies for Trades

• Identifying bias in upcoming candles relies on analyzing closes versus wicks; closing above or below previous candles indicates potential future price directions.

• Effective entry points involve waiting for confirmation through candle closures rather than relying solely on wick movements.

Understanding Candle Patterns and Trading Strategies

Key Insights on Candle Patterns

• The speaker emphasizes the importance of a "thick down close candle," which indicates a strong market dump, as opposed to a flimsy one. This type of candle is seen as more reliable for trading decisions.

• A specific candle that closes above a previous high is identified as an entry point for trades. This method, referred to as "model number one," focuses on individual candles rather than broader supply and demand concepts.

• The sequence of entries in trading includes three models: Turtle Soup (entry one), Order Block (entry two), and Breaker (entry three). Each model serves a distinct purpose in identifying market movements.

Trading Sequence and Timing

• The speaker warns against foolishly chasing trades after certain levels are hit, stressing the importance of timing in trading sequences—starting with Turtle Soup followed by Order Blocks and Breakers.

• CRT (Candle Ranges Theory) is introduced, highlighting three key candles: range candle one, turtle soup week above lower prices (candle two), and targeting 50% of the opposing range swing (candle three).

Techniques for Effective Trading

• Emphasis is placed on the speed of execution during trades; model number three (fastest entry) occurs when traders rush to hit targets after accumulating liquidity above highs.

• Catching multiple successful trades within specific time frames can significantly enhance trading skills. Achieving just a few successful trades weekly can position traders ahead of their peers.

Importance of Timing Over Price

• Every high and low from each candle is timed meticulously across different time frames—weekly, daily, and four-hour—which underscores that timing holds greater significance than price itself.

• The phases of trading are categorized into accumulation (candle one), manipulation (candle two), and fast movement towards targets (candle three). Traders should focus on capturing as many 'candle threes' as possible without forcing entries.

Final Thoughts and Homework Assignment

• Traders are advised not to force Turtle Soup setups but instead wait for clear opportunities. If conditions aren't met, patience is encouraged.